Make sure partnerships represent mutual support rather than painful...

Make sure partnerships represent mutual support rather than painful shackles, advises Pam Duke

According to the dictionary, a partner is one who shares with another or others in some activity, especially in business, where he or she shares risks and profits. In practice it is not always so clear cut. Partnership is an overused word, and people interpret it differently. Nor is it simply about sharing the work and sharing the rewards.

If we look at partnerships involving one or more parties joining together to plan or provide public services, one thing is clear. There needs to be a clear understanding and commitment to mutual goals. Every effort should be made to agree a shared vision for the partnership. This should engender a good relationship based on trust from the very beginning.

Facing the issues
Once you have established the problems that you are trying to solve with your own internal team, it is vital that you clearly communicate these issues to the other members of the partnership. Where there are a number of agencies working together it can be quite a task to ensure that the partnership will not only achieve its own stated objectives, but that it will continue to contribute to the achievement of your own organisation. Establishing clear outcomes from the partnership will help focus the ability to achieve mutual goals early on in the process. If people do not share a clear understanding and vision of what they are trying to achieve, the relationship is doomed even before it has warmed up.

Governance risks
The next stage is the how, when and by whom discussion. What skills, what knowledge and what resources can each partner bring to the table? This stage is often where relationships are tested, and where a lack of clear direction can result in endless fruitless discussions.

Informal partnerships certainly have a role within the public sector. However, many of these have no governance arrangements supporting them. This is not a problem while the partners are building the relationship and talking about what needs to be done. But if activities happen to become out of kilter with the main vision, heated discussions can occur. If no governance arrangements support the partnership, it can be difficult to remain focused and not get bogged down with a blame culture. This can be avoided by agreeing:

  • an approach to conflict resolution
  • each partner's financial responsibilities
  • the accountability of the various member bodies.
  • A simple governance framework document can be invaluable in promoting these aspects. It should be agreed early on in the partnership while relationships are good, rather than later when they may be slightly soured. This crucial step is often ignored, however, as people see it as red tape, rather than as a helpful framework which will give operating flexibility.

    Relationship risk
    How the partnership is viewed externally, for example by taxpayers, is also a significant issue. Communication is an essential element in success. For example, if there are perceptions that a local authority has teamed with unsuitable partners, and no clear partnership framework exists, there will be a negative impact on the ability of the partnership to deliver. Should the partnership fail, it will confirm the public's fear of poor value for money. At the end of the day, a local authority is an accountable body, and should bear this in mind when setting up the partnership framework.

    Output risk
    All parties need to agree a working definition of success. Are the priorities the ability to produce the goods, or to have the process and procedures in place for future dealings? Is it about the end result or is it about the journey? These issues need to be thrashed out in order for the relationship to have a measurable development.

    Partnerships do not just fail. There are many levels of failure. There are also many levels of success. Improving for the future means learning from current lessons.

    Partnership risk management
    There are many examples of the type of risks that organisations may face in respect of partnerships. Each member of the partnership brings its own risks to the party. The partnership itself will have its own risks. The delivery of the outcomes will also have risks associated with them. It is essential not only to identify these risks but also to establish who owns them, who will be responsible for managing them and who will act on them.

    Within partnerships, risk management is often brought in at the project delivery stage - looking, quite rightly, at the risks associated with the delivery of outcomes. If a standard project management approach is used then risk management will be a natural part of the process.

    But what is often forgotten are the strategic risks - the political risks associated with partnerships; the bigger picture business risks. These need to be identified and managed, where appropriate, early on in the development of the partnership, and throughout its existence, to improve the likelihood of success.

    Risk management methodologies go some way to solving these problems. While there is no standard checklist for success, as each partnership is unique, there are some common themes. Maintain a clear sense of purpose, outline roles and discuss the risks at all levels.

    Pam Duke is principal consultant for Zurich Municipal Management Services

    Risk management played a key part in the preparation of the single tier authorities for comprehensive performance assessments (CPAs) last year, according to 61% of respondents to a new survey. 82% of the authorities graded 'excellent' in the CPA, agreed on the practical importance of risk management. 84% of those not graded 'excellent' will be reviewing and updating their approach to risk management in preparation for the next CPAs.

