Business Insights: Public Private Partnership – Why DEI is the Key To Success

Learn why diversity, equity, and inclusion (DEI) are crucial for success in public-private partnerships and how it can impact businesses.

Public private partnerships (PPPs) are a contemporary means of implementing private sector provisions to help meet the increasing demand for public infrastructure (Yescombe, 2007a). Equity and inclusion are components of diversity, equity, and inclusion (DEI) and are addressed in this article. Public Private Partnerships in Infrastructure: A Study on Performance and Equity Improvement was a qualitative phenomenology study aimed to establish the scale of underperformance and general success of PPP infrastructure projects, and the targeted population is in eastern Missouri of, the United States. The methodology was qualitative, and the design was phenomenology. The theoretical framework for this study was collaborative governance, and the topic was PPPs. Collaborative management exists where more citizens and groups have opportunities beyond monitoring and providing input to elected bodies.

Equity and Inclusion

Qingbin and Zhang (2021) referenced a research gap in minority and women-owned enterprises and diversity issues concerning government projects and PPPs in extant literature. However, good news, particularly with disadvantaged business enterprises (DBE), researchers at the University of Maryland’s A. James Clark School of Engineering found that PPPs have a better record of promoting equity than assumed. PPPs set higher US Department of Transportation’s (USDOT) DBE program goals than do Design Bid Build (DBB) projects. Qingbin and Zhang’s (2021) research is one of the first to examine the correlation between methods with setting and attaining DBE goals.

DBE goals are a percentage of expected contract dollars awarded to minority and women-owned businesses participating in federally funded USDOT projects. For example, the study showed that in Ohio, value-weight DBE goals stood at 14.3% for PPPs, 10.7% for Design-build/Construction Manager at risk, and 9.2% for DBE; in Texas, the numbers were similar at 12.8%, 9.9%, and 8.0% respectively (Qingbin & Zhang, 2021). DBE goals showed that they are a robust predictor of actual DBE attainment. Further, large PPPs projects are incentivized to promote diversity and equity because of the public scrutiny these large and high-profile projects often generate (Qingbin & Zhang, 2021).

Today, there is a diversity gap among senior executives of critical industries such as business, academia, technology, media, public administration, and urban planning. The well-documented glass ceiling holds women and other visible minorities from acquiring leadership positions, and there is now a glass wall responsible for segregation by job type and profession within the industry. A scholarly and practitioner study gap exists between gender and ethnic diversity in the infrastructure sector and the PPP industry. Most senior leadership in government departments and firms engaged in PPPs are consistently male and lack diversity (World Economic Forum 2016). Moreover, literature documenting the scale of the diversity gap, its cause, or its impacts and implications is negligible (Siemiatycki, 2019).

Diversity matters in government and PPP leadership; the prescriptive declarations on the equity of achieving diversity in organizations and workplace diversity at prominent levels of organizations are associated with various outcomes that could be significantly relevant to the infrastructure projects implemented through PPPs. Theories of represented governance posit that when the demographics of an organization’s leadership are consistent with the demographics of the population, policy decisions are more likely to meet the interest of these populations (Sneed, 2007). PPPs in infrastructure participate in large projects, constituting facilities that transform communities.

Further, diversity in the senior management of organizations involved in PPP projects may be necessary for the talent pool of skilled leaders responsible for complex, expensive, and transformative projects (Siemiatycki, 2019). The literature gap on diversity issues in general and in PPPs may contribute to soft factors regarding human capital diversity implications in the performance of PPPs and complex factors related to engineering and technology requirements in PPP projects.

As observed in the UK and Ireland, the housing sector requires substantial capital investment, maintenance, and operating expenditures. As such, governments’ budget allocations for housing and the building sector are substantial and benefit from the advantages of PPPs (Batra, 2020). Nonetheless, there are very few studies involving PPPs and the housing sector in Europe (Batra, 2021). Identified barriers suggest that PPPs have issues with housing, which is a commodity, not viewed from a contextual perspective.

Herein lies the hurdles that policy, systems, and governance must face in utilizing PPPs in housing. Also, this requires structural reform in the universal system of governance and the PPP practice. Finally, the enormous growth of PPPs across sectors and the interpretation of PPP in housing must be better documented (Batra, 2021).

PPPs are more than complex technology, machinery, or raw materials. The literature review has shown that soft factors such as leadership, organization design, collaboration, the level of effort, and politics determine the success or failure of PPP projects, and these soft factors are inclusive of the VfM concept.

This article was informed by the Equity and Inclusion section of the research study: Public Private Partnerships in Infrastructure: A Study on Performance and Equity Improvement.

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