Contemporary determinants of the public sector activity are connected with emerging new public services, creating and transforming human capital and growth of social needs. The dynamic of environmental changes forces public organizations to build the productive potential and search for alternative sources of funding the investment in the range of social needs. Public -Private Partnerships (PPP) is a promising method to finance public services or goods when the public budget is limited, using activity, dynamics and the efficiency of the private sector. PPP is usually defined as a collaborative arrangement between the public and one or more private organizations. By combining public expertise, complementary contribution from the private sector and using tools of planning and monitoring and collecting information, PPP can offer leverage its resources, assets and generate a revenue stream. In this article, the authors are concerned with target costing as a management tool which can be used in the PPP arrangement and processes.