As published in the Mandarin March 11, 2022

There is an often-unspoken contributor to blowouts in government projects, costs and timelines (which often leads to further time and costs in disputes) and that is the public and private sectors general misunderstanding of each other’s view. The actual monetary impact of this struggle is unknown, but there is significant value lost because of it.

As a consulting firm working on large scale, complex, government projects, Kiah Consulting has witnessed this many times.

“Both sides lack the experience and skills to understand how the other thinks, or don’t sufficiently value other perspectives,” says Kiah Managing Director John Glenn. “That invariably leads to blowouts in project costs and timelines, and disputes.”

To understand how to make improvements, it’s important to get a handle on what factors lead to this public-private sector misunderstanding.

The first factor is a lack of career mobility between the public and private sectors, says Glenn. Unlike the United States, Australia does not have a culture of senior public servants moving to the private sector and back to a government role, or vice versa. Also, there is limited employment mobility between Federal and State/Territory governments.

“It’s a big move for career public servants to join the private sector,” says Glenn. “They worry they might not be able to return to the service, if the private role does not work out, or that they will lose their seniority if they come back. Superannuation is another consideration, where minimising impact on super benefits is important. Understandably, those in the public sector are looking to minimise uncertainty, when changing sectors, but there is a lack of understanding that risk-taking drives innovation and change in private firms.”

Equally, private-sector managers have obstacles to joining the public service and succeeding in an unfamiliar workplace culture. “Private-sector managers typically have a lot more autonomy and are often compensated proportionate to outcomes achieved and they often struggle with the rigid structure and oversight in a public-sector role.”

The result of these career-mobility obstacles, says Glenn, is a shallow pool of Australian executives who have both public- and private-sector experience. Another outcome from lack of perspective is inflated project costs.

“I’ve seen private firms propose terms to a government department that they would never accept themselves. The department compares value against other tenders or what it has paid for previously. It doesn’t consider what the private provider would pay itself for a similar project.”

Three-pronged approach

There is no quick answer to this problem. Deeply entrenched public- and private-sector cultures are hard to change and developing a larger pool of executives with deep experience across both sectors is a long journey. The best response, says Glenn, is threefold. First, both parties recognising each other’s needs.

“It takes courage for public servants to do things differently and take risks, to better align projects with private suppliers’ goals and find extra shared value. It also takes courage for private-sector managers to put themselves in the shoes of public servants and understand how project outcomes are measured.”

Additionally, public and private-sector clients have much to gain by working with specialists in this area.

The 2019 report for ANZSOG, Today’s Problems, Yesterday’s Toolkit, found that many of the innovation skills needed for public problem solving are more prevalent in the private sector than the public sector and that the private sector was far more open to using new methods.

This is where finding the right consulting partner becomes critical. Troubled projects take innovation skill to get back on the rails: they need people with a strong understanding of both sectors and extensive experience.

Education is the third part of improving public-private sector perspectives. There is so much that each sector can learn from each other through being open to learning on-the job, but more structured programs are now being sort after.

“What we’re seeing is a desire to learn the ‘ins-and-outs’ of how industry works. It seems some leaders are gaining clarity that when both sides better understand each other’s perspective, projects will run smoother and create sustainable value for stakeholders and ultimately the public.

If you would like to have a conversation about how you could approach things differently and step in a new direction with a strategic partnership or complex procurement, please reach out.

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