4.10 An area highlighted by practitioners was the bundling of smaller projects into larger ones in order to improve scale and viability, make these more attractive to larger players in infrastructure and to enable better financing options. For example, states in India are looking at bundling smaller solid waste, street lighting and health diagnostic projects in order to improve scale and viability. Among the nine projects examined as part of this review, there is bundling in five projects: the Gujarat rooftop solar projects, the PURA projects, the Lesotho Health Care Waste Management project, the Palestine Solid Waste Management project and the Andhra Pradesh Health Diagnostics project. In all of the aforementioned projects except the Palestine Solid Waste Management project, bundling was not associated with multiple jurisdictions. In the case of the Palestine Solid Waste Management a Joint Services Council was formed, which became the public authority that signed the agreement with the private party. In a recent solid waste project jointly undertaken by the cities of Bhubaneswar and Cuttack in the state of Odisha in India, the two local bodies went ahead with a single aggregated bid process. While one bidder was selected, separate contracts were signed with each municipal body.
4.11 An example of aggressive bundling is the program designed by the Pennsylvania Department of Transportation aggregating the construction and maintenance of a few hundred of small bridges into a single PPP project under its old bridges rehabilitation program. The average cost of the individual bridges is as low as approximately $2 million, which would not make for a viable single P3 project. In this case too, multiple jurisdictions were not involved.
4.12 The Tamil Nadu Road Development Company in India is also engaged in bundling of road maintenance projects to improve scale and attractiveness of relatively smaller roads to the private sector. These are projects where the government has already completed construction but is looking for a partner for operation and maintenance of the project.
4.13 In the United Kingdom, Partnerships for Church of England Schools (PfCS) was created to bundle several small schools with a new built capital cost of around £2 million into "geographically coherent" groups in order to facilitate the procurement of the private partner. At around the same time, the United Kingdom had also created the concept of "batched acute hospitals" where major acute hospital projects were bundled together for the purpose of procurement but with separate contracts being signed, given different risk allocation needs.12
4.14 The Philippines PPP for School Infrastructure Program (PSIP) involved the bundling of a few thousands of sub-projects consisting of the construction of classrooms and toilets, and supply of furniture and fixtures at various school sites into PPP packages for being bid out on Build Lease Transfer (BLT) basis.
4.15 Bundling across jurisdictions may result in problematic jurisdictional issues and may require a high level of harmonization and standardization. Several states in India have failed to achieve success in structuring single multijurisdictional projects due to a failure to satisfactorily sort out tariff and risk issues.
4.16 Bundling for procurement with separate contracts could streamline procurement and reduce costs for the bidder as well as the authority. According to a case cited in the UK, bid costs as a proportion of capital value of a project could be as much as 33% lower for a £50 million project as compared to a £20 million project.13 On the public sector side, aggregating projects for project development and procurement results in decreasing costs given that the same standard procedure is followed and the same draft documentation is used for all projects in aggregate, rather than repeating the process for each project separately. It also lowers the time taken to procure projects.
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12 HM Treasury, supra at note 13.
13 Id.