How training can make or break a PPP

The World Bank
TONY SMITH

There are currently 108 countries worldwide either implementing public-private partnership (PPP) projects or seeking to do so. But many are experiencing difficulties in training and retaining the high quality staff necessary to deliver them. This prevents them from benefitting from the improved infrastructure and services that could be provided, which adversely affects the economies.
 
Why is this important? Because PPPs have become increasingly popular as a method of delivering public sector infrastructure and services in a world characterized by massive infrastructure deficits, poor quality public services and insufficient public sector finance available to address the problem.

PPPs are inherently more complicated than traditional methods of procurement and the consequences of insufficient preparation, or simply getting the project wrong can be disastrous. They involve many parties and the term of each project could last for decades.
 
Complex projects require an in-depth understanding to ensure the best chance of success. Practical, hands-on experience is invaluable but currently in short supply. Training is therefore critically important for public sector procuring authorities to have the best chance of delivering successful projects and of effectively interfacing with private sector teams during the negotiation of the projects and through their subsequent operations.
 
Officials are often reluctant to participate in training, in part because it suggests they may not be PPP experts. Some of the arguments I have used to win them over include:

• It’s impossible to know everything. Public sector officials with responsibility for project delivery cannot be expected to have full knowledge of all aspects of PPP design and delivery themselves. However, they do need sufficient knowledge to act the role of ‘intelligent client’ and make informed decisions based on international best practices in the field. Without such knowledge, and with little understanding of how the private sector operates and its requirements to deliver a successful project, it is difficult to see how any program could be concluded successfully.

• You have to know what the private sector needs to participate. Understanding the needs of bidders and their funders is critical. Officials must understand and satisfy the requirements of the private sector before they will agree to bid for projects (for example, step-in rights for funders or the need for certainty of income to the project). Bidders spend significant time and large sums of money bidding for PPP projects, and need confidence the government body they are dealing with understands international best practices and is prepared to follow them. Without this, the chances of closing the deal are minimal and could take significantly longer and be more expensive than necessary.

• It helps to build up your marketing and negotiation skills. Officials should understand what makes their project attractive to the market and bankable, and what sorts of projects are suitable for delivery as a PPP (e.g. too small, too complicated, wrong sector). Negotiation skills are also necessary, given they will likely interface with professional negotiators from the private sector who know all the tricks when it comes to getting the best deal for their company.

• Learning how to prepare can make all the difference. Officials must understand the importance of ensuring detailed initial project preparation to be taken seriously by the market and be able to resist pressure from their political masters for a ‘quick fix’ when delivering. Standardized procurement and contractual documentation, together with PPP procurement guidelines (PPP manuals) are valuable tools in the public sector arsenal to address this point, but governments have been reluctant to finance preparation of such documentation.

As with any job, a skilled and knowledgeable person will produce a superior product, and PPP procurement is no exception. Lessons can be learned from numerous existing projects worldwide. It has been said that only a fool learns from his own mistakes; the wise man learns from those of others. Use the knowledge of others to develop your own.

 

Related

Learn how the PPP Certification Program can help you tackle infrastructure challenges by implementing efficient and sustainable PPPs. The program fosters a common minimum level of knowledge and understanding amongst practitioners to enhance professionalism in the delivery of PPPs globally, and raise the quality of PPP projects around the world. It is intended for individuals who are working on any aspect of a PPP or have an interest in PPPs. Its content is relevant to both public and private sector employees, and to countries at all levels of development. The PPP Guide is available here: www.ppp-certification.com where you can download it for free. Opportunities to register and take the Foundation exam are also available now, one of the three exams required to earn the Certified Public-Private Partnership Professional (CP³P) credential.