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Advantages And Disadvantages Of Introducing Business Models

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Published: Tue, 02 May 2017

A: Public Private Partnership is known worldwide as an important source of spurring clannish assets in stock building and improving public service delivery. As we move on with this business, it gets important to investigate objectives for PPP in visit to understand the risks and responsibilities the government would hit to adopt in visit to make PPPs growth.

As we explore PPP we see two types of common reasons which are used to explain why a government pursues PPPs. The prototypal ordered of reasons are what we would adjudge as ‘beneficial’, reasons that are consistent with the outcome that PPPs actually achieve. The second ordered of reasons are what we adjudge ‘Deceptive’ reasons-that is, reasons that are not really consistent with the outcomes that that PPPs can deliver.

BENEFICIAL REASONS FOROF PURSUING PPP

Risk transfer: Government getting rid of asset-based risks that is, risk directly associated with building or operating assets

Whole-of-life costing: Through whole of life costing the government can achieve optimization between capital costs and operating and maintenance costs, a realistic projection of amount outlay of ownership, and a artefact of comparing competing designs on a like-with-like basis

Innovation: Providing wider incentives for original solutions to assist delivery

Asset utilization: Developing opportunities to generate income from utilization of the asset by third parties, which may reduce the outlay that the polity would otherwise have to pay as a sole user with the outcomes that that PPPs can deliver.

DECEPTIVE RESONS FOR PURSUING PPP

The main deceptive reason why some governments pursue PPPs is to access finance that would otherwise not be available. Accessing finance would not be doable ultimate by introducing a PPP. If an infrastructure source is not assured that, between user fees and government subsidies, it module be able to recover its costs, the government would unable to raise the top needed fund to build the project. The government module will not able to attract clannish finance simply by deciding to do PPP, cost recovery would need to be resolute before capital can be raised

A government is an organization that has the power to make and enforce laws for a certain territory. There are several definitions on what exactly constitutes a government. In its broadest sense, “govern” means the power to administrate, whether over an area of land, a set group of people, or an association. A government is the organization that is the governing authority of a political unit. It is the system or form by which a community or other political unit is governed.

Far more important to me is, that I should be loyal to what I regard as the law of my political life, which is this: a belief that that country is best governed, which is least governed …

George Hoadly

Most people who have live in the Pakistan think of state provision when they think of public services. Consequently, when they think of public services being removed from state provision they think of privatization probably with the involvement of multi-national capital. However, for those who lived in from the period of the Industrial Revolution until the Second World war, and for million of people across the world who have lived since the war and up to the present day, the provision of services is not exclusively a matter for the state; it is a matter for the public.

For people not living within our narrow cultural constraints, delivery of services is provided through co-operatives and mutuals. The democratic nature of co-operative structures gives people direct power over service delivery. The state, whether central or local, acts as a guarantor of peoples’ rights to services. The state must always be prepared to act as an enabler but should only be a provider in the last resort. Given our knowledge of this better way, we must continue to engage, not from any sense of ideological superiority, but because we know that this better way is more economically efficient and will provide better service delivery which meets people needs better than current provision.

Let the people think they govern and they will be governed.

William Penn

It is worth acknowledging that there is some co-operative provision in Pakistan, for example there are a number of housing co-ops. It is equally worth acknowledging that there is a wider

third sector which contains various social enterprises, charities and housing associations. Some of these are in a grant funded arrangement with the state while others take a more trading approach to procurement.

Co-operative solutions, particularly when they are worker-led, require the support of trade unions. It is important to get the message across that co-operation is not privatization. Since trade unions are there to protect their members, perhaps co-operation should be promoted as a structure which can help protect their members. There is a need to make co-operative working the preferred option for workers in the service sector.

Local Government

Local government has played a leading role in Pakistan’s communities for many years and continues to have a key role to play. Support for co-operative values is not new to local government. Regional councils in particular funded and supported co-operative development. Pakistan’s local authorities have an important role to play in supporting co-operative businesses working in partnership with co-operative and mutual enterprises.

