Public Private Partnership (PPP) Preparation
Developing a successful PPP contract is so important for PPP projects to be implemented with minimum risks to achieve the strategic goals. There are many considerations to be taken into an account to manage the PPP contract effectively: (1) PPP project needs to be selected based on the right eligibility criteria. It needs to address many dimensions, (2) PPP project needs to deliver value for money. We must be sure that delivering the project through PPP modality is the right decision to take, (3) Setting up the institutional capabilities to ensure delivery is another critical element, (4) Developing the right business case to understand how the project is going to deliver the benefits against the project's costs is an important milestone, (5) Having the right framework, regulations and policies is important to know what regulatory we should develop to facilitate the execution, (6) Preparing and executing a very effective communication and marketing plan will help advertising the deal, (7) Qualifying investors and contractors to participate in the deal will enrich the outcomes and encourage competition, (8) Transparency throughout the procurement process is a must, (9) Setting up an effective contract management office to oversee the execution of the deal to monitor it's KPIs will ensure realizing benefits and (10) Having the right governing model to facilitate the partnership deal will protect the deal and guarantee it's progress.
- Understanding how to choose the right PPP project
- Knowing the right approach to build a convincing Value for Money Spreadsheet
- Understanding the optimum approach to construct the Go-Ahead Business Case.
- Enabling Public and Private sectors to develop the right Contract Management Model to execute and supervise the execution of a PPP deal
PPP Identification (Eligibility Criteria) process
The elaboration of a Public Private Comparator requires precise information on costs, investments, demand, transaction structure, regulation, risk analysis and financial modeling. This forces public decision-makers either to wait for the results of these analyzes to decide involving the private sector in the project, or to make the decision based on experience, intuition, or budgetary and/or economy policy reasons. Hence, the idea to have a tool to guide public decision-makers in the early stages of project preparation, to find out whether the project has the potential to be carried out as a PPP. This allows to select the projects which are worthy of having their Value for Money quantitative and qualitative analyzes performed.
Public Sector Cost Comparator (PSC) Process
All things being equal, the rationale for choosing a PPP instead of a traditional public procurement model is if it provides better Value for Money. A crucial issue to address is to find the key drivers of Value for Money in PPP projects and most importantly, to analyze the relationships between those key drivers and the complex notion of Value for Money. The Public Sector Cost Comparator (PSC) promotes full cost pricing at an early stage in the procurement process; acts as a key management tool during the procurement process, assisting the procurement team by focusing attention on the output specification, and risk allocation and development of a comprehensive costing of the project; provides a consistent benchmark and evaluation tool; and encourages bidding competition by creating confidence in the financial rigor and probity of the evaluation process.
PPP Business case development process
- The PPP project provides business synergy and strategic fit and is identified upon a robust and evidence-based process: rationale of why the PPP project is required, as well as a clear definition of outcomes and the potential scope for what is to be achieved.
- The PPP project optimizes public value. It explains how this is achieved by, identifying and appraising a wide range of realistic and achievable options, in terms of how well they meet the PPP project's objectives and critical success factors agreed for the scheme; and subjecting a reduced number of options, to cost benefit analysis (CBA)
- The planning and management of the procurement in accordance with the approved roles and regulations. It includes the contractual arrangements and specifies the accountancy treatment to be used for the proposed service.
- The preferred option to result in a fundable and affordable Deal. Set out the capital and revenue requirement for the project over the expected life span of the service, together with an assessment of how the Deal will impact upon the balance sheet, income and expenditure account and pricing of the public sector organization.
- The project is capable of being delivered successfully. The project to be delivered in accordance with a standard Program and Project Management (PPM) method with a robust arrangement in place for change management and contract management, the delivery of benefits and the management and mitigation of risk.
PPP Contract management
The government Contract Management Office (CMO) typically has the responsibility of overseeing the contractor’s management and execution processes during the life of the contract. This responsibility includes negotiating the terms and conditions of contracts, ensuring compliance with those terms and conditions, as well as documenting and agreeing on any changes or amendments that may arise during contract implementation or execution. The responsibilities can be summarized as the process of systematically and efficiently managing contract creation, execution, and analysis for the purpose of maximizing financial and operational performance and minimizing risk. The contract change process is also a key facet of Contract Management including ensuring baseline integrity through diligent maintenance of the baseline.
PPP related activities (Managers, Directors) – Public Sector delegates – Private Sector delegates - Government Entities interested – Business People