Elective Public Management – Week 5 Organizational Structures/PPP

Building Competence. Crossing Borders.

Elective Public Management – Week 5

Organizational Structures/PPP

Prof. Dr. Andreas BergmannInstitut für Verwaltungs-Management

andreas.bergmann@zhaw.ch

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Preliminary note

Structures (follows Processes) follows Strategy

Alfred Chandler, 1962 (later annotated by Jack Welch)

… is equally valid in the Public Sector!

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Organizational Structures/PPP

Overview

Starting point: Legal Forms of the Public Sector

Traditional structure: division of labour according to Fayol/Weber

Influence of New Public Management and ICT

PPP as an additional structural option

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Starting Point: Legal forms

Legal forms determine the degree of autonomy

• Administration unit

• Department

• Dependent agency (without an own legal identity)

• Independent agency (with own legal identity)

• Incorporated company under public law

• Incorporated company (limited company, companionship, foundation) under private law

• Incorporated company in private ownership

org.auto-nomy

ofthe

entity

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Starting Point: Legal forms

Influenceof

politics

Legal forms determine the influence of politics

• Administration unit

• Department

• Dependent agency (without an own legal identity)

• Independent agency (with own legal identity)

• Incorporated company under public law

• Incorporated company (limited company, companionship, foundation) under private law

• Incorporated company in private ownership

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Traditional: division of labour

Top level structure

• Divisional structure predominant

- Ministries (of Education, Justice, …)

- Department (of Finance, …)

- Divisional Units (in smaller entities, such as local administrations, i.e. tax collection unit)

• Structure often similar to Classification of Function of Government (COFOG, issued by UN/IMF)

- Caution! The expression „function“ or „functional classification“ does NOT

coincide with the „functional organizational structure“, as it is used in

Organizational Theory!!!

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Traditional: division of labour

Functional Classification (~divisional structure)

• COFOG = Classification of Functions of Goverment- 01 General Public Services

- 02 Defence

- 03 Public Order & Safety

- 04 Economic Affairs

- 05 Environmental Protection

- 06 Housing & Community Amenities

- 07 Health

- 08 Recreation, culture & religion

- 09 Education

- 10 Social Protection

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Traditional: division of labour

• Swiss Variant

- 0 General Public Services

- 1 Security

- 2 Education

- 3 Leisure & Culture

- 4 Health

- 5 Social Welfare

- 6 Traffic

- 7 Environment

- 8 Economic policy

- 9 Finance & Taxation

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Traditional: division of labour

Main issue: Shared services

• May be substantial in larger administrations

- Communication

- Personnel

- Finance

- ICT

• Typical area of conflict

- Cost (economies of scale!) vs. Customization

- Result: decentral solutions predominant

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Influence of NPM/ICT

Stances of NPM

• Organizational structure reflecting products (services)

- Product = smallest entity of delivery, which may be demanded by (external) customers

- Grouping either- by groups of products; or- groups of customers

• Outsourcing of shared services

- Shared service centers

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Influence of NPM/ICT

Limitations by ICT

• ICT is process oriented (rather than product oriented)

- Heterogeneous products in public administrations require tailored processes and ICT

- But: Identical support processes do not require tailored processes and ICT

- Large ERP systems (SAP, Oracle) usually cover both

• Heterogeneous ICT is major cost factor

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Influence of NPM/ICT

eGovernment

• More than a webpage

• Customer orientation:

- E.g. „circumstancial“ approach (www.win.ch)

• But: Integration of processes crucial

- Data exchange

- Web data in databases, responses into databases

- Limitation: electronic signature

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Influence of NPM/ICT

Bottom line

• External perspective

- Introduction of product/market oriented structures

- Citizen should no longer be required to know the structures

• Internal perspective

- Integration of processes

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PPP as an additional structural option

Preliminary definition of PPP

A PPP is an agreement between government and a private partner(s) (that may include the operators and financiers) according to which the private partner(s) delivers the service in such a manner that the service delivery objectives of government are aligned with the profit objectives of the private partner(s) and where the effectiveness of the alignment depends on a sufficient transfer of risk to the private partner(s). (OECD)

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PPP as an additional structural option

Source: Bennett et.al.(2000) in Bult-Spiering-Dewulf (2006)

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PPP as an additional structural option

Service concessions

Public finance Concession

Government

Concessionaire

Operating Company

Construction company

Service contract

Operating contract

Construction contract

Finance providers

Government

Finance providers

Operating Company

Construction company

Finance contract Operating

contract(s)

Construction contract

Source: WORLDBANK, 2007

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PPP as an additional structural option

Structural effects

• In many but not all cases: separate entity is created (or an existing one is appointed)

- Special purpose entity

- Concessionaire

• In all cases: Responsibilities are shifted away from public administration

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References

- Bolz, U. (2005) Public Private Partnerships in der Schweiz.- Bult-Spiering, M., Dewulf, G. (2006) Strategic issues in Public-Private Partnerships. An

international perspective.- The World Bank (2007) Improving the management of concessions: Better reporting and a

new process for deciding when to use a concession