It’s almost Valentine’s Day! A few words on unsolicited proposals and love

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What to do with unsolicited infrastructure proposal
Photo credit: wk1003mike | Shutterstock

Ah, Valentine’s Day is afoot. Lovebirds are sweating (or swooning, as the case may be); marketers are marketing; poets are writing. And here on the Getting Infrastructure Finance Right blog, it’s time to pull out my odd and enduring (if not endearing) abuse of the metaphor of love to describe the relational challenges of PPPs (links to past blogs below). This time we’ll discuss how this relates to unsolicited proposals (USPs) in PPPs.

If you’re interested enough in infrastructure finance to be reading this blog, you likely know that USPs occur when the private sector, rather than the public sector, takes the lead role in identifying and developing projects. My colleagues Junglim and Philippe recently launched a Quick Read on USPs that I hope you’ll read (it’s brief, I promise!) and consider sharing.

The logic for creating a special regime for USPs generally suggests that the private sector should be incentivized to be proactive in moving infrastructure agendas and, in exchange, they should be allocated any resultant project either without competition, or with an advantage if competing (for example the right to match the best bid).

Private companies have marketing and business development budgets designed to fund proactive engagement with prospective clients in an effort to build business in this way. USPs are sometimes couched as technical assistance, corporate social responsibility engagements, government-to-government dialogue, or whatever medium provides the best access to client decision makers.

USPs are common, in particular in developing countries where governments are flooded with them.

From my experience, USPs fall into four categories:
 

  1. Good firms, with good experience and capacity, that are frustrated with the slow processes that impede most government action.
     
  2. Good firms with good experience, but no local expertise. Delivering projects in Africa is very different from delivering projects in North America or in Europe. They recognize this, are keen to expand in a new region, and hope to use a USP to create such an opportunity.
     
  3. Firms with limited experience that want to develop new capacity through the proposed project.
     
  4. Firms with limited experience and no real intention to deliver the project. They are hoping to leverage the opportunity to earn a return by selling it to a more experienced firm or get bought out by the government when the USP does not deliver.
     

My experience in Africa and Asia suggests that USPs fall into these different categories at a rate of 10%, 20%, 25% and 45% respectively.

So this is indeed a tricky game for governments: they don’t want to miss out on a good idea from a good firm with strong experience, but at the same time they don’t want to get trapped in a bad marriage.

My daughter is the most beautiful, amazing creature in the world. I’m trying to accept the fact that some day she'll start dating. And when she does bring home a special friend, I plan to greet them while nonchalantly cleaning my shotgun or sharpening my samurai sword (I have neither of these, but please don’t interrupt my fantasy). This is to say: I will do my utmost to help her find the very best partner and avoid the rest. I cannot imagine giving preference to a dating partner just because they were the first to ask her out, or the first to take her to a nice restaurant, or even the first to profess love and devotion. The first one might very well be the best—but a lot of due diligence is needed to be certain.

Being proactive is great, and the early bird often catches the worm, but a PPP is a long-term commitment that ultimately uses taxpayer money to fund infrastructure that should improve lives. It deserves the effort and patience to find the right partner—through open, transparent, fair, and balanced competition.

My daughter is definitely worth the effort and patience. Is your PPP project worth it?

 

Related Posts
 

What do mothers-in-law and national PPP structures have in common?


The true romance of PPPs: Make them pay!


Making PPPs work: Going to the chapel


10 candid career questions with PPP professionals – Jeff Delmon

 


This blog is managed by the Infrastructure Finance, PPPs & Guarantees Group of the World Bank. Learn more about our work here.

Authors

Jeff Delmon

Senior PPP Specialist

Join the Conversation

Xavier Decoster
February 18, 2020

Great read!

Makes me think of the 2018 report by the European Court of Auditors (ECA): "Public Private Partnerships
in the EU: Widespread shortcomings and limited benefits."

The report identifies several critical weaknesses in PPPs in Europe and stresses the need to increase the experience and capacity of the public authorities:

"There was a lack of adequate analyses about the potential for PPPs to deliver additional value-for-money, as well as a lack of adequate strategies on the use of PPPs and of institutional and legal frameworks. (...) The shortcomings identified in our audit show that considerable administrative capability is necessary for the implementation of successful PPP projects, and that this can only be ensured through adequate institutional and legal frameworks and extensive experience. We found that these conditions are currently in place only in very few Member States, which conflicts with the EU’s increased emphasis on the more widespread and intensive leverage of public funds with private funds and the role, PPPs can play in that respect." (para. 78 & 85)

[ URL: https://www.eca.europa.eu/en/Pages/DocItem.aspx?did=45153 ]

Cesar Queiroz
February 18, 2020

Dear Jeff,
Congratulations on this great text. While you were able to make it sound humorous and light, this is certainly an extremely important subject, both for developed and developing economies, more so for the latter. Your four categories of USP proponents seem realistic and didactic. [Perhaps we could add good firms with not so good intentions.] We have all seen how costly USPs can become to a developing country. One cannot be too careful in screening such proposals. Nevertheless, despite all the pitfalls, at least one satisfactory example comes to mind: the "Dulles Greenway" - road between Dulles airport and Leesburg, in the state of Virginia in the US.
Happy Valentines Day!
Cesar Queiroz