A wise government knows how to enforce with temper, or to conciliate with dignity, but a weak one is odious in the former, and contemptible in the latter.

George Greenville

Local Authorities need to be partners in developing mutual solutions with communities. Pakistan’s local authorities should work in partnership with co-operative enterprises to improve social services, develop anti-poverty strategies and to provide environmental justice for communities. Procurement polices designed to achieve social aims and maximize the benefits for local communities will always assist successful co-operative enterprises. We should challenge the fear culture and encourage best practice. Procurement legislation needs to be looked at and all local services should be considered for co-op options.

Moving to a co-operative model of service delivery would require a complete review of departmental structures within the local authorities existing political framework. We need to put in place now the support mechanism to underpin co-operative service development.

There is widespread acknowledgement that the way local authorities deliver public services is changing. Privatization is happening but co-operative solutions can put people in ownership and control and enhance democracy. We should be pro-active in looking for services which are due to be externalized and have a co-operative model ready to promote. Public services should be delivered according to need and any profit should be paid back into the community. We need to develop across local government, through education, a knowledge base of councillors and policy makers across all parties together with officers with expertise ready to champion the co-op model.

Planning

Planning is an issue that cuts across policy areas. We should see this as an opportunity to develop a co-operative approach to some of the greatest challenges in 21st century Pakistan. Planning, above all else, is about co-ordination of provision and co-operative models, particularly secondary co-operative models, provide an ideal solution in this context.

There are clear opportunities to develop co-op models to meet the needs of society to co-ordinate its approach to service delivery. For example, an industrial and provident society model could be used to create separate legal entities which would be responsible for linking up the shared responsibilities of the Health Service and local government and be democratically accountable to the communities they serve. This means extending co-operation beyond co-operation with a small “c” to creating structures which are fully accountable. It is important that co-operators take an active involvement in local planning and use it to engage with community groups.

As a Movement which is heavily involved in retail and property, we are well placed to provide socially responsible solutions to the problem of town centre development in Pakistan. The co-operative model would provide an ideal structure for town centre partnerships. Not just co-operation with a small “c” between those involved in supporting town centre development but actual business models which could be used to develop town centers in a way that communities would want.

We should seek to establish a consensus that co-operation is the default position. When planning new developments it is important to include play areas, community shops and centers where appropriate. Co-ops should seek to take advantage of community benefit clauses. The community benefit aspect should be seen as a way to develop new co-op businesses.

Too bad that all the people who know how to run the country are busy driving taxicabs and cutting hair

George Burns

Health

As co-operators, we view healthcare much in the same way we see every issue that confronts people, their families and communities – we believe that power should lie with the people. Communities have to take responsibility for health provision and we believe co-operative and mutual models of healthcare provide them with the best opportunity to do this.

The highly emotive campaigns which have arisen from proposals to re-design the delivery of acute and specialist services underlines the importance placed on the NHS by communities and the sensitivity with which politicians need to deal with the issue of health. The co-operative model could be applied to hospitals.

With the aging population, social care was highlighted is the type of service where the caring, sharing Co-op model should be an obvious option.

We believe that co-operative models would produce greater integration and would suggest that the evidence of co-operative healthcare provision overseas supports this contention. A key challenge for the provision of health services is to connect them with people the users, employees, patients and the wider community. It is essential to engender a type of ownership that enables stakeholders to feel that these services are run on their behalf and not for someone else’s vested interests.

We must address the issue of elections to Health Boards which would create an element of community involvement and accountability in health delivery.

Consideration should be given to the increasingly challenging subject of care provision in Pakistan. This is an area which requires partnership between the NHS and local government. It is also an area which may have significant potential for co-operative development and is an area being prioritised by Co-operative Development Pakistan.

We require action on pharmacy delivery and occupational health looking at co-operative rather than private solutions.

