Smart cities: are public-private partnerships the way forward?
The rise of smart citiesis providing unprecedented opportunities for mutually beneficial public-private partnerships to provide new business opportunities, cost efficiencies, and greater access to specialist skills and expertise.
Deflecting initial costs from the public purse to private investment is significant with just 16 per cent of cities able to self-fund required infrastructure projects, according to research from Deloitte.
Smart city collaboration is a lifeline for startups that need the public sector for their initiatives to come to life, while city governments are increasingly hungry for data to inform approaches on everything from policing, emergency response, waste management and public transport. And dwindling budgets mean there’s increasing pressures to use data as efficiently as possible to glean maximum value.
But collaboration isn’t always straightforward, and one of the biggest barriers to smart cities being rolled out is the different ways in which the private and public sectors work.
While private companies typically aim to provide solutions that can be easily rolled out across cities worldwide with minimal tweaks, some argue that for smart cities to reach their potential, technology must be tailored specifically for one place and its population.
Public organisations also tend to be more risk averse and smart city projects can be risky, which means a lot fail to get off the ground without access and funding from government agencies.
Dan Dowling, urbanisation and cities leader at PwC, says public-private collaboration is fundamentally important for a smart city, but finding the right balance has been difficult.
“This is partially characterised byprivate companies that look to offer potentially transformative products or services to cities, but in spending areas cities have not always had the time to build capacity in,” he says.
“Because many products and services are new, cities are not always able to discern between solutions which will work well and those that don’t offer value for taxpayers’ money.”
Mr Dowling says tension has been sparked by the rise of e-scooters and dockless bikes in many international cities in the past 12 to 18 months.
“The private sector has provided a last-mile mobility solution with little or no public investment, but market saturation and implementation issues press local governments to regulate a new service in the city,” he says.
Private organisations have more flexibility and exist to make a profit, whereas governments are reliant on funding, and projects can be dropped or suspended without notice if funding changes. Private companies generally keep their procurement activities confidential, while public organisations need to be transparent about how money is being spent.
The financial and time pressures on councils to deliver smart city projects means they may require help and resources from third parties, and are unable to do everything themselves to keep to deadlines and budget. For this reason, some promote the use of open source technologies to make collaboration easier and provide data across the council in a standardised format. But tech companies can find it difficult to work with open source.
