Making the Elephant Dance

We once had a government that tried to do everything by itself. In addition to the business of governance, it also actively dabbled in bread making to aircraft production and banking to hotels.  Over a period of time it has accepted that it should focus on its core responsibility of governance and has attempted to move out from non-core sectors. Therefore it has, in the recent past, started using private sector capital and private sector involvement to augment and strengthen governance and to provide public good

Some of these partnerships have been successes and some failures.  The success and failure of such joint initiatives depend on many factors.  The willingness of the key bureaucrats driving the project to take bold decisions and the scruples of the private sector partner are two critical factors of success.

The worst combination is when we have an indecisive officer and a scrupulous service provider. In this case the project will suffer and the service provider will suffer humongous loss. This is the reason why many private sector companies desist from working for government.

The next worst combination is when we have an officer who is decisive and absolutely corrupt teaming with an unscrupulous service provider. In this case they will clean the tills and the project will suffer.

The best result is when there is combination of decisive and result oriented officer and scrupulous service provider.  This is a road fraught with risks because this will involve judgement calls and judgement calls involve calculated risks based on information available at that point of time. But unfortunately these judgment calls often are often misinterpreted. This then leads to both parties being accused of the personal agenda behind their actions.  They get equated to the worst combination described above. Both end up suffering for the decisions they have taken. That is why this is a rare combination. However what we need today is this combination.  

This is less of an issue when outcomes of the envisaged projects are very clear and the scope of private sector participation can be articulated un-ambiguously. In these cases it will be possible to develop a clear contract and monitor the performance against the clear milestones in the contract. However in projects which are transformative in nature this becomes all the more critical. In this kind of project it will not be very easy to clearly develop the implementation plan and identify clear milestones. Therefore there will be many occasions, based on ground realities, when judgement calls are required to be made and course corrections are required to be effected. In such cases the combination of visionary and courageous leadership from the government and scruples of the service provider becomes very critical. 

In typical government procurement such a combination which will effectively enable active management will be very difficult to implement. This is the reason why many of the transformative projects in Private Public Participation fail.

This is especially true for IT projects. Today many top-notch IT companies are unwilling to work with government because they feel that government does not understand or appreciate this dimension. On account of this blindness on the part of the government buyer, for honest service providers government projects are loss leaders. Especially with the alternate business opportunities recovering around the world it will be difficult for the government to to attract good IT companies to take serious interest in the e-enablement of government projects.

The most effective way to handle such transformative projects is to carve these as independent projects and hand these over to a Special Purpose Vehicle (SPV) which has been suitably structured with sufficient flexibility to take nimble decisions and relevant mid-course corrections when needed. It is also important to have the right kind of leadership, team with relevant expertise and experience and also a supervisory body that recognizes the different approach needed for these SPVs to succeed. Especially the leadership vision and courage to take decisions will be very critical.  Delhi Metro is a very visible example of a successive implementation in this model.

There are many more transformative ideas that are awaiting such interventions especially in the area of digital transformation. We hope that the clear mandate the government has this time will help them take this path with more confidence. 

“Planning is helpful. If you don’t know what you want, you’ll seldom get it. But, no matter how well you plan, you will fare better if you expect the unexpected. The unexpected, by nature, comes unseen, unthought, unenvisioned. All you can do is plan to go unplanned, prepare to be unprepared, make going with the flow part of your agenda, for the most successful among us envision, plan, and prepare, but cast all aside as needed, while those who are unable to go with the flow often suffer, if they survive.”   David W. Jones, Moses and Mickey Mouse

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