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One question, eight experts, part six: William Dachs

William Dachs's picture

To gain a better understanding of how innovation in public-private partnerships (PPPs) builds on genuine learning, we reached out to PPP infrastructure experts around the world, posing the same question to each. Their honest answers redefine what works — and provide new insights into the PPP process. This is the question we posed: How can mistakes be absorbed into the learning process, and when can failure function as a step toward a PPP’s long-term success?

Our sixth response in this eight-part series comes from William Dachs, Chief Operating Officer of the Gautrain Management Agency in South Africa. 

South Africa's Gautrain.
Photo: Wikimedia Commons

The ability of a national PPP program to apply lessons learned from one project to the next is dependent on factors such as the documentation of case studies and the use of a central repository of information in a PPP unit at the national level, where such lessons can be distilled and applied to the next project in that jurisdiction.

There are plenty of good examples of such programs that learn from and apply lessons. But how are individual PPP projects able to absorb mistakes and still meet the original objectives of value for money for the users of the services and the taxpayers who may ultimately bear the risk of the project failing?

It is impossible to predict the range of possible risks and to allocate these with precision over 20 to 25 years in a complex and changing environment. As such, the key to achieving long-term value from a PPP does not only lie in the quality of the feasibility and procurement phases, but also in how the balance of risk and rewards is established and applied in the PPP contract so as to be able to survive significant changes over a long period of time.

One question, eight experts, part two: Fernando Crespo Diu

Fernando Crespo Diu's picture

To gain a better understanding of how innovation in public-private partnerships (PPPs) builds on genuine learning, we reached out to PPP infrastructure experts around the world, posing the same question to each. Their honest answers redefine what works — and provide new insights into the PPP process. This is the question we posed: How can mistakes be absorbed into the learning process, and when can failure function as a step toward a PPP’s long-term success?

Our second response in this eight-part series comes from Fernando Crespo Diu, Director of UTAP, the Portuguese PPP unit.

Although not a desirable outcome, failure is always the first step of the learning process toward more successful projects, in terms of implementation, value for money, and financial and fiscal sustainability. There is an enabling prerequisite for the learning process, particularly given the complexity and long duration of PPP arrangements: the establishment of institutional arrangements that provide stable, professional and fully dedicated teams of experts within the structures of the public sector.

A central PPP unit — ideally located in the Ministry of Finance — should participate in all stages of a project lifecycle, from structuring to contract management, allowing continuous feedback and dialogue between contract management and public teams. In such an environment, the role of external advisors has to be carefully planned, as they provide key skills along the project lifecycle, but must not substitute those tasks where knowledge must be developed, stored and used by the public sector.

Good decisions, successful PPPs!

Marcos Siqueira's picture

When considering public-private partnerships (PPPs), the million- (or even billion-) dollar question is: What is the single most relevant factor that drives PPP projects to failure?

Photo: flickr/Milton Jung
As a governmental officer, managing PPP transactions for many years, and later as a consultant on the private side of transactions, I have led more than 40 PPP initiatives. Many succeeded and are delivering Value for Money for users and taxpayers. However, several others failed along the way, and contracts never got signed. What surprises me is that failure came even to some technically perfect projects.

Every successful PPP with which I’ve been involved shared one important factor: effective governance in the project level, from the identification of the project, all the way to the tender process.

By governance I mean the set of processes that allows decisions to be made by the right people, with access to the right information, at the right time, so the project can meet the requirements defined by the project’s stakeholders.

Exploring Value for Money analysis in Low-Income Countries

Irene Portabales González's picture
The World Bank has identified 34 countries that qualify as Low-Income Countries (LICs) for 2015. LICs have a per capita income less than US$1,045 per year, while the world average is US$14,307. These countries face important infrastructure gaps that need to be addressed in order to support economic growth and reduce extreme poverty.
 
Cover of the "Value for
Money" report

Design: Sara Tejada

Public-Private Partnerships (PPPs) have been an important option to develop infrastructure and services.

However, challenges for preparing, procuring and monitoring PPP projects in LICs are huge. Challenges include weak institutional capacity, constraints in fiscal space, shallow capital markets, and lack of access to long-term financing.

Despite these challenges, LICs have made important efforts to implement PPP policies, laws and regulations. As a result, these countries closed 377 PPP deals between 1987 and 2013. Even with this considerable effort, LICs still have important infrastructure needs. This is a good start, but hardly enough to tackle the problem.

During the project selection stage, LIC governments have to discuss whether a particular project should be implemented under a PPP scheme or through traditional procurement. There are several reasons why governments decide to implement a PPP: to accelerate public investment programs, maximize the fiscal space or to try to avoid fiscal controls, for example.

At this key decision point, various options can be considered by governments, including a Value for Money (VfM) analysis.