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Public-Private Partnerships Add Routes to ‘Smart Cities’

June 6, 2017

Kathleen Laney and Matthew Wallace

On the road to any “smart” city’s successful transformation, public-private partnerships (PPPs) are key components. Governments alone do not have all the resources required to facilitate integration of all smart city technologies.


PPPs can remove some of the barriers that smart city projects confront. Implementation challenges in the public sector, such as lack of public funding, ineffective procurement processes and technical skills gaps, can be addressed with private partnerships that bring funding, efficiency and valuable knowledge to cities as they begin the transition to 21st century “smart cities.”


For cities navigating this transition, PPPs can leverage the resources necessary to provide sustainable and scalable solutions. Through such partnerships, governments get access to knowledge, ideas and technology, while the private sector receives the benefits to scale projects that only governments can provide.


As such, these partnerships can create symbiotic relationships in which both parties benefit and achieve that which they could not separately.


Financial Benefits


Due to limits imposed on public spending and shortages in public financing, the required investments for the development of smart city initiatives are often unavailable. PPPs reduce the government’s need to take on debt, identify accurate costs for various projects and improve planning to ensure fair pricing and realistic timelines.


These partnerships also distribute the risk associated
with such massive investments among parties that are capable of managing and reducing this risk.


These partnerships also distribute the risk associated with such massive investments among parties that are capable of managing and reducing this risk. Private sector companies are less exposed to political volatility that can hamper continuity of long-term projects.


Because of the length of smart city projects, lasting relationships are built that include adaptable and relevant PPP financing and contractual mechanisms. In developing smart cities, municipalities could collaborate with companies both large and small to further their development and achieve growth.


Ultimately, smart city PPPs should become flexible partnerships between municipalities and private entities that introduce and update smart technologies, while creating real and lasting benefits for all parties, as well as the citizenry of the city itself.


While no two PPPs are alike, there are forms of PPP models most commonly used to manage and finance smart city projects.


Traditional Public-Private Partnerships


The most typical PPPs are medium to long-term arrangements between public companies and private sector entities. Under the terms of such arrangements, the public-sector community services are provided by private sector companies with a clear and defined agreement on the goals of the delivery of services to the public sector.


While PPPs exist in a variety of municipal interests, mass transportation and parking are two of the most common and significant areas in which these relationships are created and developed. Three key components to PPP development are:


Financial setup.


Sharing of technical knowledge.


Ease of scalability.


‘Smart city’ PPPs


Smart city PPPs share many of the aspects of traditional PPPs, while expanding on the scope and applicability of these partnerships. They can often represent projects that are smaller and more flexible in scale than traditional PPPs, and are frequently, as one would expect, technology-based in nature.


Technological innovations can create non-traditional challenges for PPPs, such as the need for staff and employees with the requisite training and skill set to implement the innovations; and the potential for resistance from the public that is intended to benefit from the introduction of smart technology.


Thus, smart PPPs share the three key components articulated above while adding a few others:


Financial setup.


Sharing of technical knowledge.


Ease of scalability.


Visibility and justification to citizenry.


A workforce with the skill set, training and knowledge required


Keys to success


One key to successful PPPs in developing smart city initiatives is to learn from previous PPPs’ experiences, not only from within your own municipality, but also from smart city PPP projects around the world.


For example, smart transportation programs have, in particular, been an aspect of smart city development In the U.S. Through “smart” transportation, municipalities see benefits, including improved pedestrian and driver safety, decreased traffic congestion through smart traffic and smart parking technologies, and positive impacts on long-term sustainability.


Ultimately, smart PPPs can have numerous benefits to private enterprise and, of course, the municipality in question. Although successful implementation must be judged over a longer term than traditional business developments, smart city PPPs can and should result in the following:


Financial benefits and efficiencies.


Risk management through partnerships.


Faster growth and innovation through broader access to expertise.


Improved access and efficiency in public services for the citizenry.
Increased economic development.


In conclusion, these public-private partnerships are an outstanding tool for cities to foster growth and move more rapidly and effectively in the direction of 21st century modernization, and in ultimately becoming a truly “smart” city.


Kathleen Laney, President of Laney Solutions and a Contributing Writer for Parking Today, can be reached at kathleen@laneysolutions.com. Contact Matthew Wallace, President of Wallace Consultants, at wallacemnw@gmail.com.



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