    CPAs are a UK Government initiative, designed to help councils deliver better services for local people, helping them identify actions they need to take to deliver this improvement.

    The survey, conducted by Zurich Municipal Management Services, also revealed that 61% of district councils were confident that their authority's corporate governance arrangements will meet the standards expected by the CPA inspectors. However, 24% stated that they 'didn't know' and 14% were not confident.

    With careful planning and risk assessment from the outset, the reservations surrounding partnership working can be dispelled for good, says Gemma Rogers.

    Public Private Partnerships (PPPs) including private finance initiatives (PFIs) can enable the public sector to obtain the modern, quality facilities it so desperately requires, as well as gaining expert advice and input from its private sector counterparts. PFI contracts granted last year amounted to around £8bn, with all indications suggesting that this figure will increase this year and for the foreseeable future.

    However, there is real anxiety that the traditional public service ethic is in danger of being sacrificed to the profit motive which drives the private sector, and that there will be a shift in focus from the quality the public sector strives to accomplish, to a service dominated by cost at the expense of quality.

    One negative perspective is that the private sector is screening the public sector for business opportunities, a steady funding flow and good investment return, sparking concern about losing tradition in the public sector. This potential exploitation of the taxpayer is being watched carefully by the National Audit Office and the Public Accounts Committee after several examples of a private partner achieving exceptional levels of profit from its partnerships.

    On the positive side, there is recognition that carefully planned and managed partnership working can ease many of the public sector woes and offer effective solutions. The number of demonstrably successful PPPs is increasing. The education and employment sectors have demonstrated particularly favourable levels of success, with more than 50 deals in place worth over £700m. And these have enabled significant improvements, for example in the quality of accommodation and availability of IT facilities for schools across the country.

    One of the advantages of PPPs, promoted by the Government, is that they allow risk transfer to the private sector. However, in reality, the private sector will not accept new risks at no charge, so the cost has to be built into the contract. In addition, if things were to go wrong, it might not be possible for the public body involved to become detached. There are strong hints that, even where insured costs are picked up by the private partner under contract, the wider impact of the problem will continue to rest with the public body.

    Since many of the projects undertaken become extremely high profile, one of the biggest risks involved is to the reputation of the partners. This may not present too much of a threat for the private partner, which is likely to have formed a subsidiary specifically for the partnership, thus shielding its own corporate brand. However, the public sector partner will usually be less protected and a failure may potentially affect the organisation's future ability to attract private sector partners.

    Further, although each case is unique, many PFI projects are often aimed at leading edge innovative activity. By definition they will be more prone to failure, particularly if the associated risks are not clearly identified from the outset and managed from the planning stage.

    Tackling risk early
    One of ALARM's key concerns is that the risk manager is often not involved at the crucial initial planning stage of the partnership project, although this is the time when he or she could make the most positive contribution. This can result in major risk issues only being identified once the project is in full swing, and those spearheading it may wish to deny that the risks really exist. However, where good risk management practice is embedded into projects at an early stage, with clear allocation of responsibilities and a shared understanding of the aims and objectives, ALARM endorses partnership working. Indeed, one of its own key objectives is to work in partnership with others to promote good risk management, as exemplified by the recently launched risk management standard.

    Here ALARM collaborated with the Institute of Risk Management and the Association of Insurance and Risk Managers. Despite common areas of activity, it was the first time the three bodies had worked so closely together and, by pooling ideas and resources, they produced a document which provides a comprehensive framework for risk management, clearing up any past ambiguity and providing guidance for any organisation aiming to embed risk management.

    Such a success highlights clearly the benefits that partnerships can deliver for all those involved. And if we progress with carefully planned, risk-assessed, PPPs, the extra resources and services provided can bring much needed improvements to the public infrastructure.

    With extensive research and a properly thought out plan, partnership agreements will bring benefits. The skills of each partner can be combined in delivering complex services to the benefit of the public in a way which may not be possible for an organisation working alone.

    Gemma Rogers wrote this in association with ALARM, the national forum for risk management in the public sector, Tel: 01395 223399, .