Privatization and Outsourcing: A Systems Approach

There is a worldwide interest in converting ownership of assets and services traditionally owned and operated by governments to private entities. One of the largest areas being considered are traditional water, wastewater and other water resource entities traditionally owned and operated by some local government or authority. Up to now, success or failure of these activities has been strictly an opinion rather than a verifiable fact as no established practice exists to determine, price and verify the effectiveness of any privatization exercise devoid of any political or emotional opinion. Because water is required by everyone, the pressure to provide effective and cost-affordable water service is highly critical, and also heavily debated because of deep political and economic underpinnings. The method presented in this text, verified in the examples, provides a tangible and repeatable method for making these determinations devoid of political, emotional or other external forces distant from the project but ultimately affecting the outcome of the endeavor. This method may also be adapted for any government owned assets such as highways where rates are currently charged.