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Working Towards a
Leaner and Improved
PPP Procurement
Process
National PPP Summit
3 June 2014
1© 2014 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with ...
2© 2014 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with ...
3© 2014 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with ...
4© 2014 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with ...
5© 2014 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with ...
6© 2014 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with ...
7© 2014 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with ...
8© 2014 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with ...
9© 2014 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with ...
10© 2014 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with...
11© 2014 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with...
12© 2014 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with...
Thank you
David Asteraki
Director
Infrastructure & Projects Group
KPMG Corporate Finance
E: dasteraki@kpmg.com.au
T: (+61)...
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David Asteraki - KPMG - Working Towards a Leaner and Improved PPP Procurement Process

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David Asteraki delivered the presentation at 2014 National PPP Summit.

The National PPP Summit is the leading annual event for industry stakeholders to gather and discuss the issues across the national and global PPP markets. The 2014 agenda reviewed current and emerging financing models as well as showcasing best practice strategies for the procurement process, risk transfer and whole-of-life project management.

For more information about the event, please visit: http://www.informa.com.au/PPPSummit14

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Transcript of "David Asteraki - KPMG - Working Towards a Leaner and Improved PPP Procurement Process"

  1. 1. Working Towards a Leaner and Improved PPP Procurement Process National PPP Summit 3 June 2014
  2. 2. 1© 2014 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. KPMG and the KPMG logo are registered trademarks of KPMG International. Disclaimer The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough examination of the particular situation. The views and opinions expressed herein are those of the presenter and do not necessarily represent the views and opinions of KPMG, an Australian partnership, part of the KPMG International network.
  3. 3. 2© 2014 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. KPMG and the KPMG logo are registered trademarks of KPMG International. History of the Australian PPP market 0 2 4 6 8 10 12 14 16 18 0 1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 9,000 1987 1990 1993 1996 1999 2002 2005 2008 2011 No.ofProjects CapitalValue($m) Capital Value (lhs) No. of Projects (rhs) Source: KPMG, drawing on a variety of external sources 137 projects with a total capital value of $57.7 billion
  4. 4. 3© 2014 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. KPMG and the KPMG logo are registered trademarks of KPMG International. Victoria & NSW have led the way VIC - 45 NSW - 43 QLD - 13 WA - 11 CWLTH 8 SA 7 NT 4 TAS 3 ACT 3 Location of PPP Projects 1987- 2013 Source: KPMG, drawing on a variety of external sources
  5. 5. 4© 2014 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. KPMG and the KPMG logo are registered trademarks of KPMG International. Transport has been the main sector Transport Health Water Sport/Entertainment Justice Defence Education Student accommodation Housing ICT Waste Other Source: KPMG, drawing on a variety of external sources Sector by capital value Sector by number 1987 - 2013
  6. 6. 5© 2014 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. KPMG and the KPMG logo are registered trademarks of KPMG International. High capital values by international standards 0 5 10 15 20 25 30 35 $0 - 50 $50 - 100 $100 - 200 $200 - 500 $500 - 1,000 $1,000 - 2,000 $2,000 - 5,000 $5,000+ No. Capital Value, $ million, Dec 2013 prices,1987 - 2013 Average project capital value is $534 million, Dec 2013 prices
  7. 7. 6© 2014 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. KPMG and the KPMG logo are registered trademarks of KPMG International. What are the problems?
  8. 8. 7© 2014 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. KPMG and the KPMG logo are registered trademarks of KPMG International. What are the problems? Project pipeline • Size is an issue • Variable commitment to PPPs • Inconsistent application of Procurement Options Analysis to potential PPP projects • Too much politics
  9. 9. 8© 2014 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. KPMG and the KPMG logo are registered trademarks of KPMG International. What are the problems? High bid costs • Reasons • Project’s complexity and value • Lengthy procurement • Multiple bid stages Project value Losing bidder Winning bidder $250 million $2 – 3 million $2.5 -5.0 million $1 billion $5 – 6 million $7 – 9 million $2 – 5 billion $20 – 40 million
  10. 10. 9© 2014 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. KPMG and the KPMG logo are registered trademarks of KPMG International. Procurement timetables vary, but compare well 13 – 20 months 16 – 18 months Typical time0 12 24 36 48 60 Canada Australia However, risk of extended timetable is significant
  11. 11. 10© 2014 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. KPMG and the KPMG logo are registered trademarks of KPMG International. What are the problems? High bid costs • Excessive information requirements • Non-standardised documentation • “Excessive” focus on design and innovation • Requirement for financing certainty
  12. 12. 11© 2014 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. KPMG and the KPMG logo are registered trademarks of KPMG International. What are the problems? Bid costs at risk • Number of bidders • Partial reimbursement of bid costs
  13. 13. 12© 2014 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. KPMG and the KPMG logo are registered trademarks of KPMG International. A call to action • Greater certainty in infrastructure funding • More consistent use of PPPs • Strengthen independent prioritisation of projects • Avoid multiple bid stages • Rationalise information required at bid stage • Accept uncommitted finance at bid stage • Partial reimbursement of bid costs
  14. 14. Thank you David Asteraki Director Infrastructure & Projects Group KPMG Corporate Finance E: dasteraki@kpmg.com.au T: (+61)(0)2 9295 3858 © 2014 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved. The KPMG name, logo and “cutting through complexity” are registered trademarks or trademarks of KPMG International.
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