Once the municipality (with key stakeholders) has agreed a broad strategy for services and has decided on the partnership approach to the delivery of a specific service (such as water, sanitation or solid waste), a process of developing a partnership framework should be undertaken. This book has proposed key elements determining the nature of a sustainable partnership framework focused on the poor: potential actors, content, scope, fundamental principles, linkages to poverty reduction and urban governance, and the importance of capacity building. Yet putting all the pieces in place is not necessarily straightforward.

The first stage of developing the partnership is preparatory. This requires a municipality to plan its way through the process, and will determine the overall spirit of the partnership development process. In the first instance, it is necessary to establish a dedicated management team or task force (see the discussion on municipal structures later in this chapter), to agree the timeframe and methodology of developing the partnership. Most importantly, the municipality must decide how it will approach consultation and participation with potential partners and public stakeholders. It is also necessary to identify what support will be needed for this process. The strategy for collaboration should then be carried forwards in the following steps. For the more ambitious PPPs with the international private sector, this will involve appointing transaction advisors and formulating the way they will be managed.

A second key stage - and the most time-consuming - in the preparation of a partnership (especially one involving the formal private sector) is the collection of information. Information creates a more predictable and secure environment in which PPPs can develop, and reduces the risk of them being called off when unknown factors come to light. However, the level of detail that a municipality aims to achieve will vary. Some arrangements are prepared in great detail, often produced with the support of external agencies; but smaller municipalities may not have the resources needed to engage the recommended consultants. Sometimes it is inevitable that they proceed with less information. It is nonetheless essential that a strategy should define who will be responsible for collecting this information and when. Various guidelines recommend that the feasibility process should be conducted in two stages: an initial analysis that creates a stepping stone and provides enough information to establish the feasibility and structural parameters of a partnership; and a more detailed, focused stage of problem analysis that leads to detailed solutions in the procurement process.

In consultation with a broad range of stakeholders (and utilising a range of participatory tools and techniques), the key elements of the partnership should be defined, discussed and agreed. As discussed in Part 2, this will include:

•  clarifying realistic objectives;

•  defining the basic principles of the partnership;

•  establishing the programme of change;

•  defining the scope and functions of the arrangement;

•  identifying the key partners, their roles and relationships;

•  defining the levels of service, and how the poor will be targeted;

•  identifying the potential financing mechanisms;

•  establishing the legal and regulatory framework; and

•  identifying the major risks.

This outline framework will then have to be detailed to varying degrees, dependent on the nature of the arrangement envisaged. For complex investment-linked partnerships, this stage will involve detailed analytical studies and proposals carried out by skilled experts. Ideally, in such a contract the municipality will have enough financial backing to make sound preparations.4

Detailed schedules of the analytical stages in the preparation of PPPs for water and sanitation and solid waste management have been produced in toolkits produced by the World Bank and others.5 They are very helpful sources of information for municipal officials. Typically this will include:

•  technical assessments;

•  financial studies and financing options;

•  legal and regulatory framework analyses and recommendations;

•  institutional analysis; and

•  poverty analysis and social assessments.

The results of these studies will determine the detailed structure and content of the partnership arrangement. They will lead to the articulation of the key components of the partnership framework and guide the identification of potential partners. Based on the understanding of the fundamental nature and characteristics of the organisational sectors (discussed in Chapter 6), the roles and relationships between key actors such as the large-scale private sector, the small- scale private sector, NGOs and the municipality will need to be defined, although it is clear from experience that such roles and relationships change, and partners should work together to formulate their agreed method of implementation. To this end the procedures undertaken in the development of the partnership framework must be flexible.

In most cases, the framework will then define the contractual aspects of the arrangement with all parties. In the case of the main commercial operator, this may be based on a pre-existing model, or it may be an arrangement developed by the contractual parties to suit the context and required outputs. In the cases of NGOs and small-scale providers, municipalities may have to develop new innovative mechanisms for drawing these key parties into the partnership (see Chapter 8). Experience of contracting NGOs and multisector partnerships within municipalities will be limited and it will be critical to test the arrangements and/or seek specialist advice where lengthy arrangements are envisaged.

This stage will take a municipality through the process of translating its objectives into a defined arrangement whereby partners can be procured.