One method of overcoming the difficult informational requirements of the allocation models described above is by enacting a requirement that anyone wanting to purchase cigarettes must first purchase a ‘cigarette card’. The card, which could be based on the same magnetic strip (or computer chip) technology used for credit cards and ATM cards, would be issued to any legal-aged smoker who wanted to buy cigarettes and would have to be presented by the smoker each time she purchased cigarettes. A reaction of many readers may well be that our proposal gives too much information to government agencies, therefore creating a ‘Big Brother’ problem. We sympathize with that concern, but we believe the problem is not as significant as it may appear initially. First, it is not clear that the sort of information that the cigarette card system would generate is any different from the sort of information that the American public routinely provides to government and private agencies. In other words, it may be too late to worry about the sort of privacy concern that this proposal raises.

Jon D. Hanson and Kyle D. Logue quotes

Education

Public services are more concerned about the delivery of education as a service rather than curricular issues. However, it is worth saying that the issues of educational structures and curriculum are connected. The Co-operative Movement has an excellent record in education. When, in the past, co-operatives have delivered education, delivery and content have supported each other. We hope that development regarding co-operative schools will lead to a return to this link.

The work being done at present in Pakistan is to be highly commended and we hope this will achieve its objective of bringing co-operative ideas to every school in Pakistan. However, there is a long way to go. Co-operation offers solutions to many of the challenges of public service provision but co-operative solutions have been ignored because civil servants and politicians have no background knowledge in co-operation. Schooling system, almost without exception, completely ignores co-ops business models. Most teachers are still unaware of co-ops and therefore the ignorance perpetuates itself.

We recognize that education sits quite firmly within local government and that most people in Pakistan would wish it to remain so. However, we would argue that in the longer term it is not just the curriculum which should become co-operative but also the structures. We need to continue to discuss how we can further develop co-operative education in schools and to develop the ownership of the curriculum so that it is owned and managed by the communities it serves.

We should collate and build on best practice already in schools, such as the the work of unions, bringing new savings models into schools. It is essential to promote the co-operative model at school level and equally important to engage with the curricular drivers in Pakistan such as Learning and Teaching Pakistan.

For centuries it was never discovered that education was a function of the State, and the State never attempted to educate. But when modern absolutism arose, it laid claim to everything on behalf of the sovereign power….When the revolutionary theory of government began to prevail, and Church and State found that they were educating for opposite ends and in a contradictory spirit, it became necessary to remove children entirely from the influence of religion.

Lord Acton

It’s time to admit that public education operates like a planned economy, a bureaucratic system in which everybody’s role is spelled out in advance and there are few incentives for incentives for innovation and productivity. It’s no surprise that our school system doesn’t improve: It more resembles the communist economy than our own market economy.

Albert Shanker

PPP approaches should not be seen as a “magic bullet” and may be best suited to specific circumstances. As in all cases of public procurement, corruption remains a risk that must be carefully managed. As PPP projects are relatively new, lack of familiarity with the procedures may open up new corruption risks. On the other hand, greater emphasis on the delivery and measurement of outcomes in PPP procurement may introduce greater levels of transparency and accountability. The main advantages and disadvantages of PPP are summarized below:

ADVANTAGES

Makes use of private sector skills, modern technology, and efficiency

Forces the public sector to focus on outputs and benefits (rather than inputs) from the start

Brings in private capital and makes projects affordable

Risks are shared by the different parties

Budgetary certainty

The public sector only pays when services are delivered

Capital “at risk” is an effective incentive to make private companies perform.

DISADVANTAGES

PPP implies a loss of management control by the public sector and therefore may be politically unacceptable

Ability, skills, and sufficient capacity of the public sector to adopt the

PPP approach and create a good incentive and regulatory environment

Lack of private sector expertise

Does not achieve absolute risk transfer

Procurement can be lengthy and costly

Long-term relatively inflexible structures

PUBLIC SERVICE DELIVRY PROCESS


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