A properly prepared project can only be achieved by the investment of time and resources in project development. The Government will need to form a project team, with appropriate skills, focused on the transaction. Many of these skills can be bought in through short term contracts and transaction advisers, though the project team will need the capacity to manage those advisers and the underlying issues to be resolved.
The contracting agency will need experienced and professional financial, legal, technical, insurance and other advisers when identifying, designing and procuring a project. Each of these advisers will be subject to different agendas and incentives which will influence the nature of their advice and the ease with which the Government will be able to manage their involvement. The project team (possibly through the PPP institutions) should have access to expertise in managing such advisers. To provide capacity to the teams, the United Kingdom arranged for secondment of staff from commercial banks and law firms with expertise in project finance into their PPP unit. South Africa and Egypt initially hired long-term expert consultants who had experience in successful PPP programs to work in their PPP unit to improve access to global best practices.
| Box 3.7: The UK's Erstwhile PPP Unit |
| Partnership UK (PUK) was formed by the UK Government in June 2000 following the recommendation in the second Sir Malcolm Bates review of 1999, and absorbed back into HM Treasury in 2012. It was a PPP, majority owned (51%) by private sector shareholders and the remainder retained by Government (HM Treasury 44,6% and Scottish Executive 4,4%). PUK supported: • individual projects before, during and after procurement-by using its commercial experience and expertise. • Government in developing policy and monitoring compliance-by using its market knowledge to ensure that outputs are effective and practical. PUK financed itself by charging fees to the public sector for its services, benchmarked against private advisory companies. |
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| Box 3.8: The Challenges of Large Demonstration Projects |
| In Russia, the Government of the City of Saint Petersburg decided to launch the Western High Speed Diameter toll road as a large, single project with project costs exceeding Euro 12 billion in 2007. The subsequent tender process resulted in a single bidder, due primarily to the size of the project. After efforts at negotiation, the City chose to cancel the bidding process, restructure the project, and retender based on smaller phases of the project with more creative use of available financing, which lead to the successful implementation of the project. |