MANAGING IN A MIXED ECONOMY Essay Example | Topics and Well Written Essays - 2750 words

MANAGING IN A MIXED ECONOMY - Essay Example In other types of contracts like the private finance initiative, the private sector makes the capital investment through a contract by the government while the government might wholly or partly bear the cost of providing the service. In the UK, PPP has had a long history. In 1992, the private finance initiative (PFI) was introduced by the Conservative government. This was the first official and systematic program aimed at encouraging public-private partnerships. Over the years, this initiative has been expanded to create efficiency and to enhance the realization of â€Å"value for money.† It must be emphasized that PPP has been successful in a number of ways throughout the UK. Various programs have successfully been accomplished through this initiative and the trend continues. In the same way, the initiative has had is fair share of challenges (Dodgson & Gann, 2008). Some of the programs initiated through the private finance initiative have run out of budget without giving the value for money. The core objective of PPP is to ensure a proper partnership without diminishing either sector. In a world where innovation and strategy implementation seems to be the only way forward, it is indeed important for the private and public sector to collaborate in offering services to the people. London Underground One example of PPP is the London Underground which is a metro transportation system serving a larger portion of the greater London. Spanning over 402 kilometers with 270stations, the Tube is a subsidiary of Transport for London. Presently, 91% of the operational expenditure of the system is covered by fares paid by the passengers. Under the PPP, there were three infrastructure companies which were responsible for the renewal and maintenance of the London Underground. Indeed, it is realized that the PPP was a great step in enhancing the efficiency of the rail system and learning some of the issues which should be a dressed in order to improve such future partn erships in the country. In a way, the London Underground PPP is a classic case of a public private partnership which realized a number of successes and was also plagued with many challenges. In the context of strategy and innovation, it is realized that partnerships are an important way of benefiting through the good strategy and innovation in the private sector and the mechanisms of the government. The essence of this partnership was basically to develop and create an efficient infrastructure for London which could become a model across the world. As such, the London Underground Limited was created as the public sector mandated to operate and maintain this metro system in London. PwC was in charge of reviewing the options available in terms of strategy and funding while also ensuring the continual development of the initiative. At the end of the review process, the PPP was clearly outlined. It involved a ?37.7 billion of investment spanning a period of 30 years in addition to a ?4. 6 billion of private funding. Private sector consortiums were therefore allowed to take charge of the rehabilitation and maintenance of the Underground system in order to enhance its performance and ensure innovation and proper strategy implementation. In addition to the private financing, the government provided annual grants and