Elective Public Management – Week 5 Organizational Structures/PPP

1. Elective Public Management – Week 5Organizational Structures/PPP • Prof. Dr. Andreas Bergmann • Institut für Verwaltungs-Management • andreas.bergmann@zhaw.ch

2. Preliminary note • Structures (follows Processes) follows Strategy • Alfred Chandler, 1962 (later annotated by Jack Welch) • … is equally valid in the Public Sector!

3. 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

4. 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 of the entity

5. Starting Point: Legal forms • 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 Influence of politics

6. 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!!!

7. 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

8. 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

9. 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

10. 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

11. 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

12. 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

13. 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

14. 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)

15. PPP as an additional structural option Source: Bennett et.al.(2000) in Bult-Spiering-Dewulf (2006)

16. PPP as an additional structural option • Service concessions Source: WORLDBANK, 2007

17. 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

18. 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