Allocation of risk in public private partnerships in information and communications technology

Abstract

A public private partnership (PPP) is an agreement between a public and a private party to achieve a strategic objective. The PPP model is based on three principles: risk allocation and transfer, affordability, and value for money. Traditionally, PPPs have been leveraged for hard service development such as infrastructure development. The advancement of technology within the context of the Fourth Industrial Revolution (4IR) has created new opportunities and risks for PPPs as important mechanisms for the promotion of development. The 4IR has implications for government service delivery, which have brought about an increased demand for service delivery innovation and the development of information and communications technology (ICT). Although PPPs have traditionally focused on hard services, it is important to consider PPPs for soft service delivery. It is therefore necessary to rethink the role of the PPP model as an alternative service delivery mechanism. The aim of this article is to discuss risk allocation in ICT PPPs. The research approach is qualitative in nature. The research method is based on a desktop analysis of literature and secondary data utilising unobtrusive research techniques such as conceptual and documentary analyses. The article identified various risks and opportunities for PPPs for service delivery innovation. These partnerships are often faced with high levels of uncertainty in terms of funding, level of stakeholder commitment, and complex relationships. Other risks include vendor financing, market risk, intellectual property (IP) risk, data governance, and regulatory risk. The deployment of ICT can reinforce and expand PPPs beyond all previous limitations and boundaries. This research makes proposals for good practices for risk allocation in ICT PPPs.