Privatization of garbage collection is an option that cities and municipalities can pursue. Outsourcing to a company provides advantages to the government, including cost reduction and delegation to expert contractors. It is essential to note that there are similar drawbacks in pursuing the strategy. The following are the pros and cons of privatizing solid waste management.
Pros of Privatization
One of the advantages of privatization comes from access to qualified companies. The local government can tap providers with existing expertise in managing waste. Their ability to handle waste segregation and collection has the potential to increase the quality of service administered to the community.
Access to technological innovation is another benefit of choosing privatization. Sourcing services from the private sector increase the chance to access innovation and techniques surrounding garbage disposal. For instance, some companies use routing software for garbage trucks to monitor operations and improve services.
Privatization also removes monopolies from existing in the market. Allowing companies to showcase their services stimulates competition and enable providers to target specific customers and segments. Equally relevant to competition is the potential to reduce costs. It occurs because there is more than one waste management company to address the problem.
Finally, privatization enables the local government to control the increasing cost of public spending. Since garbage collection requires funds to sustain, the government can transfer these expenses to the companies and support allocation to other significant priorities.
Cons of Privatization
An apparent downside of privatization is the loss of control from the government. It means that the local city cannot dictate the policy on waste management and disposal. The discretion goes to companies fulfilling the service. As such, it might become difficult to implement new strategies to match the needs of the community.
Privatization can also lead to an increase in service rates. While it is true that removing the monopoly can help lower the price, the decision to increase charges rest on the company handling the service. The provider can make price adjustments to support additional features or functions such as routing software for garbage trucks.
Reduction of service quality can occur during privatization. The reason comes from the specific provider focusing on profit. The objective is to focus on generating revenue. Customers suffer from the process because the company has the power to increase or decrease prices.
Finally, privatization creates unemployment and low morale. The problem occurs when the local government provides a contract to a private firm. As such, the previous employees of waste management either transfer to another department or lose employment. Low morale occurs because employees feel insecure about their future job and sympathy for losing a colleague.
Overall, the points above show that privatization has similar benefits and disadvantages. It is important to carefully study options, assess the implications to cost and determine whether the community can enter into a contract with a private firm or keeping operations within government control. Considerations about budget, service requirements and interests of people remain priorities for the decision.
If you are in the solid waste management business, a routing software for garbage trucks can bring a ton of benefits to your operations. Contact Route Optimization Consultants today to discuss details.