Good engagement with end users at an early stage during project inception and throughout the project is essential to ensure project viability.
Engagement with end users is always important, especially when those users need to sign up to a project, i.e. pay user fees to ensure its success. In this project, it is clear that support from landowners was overestimated to begin with, leading to a lack of adequate engagement in selling the benefits of the irrigation scheme at an earlier stage.
The current awareness campaign run by the Project Company and Procuring Authority is seen as successful, as landowners are joining the project in greater numbers. Additionally, the Regional Government of Catalonia, through the Institute of Agricultural Credit, has offered soft loans to the farmers to help facilitate the inclusion of landowners in the irrigation system.
The Procuring Authority must carry out sufficient due diligence, to ensure that the scope of the project and any contractually prescribed reference design is compliant with all relevant legislation.
It is crucial to ensure adequate due diligence and stakeholder consultation from an early stage of the project design and scope definition, as regulatory compliance can have a major impact on the project. This becomes particularly important for projects which are environmentally sensitive. Although the Regional Government of Catalonia approved the Environmental Impact Statement in 2002, this was not sufficient for the European Court of Justice. This led to a significant reduction of the irrigating areas and the total volume of water available for irrigation, which was prescribed in the conceptual design set out in the PPP contract. Increasing public concern over environmental issues, together with an ongoing evolution in relevant international regulations (e.g. European Union environmental regulations) may affect a PPP project at any stage.
In a similar way, any risk of challenge from environmental groups can be mitigated through earlier stakeholder engagement. This risk cannot be removed entirely, as some activists may disagree with the project at a fundamental level, however early and genuine engagement can discourage other groups from taking legal action.
Continuation of staff from construction through to operations improves the efficiency of managing the transition between the phases.
Continuity of staff through transition phases improves performance. Many engineers who worked for the Project Company during the construction phase have continued through to the operations phase, and this has helped build trust between the parties. It is particularly important on projects that have a long crossover between the phases.
Over-specification in the PPP Contract, and development of input rather than output specifications, can have an adverse impact on the final design and whole-life costing.
Overly prescribed specifications can limit the ability of the Project Company to innovate and develop efficient solutions. The contract requirements in this case were prescriptive in terms of the design solutions. For example, the contract specified the use of polyester pipes, which did not prove to be the optimal solution from a whole lifecycle point of view. As it was a contractual requirement, it was difficult to change.
Government backing becomes very important in critical situations, such as lack of financing, and can mitigate the risk of project postponement or termination.
In this project, the decision of the Procuring Authority to step in and repay the existing debt was driven by its financial exposure on other projects and its overall financial standing. Financial backing from the Spanish government was then provided to rescue the Regional Government of Catalonia as part of a wider strategy to help regional governments settle their existing debt with the loan providers. This allowed the project to continue in a situation which otherwise may have led to postponement or even termination.