P3 projects are understood to be uniquely ripe for innovation, as they combine procurement and long-term collaboration between parties. But what kinds of conditions create the most innovative P3 projects?
Researchers in Belgium studied 24 P3 projects, through surveys and interviews with stakeholders, and took one of the most empirical approaches yet to answering the question: what spurs innovation in P3s? They published their findings in a recent issue of Public Management Review.
From the paper:
We started from the premise that both ‘procurement for innovation’ logics and ‘collaborative innovation’ logics might cause the creation of innovation in PPPs. None of these conditions were however necessary to create high levels of innovation. Particularly, the conditions related to procurement for innovation logics were not necessary, which goes against the assumptions in the literature that procurement for innovation is more important in PPPs than collaborative innovation. However, procurement and collaboration seem to have combined effects on innovation in PPPs. Design freedom complements and reinforces information sharing and network management in the phases after contract close and exhibit effects on the innovations. Innovation in PPPs is a process situated in a dynamic environment and influenced by combinations of multiple types of conditions, acting on multiple points throughout the lifetime of the project.
First, innovation through PPPs does not solely depend on contractual stimulation. Researchers and practitioners need to consider innovation as something that is not simply controlled for by procurement-related conditions at the start of a project. Innovations might emerge from dealing with random challenges in the design and construction processes. Hence, both public and private managers need to be aware of these innovation opportunities during the processes after contract close, instead of solely relying on the stipulated conditions in the contract. Private managers need to be open for feedback of the public partner during the construction phases and public managers need to recognize the importance of real collaboration with the private partner to develop innovative ideas, instead of just ‘demanding’ innovation through the contract. Policy makers need to be aware that setting up PPPs to create innovative services only works if the public and private partners are willing to invest time and resources into collaborative activities. Our research indicates that PPPs that do not stimulate these collaborative activities are less likely to generate innovation.
Second, design freedom, information sharing and network management not only complement but also reinforce each other in enhancing innovation. Designing an environment in which exploration can occur (through design freedom), reinforces the potential impact of information sharing and network management on generating innovation. Public and private managers need to be aware that stimulating design freedom opens the door for additional innovation dynamics that work in conjunction with design freedom (i.e. exchange of information, exploring ideas and connecting people).