Public Private Partnerships (P3s) in Cities

Reading Erik Larson’s book “The Devil in the White City: Murder, Magic, and Madness at the Fair that Changed America,” I was fascinated by how a determined group of business people and citizens in a few short years funded, designed and built the Columbian Exposition for the Chicago World’s Fair in 1893. Designed by John Wellborn Root, Daniel Burnham and Frederick Olmsted, based on what they thought a city should be, the World’s Columbian Exposition influenced architecture, style, and smart cities during the industrial age.

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Looking West From Peristyle, Court of Honor and Grand Basin of the 1893 World’s Columbian Exposition (Chicago, Illinois)
This media file is in the public domain in the United States.
Date: 1893
Source: The Project Gutenberg EBook of Official Views Of The World’s Columbian Exposition
Author: C. D. Arnold (1844-1927); H. D. Higinbotham

Today is not much different. Around the world today, cities of all sizes, want to become “smart cities.” Municipal leaders expect to harness technology to transform service delivery and improve quality of life for citizens. Smart cities projects range from smart lamp posts,  to better water management (http://scn.sap.com/community/utilities/blog/2016/01/27/smart-water-moves-into-the-focus) to sustainable lights, to improved resilience to natural or unforeseen events. Smart cities projects involve devices and sensors to digitize information for analysis, which enable insights and better outcomes for constituents.

How do cities become smart cities in the 21st century?

Investment in devices, sensors and connectivity is an important step to becoming a smart city. This investment is required, whether a smart city is a greenfield investment, like the Deep Ellum project in Dallas, Texas or rebuilding as in Fujisawa, Japan (see also http://fujisawasst.com/EN).

 A city needs both financial resources and technical expertise. According to a recent report (http://bv.com/reports/2016/smart-cities) by Black & Veatch, nearly 70% of survey respondents see budget constraints as a hurdle to smart city management. Slightly over 49% view lack of resources or expertise as an obstacle. The corporation formed to create the Columbian Exposition is similar to today’s public-private partnership (P3). Technology, engineering, and / or financial companies form P3s with local government to share responsibility for investment needs and future returns on investment. Dallas Innovation Alliance brings together stakeholders from the City of Dallas, corporations, civic and non-governmental organizations, academia and private individuals to support the city’s ongoing evolution as a forward‐thinking, innovative, ‘smart’ global city. Another example of public-private collaboration  is SUPERPUBLIC together with CityInnovate in San Francisco, California, which brings federal, state and city government together with the private sector and academics together in an innovation space to collaborate to solve problems. Start-up firms can also help local governments gain tools and resources for citizens to address urban challenges, while helping start-ups find use cases to help them succeed in the government technology market. The Start-up in Residence programs in the San Francisco Bay area promotes regional government technology research and development.

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So the concept of public private partnerships is not new.  Governments are taking them to a new level with new forms of collaboration involving private sector, start-ups and academia. Everything old is new again. Or something like that.

Are there any P3s in your neighborhood? Please share with us.

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6 Comments

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    1. Marlyn Zelkowitz Post author

      Thanks, Marlene! Chicago was very forward-thinking. The Columbian Exposition had moving walkways, elevators, and new electric street lamps powered by alternating current. In this sense, Chicago played a role in adoption of alternating current as the electrical standard in the US. Now street lights are LED, can be controlled remotely, and may house additional sensors, such as air quality monitors or gunshot detectors to improve public safety. Very interesting indeed!

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  1. Tony Han

    Nice Marlyn..  agree that these P3 collaborations are key for progress and exemplify a great way forward when constraints tend to inhibit one avenue of transformation.  Out West, these partnerships are well support with many proponents…   improved water management is top of mind, not just across the entire west region, but also across the globe (rightfully so).  Thanks for highlighting these examples, all good points that should be pursued and accelerated

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    1. Marlyn Zelkowitz Post author

      Hi Tony,

      Thanks for your comments. Water management is a great use case. McKinsey Global Institute, in their June 2015 report, “The Internet of Things: Mapping the Value Beyond the Hype” included water leak identification, analysis of flows, and waste reduction in their estimated value of US$ 930 billion – 1.7 trillion in value for IoT in cities by 2025. You can find the press release and report here

      The report talks about the “what”. Use cases, where the potential value is, not just in cities, but in many industries. This blog is about the “how” to deliver the value – bringing together cities, established businesses, academics, start-ups, non-profits, and other stakeholders to work on smart city projects.  We see this approach being used around the world.

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  2. Jim White

    Marlyn – great to see these approaches beginning to surface in the Smart City space.

    There are many examples of successful (and unsuccessful) large scale public-private partnerships (“PPP’s/P3’s”) in cities in the UK – particularly around public assets (education, healthcare) and infrastructure (roads, lighting). I have personally been involved in setting up special purpose vehicles to regenerate cities/drive economic prosperity and with the right meeting of minds, cultures and common goals, these models can be extremely successful in accelerating progress for cities, typically short on financial resource but perhaps rich in other assets.

    I guess we need to think about the deliverables from the partnership (the “what”) and the economic model that sits behind (the “how”). This is a fairly nascent area for PPPs. There was a use case in a German city where the private sector partner effectively financed LED lighting across the city and when doing so installed IoT sensors capturing data on traffic, vehicle movement and on street parking.

    This was in turn monetized for navigation, parking, route planning creating a genuine win-win for both parties. Data became the ‘new economy’ in that model – so these approaches are possible, it simply requires a robust use case, a business plan and the right mindset.

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    1. Marlyn Zelkowitz Post author

      Hi Jim,

      Thanks for your thoughtful comments. Indeed, the challenge is always to figure out the right model and risk/reward structure for the many stakeholders involved in any public private partnership. We have seen successful versions for infrastructure, such as utilities and toll roads – but we have seen these vehicles struggle to meet their goals.

      I’m so glad you mentioned the German city. The project director will speak at the Smart Cities Week in Washington, DC at the end of September. The event promises to be interesting – and with a little luck, perhaps I will attend.

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