Managing in a mixed economy Essay Example | Topics and Well Written Essays - 3000 words

Managing in a mixed economy - Essay Example This study deals with Private-Public Partnership (PPP) agreement between London Underground and Mertronet. The purpose of the PPP agreement was to acquire funds from the private sector. This paper begins with the background of London Underground and Metronet. Historical facts are also provided to understand the reason for selection of PPP as a means of financing. It also contains literature survey of the problems of London Underground and Metronet also the National Audit Office Report is presented. The paper has been concluded with a few causes and reasons for the London Underground failure and liquidation of Metronet and is followed by the recommendation for the improvement of the PPP agreement. London Underground has started its operation in the mid-19th century with the help of private venture capital. The Metropolitan line between Farrington and Paddington was the first construction, built by Sub Surface Line (SSL), which was one of the first construction sectors of London Underg round (Wolmar, 2002). Due to absence of governing body and corporation, the entire sector started working independently. Therefore, the London Passenger Transport Board (LPTB) was formed in 1933 to control the road and underground transport. In 1948, it was undertaken by the British Commission. The five separate corporations including London Transport Board were restructured by British Commission. ... The tubes were disorganised, chaotic and systematically mismanaged since the early days. Hence, it was necessary to form a PPP. During the year 2002, due to inadequate investment and problem in managing public service and maintaining infrastructure, it was decided that maintenance and renewal of London Underground’s infrastructure would be undertaken through PPPs (Kellaway & Shanks, 2007). In PPP agreement, a contract has been signed for 30 years and the main purpose was to obtain funds from private sector. It was a partnership between two functions of business, i.e. finance and operation. Private sector is well-organised than public sector to complete a project in a cost-effective way. The renewal and maintenance of the tubes by public sector operations and private sector infrastructure were an arrangement that ensured the tubes would provide successful service more efficiently. The stations, train operations, signalling and safety was continued by the public sector, through London Underground Limited. The infrastructure companies such as Infraco BCV, Infraco JNP and Infraco SSL were formed for the purpose to manage station, trains, and signal and track infrastructure. Infra JNP was undertaken by Tube Line on 31st December 2002 and on 4th April 2003 other two companies were undertaken by Metronet. Metronet had invested ?17 billion amount for the PPP contract of 30 years (Finn & Et. Al., 2007). Metronet Rail Group is the group of Metronet Rail BCV Limited and Metronet Rail SSL Limited based in London, UK. Metronet Rail BCV Limited is involved in upgradation, replacement and maintenance of sub-surface deep tube lines that operates in the streets of London (Bloomberg