2.1  Project pipeline

In order to encourage long-term planning and institutionalise a public investment framework, a Pipeline of Priority Projects is recommended to be published by the Department of Finance. This pipeline document will serve as the cornerstone of public investment decisions, regardless of the Method of Procurement ultimately pursued. The purpose of such a document is threefold: first, to ensure medium-term and long-term alignment of all infrastructure projects with the strategic vision of government entities, the Emirate of Dubai, and of the United Arab Emirates. Second, by introducing a preliminary filter for all projects, it enables an institutionalised Screening of whether the projects being procured are truly needed. Lastly, it serves as a preparatory signal to private investors and the broader market of the projects being tendered by the government, alerting them to possible investment opportunities.

The pipeline will have two components: a document comprising a summary of the five-year public investment programme, and a detailed breakdown of all the projects with a costing estimate and description included. When the PPP programme commences, government entities will continue to follow traditional budgeting procedures; however, during the first year, all government entities will have to prepare a five-year pipeline of all their projects, and Project Concept Reports for all the projects mentioned therein. (Guidance on drafting Project Concept Reports follows from Section 2.2 onwards.)

A summary of the public investment management process, described in detail in the section(s) below, is as follows: government entities must prepare a longlist of infrastructure projects that they would like to implement and receive budgetary appropriations for from the Department of Finance. This longlist will be subject to an initial Screening process conducted by government entities, with the requisite assistance from the Department of Finance, to derive a shortlist of infrastructure projects. Then, government entities must prepare Project Concept Reports for all the projects listed in the shortlist, and submit them to the Department of Finance for review, budgetary sanction, and approval. The Department of Finance will review and approve all Project Concept Reports, verify the high-level costing estimates, and ensure that the project is necessary to serve the residents of Dubai. Following the approval of the Project Concept Reports, the Department of Finance will place all shortlisted projects onto the five-year pipeline, and prepare the pipeline documents for publication.

In order to prepare the shortlist of projects that will become a part of the final pipeline, government entities are advised to first develop a longlist of projects, based on existing masterplans and internal assessments. In conjunction with the Department of Finance, an initial Screening process must be utilised: whether these projects serve a societal need and are tailored towards addressing a particular service gap. Moreover, government entities must apply a more fundamental Screening test that determines if the project addresses sensitive matters, such as national security or defence, wherein there are compelling reasons for the government to retain control. Following this Screening process, a shortlist of projects is prepared.

The shortlist of projects will include projects of varying project values and will state is these will be procured traditionally or through PPPs. When testing the PPP suitability of projects, government entities must consider the following factors that act as Value for Money drivers:

  Scale of the project: Are transaction costs likely to be justified? - Projects with a capital expenditure of lower than AED 200 million or with an operating expenditure of lower than AED 10 million per year generally do not result in Value for Money savings significant enough to justify the transaction costs.

  Outputs capable of clear specification: Is there reason to believe a contract that will hold the provider accountable can be drafted?

  Opportunities for risk transfer: Is there good reason to believe that a PPP will provide Value for Money compared to the alternative of traditional public procurement? - i.e., appropriate Risk Allocation should assign risks to the party best able to control or bear them.

  Market capability and appetite: Is there a potentially viable commercial project and a level of market interest in the project?

(Source: PPP Knowledge Lab, South Africa PPP Manual)

Once the shortlist of projects has been decided upon, government entities will work in conjunction with the Department of Finance to prepare Project Concept Reports for all the projects, comprising of an initial needs assessment, a costing estimate, and a brief description. These Project Concept Reports will be utilised for the budgeting purposes of the Department of Finance, and for the publication of both the detailed breakdown and summary documents that will comprise the pipeline. The Project Concept Reports will be reviewed and approved by the Department of Finance prior to their inclusion and publication as part of the pipeline.

While the pipeline must include all projects, regardless of project value and the Method of Procurement ultimately pursued, government entities might pursue projects that are not listed, should the need arise. In such cases, project-specific Project Concept Reports must be prepared for all projects comprising of the same content, as denoted above and further detailed in Section 2.3. Following the approval of the Project Concept Report, the Government Entity is either mandated to test for PPP suitability (if project value meets the Threshold of a capital expenditure of over AED 200 million or an annual operating expenditure of over AED 10 million), or can proceed with traditional procurement. If testing for PPP suitability is required, the Government Entity will proceed with the Feasibility Study.

The Department of Finance will be responsible for collating the Project Concept Reports for all shortlisted projects from the government entities and preparing the pipeline for publication. As noted earlier, the published pipeline will comprise of two separate components: a summary document and a detailed breakdown worksheet. The published summary will be a brief document that aggregates the planned investment in infrastructure, provides a breakdown by sector and by region, and provides a primer on the track record of the programme. the detailed breakdown will be published in the form of a worksheet, comprising of the following details for each project: the project/programme name, the sector, the sub-sector, the number of projects (if bundling is applicable), the total capital expenditure funding estimate, the estimated start of works/construction, the estimated date of service, and the preliminary operating cost estimate for every year from the end of construction till the end of the five-year period.