The document discusses public-private partnerships (PPPs) and procurement. It provides examples of PPP arrangements for infrastructure projects like prisons, roads, and water services. PPPs involve a private entity financing, building, and operating a project according to a long-term concession agreement from the public sector. The benefits to the government are accessing infrastructure without public funds and transferring construction and operational risks to the private sector.
•What is Contract?
•What is Construction Contract?
•Purpose of Construction Contract
•Contract for Bid and Procurement
•Contract for Pricing Arrangement
•Construction Contract Component
•Contract Document List
•Standard Form of Contract in Malaysia
design bid build or Traditional contract shortcomings and alternative method,...Tehmas Saeed
discussion of time, quality and cost, Factors which shape and influence project success.procurement selection criteria, matrix, risk allocation of different contractual arrangements, procurement strategy,
QUESTION :
Taylor’s University is intending to build a branch campus in Kota Kinabalu, Sabah. Based on Taylor’s University plan they require the branch campus to be operational in mid-2019. Your quantity surveying firm, Innovative Cost Consultant Sdn. Bhd., of which you are a director, has been appointed to provide advice on the procurement system and the tendering methods that are to be adopted in carrying out the project.
The management of the University has informed you that the following requirements are of priority:
i) Cost to completion to be within the budget fixed.
ii) Timely delivery of the facility in order to commence operation in mid- 2019.
You are required to prepare a report to Taylor’s University recommending the procurement system and the tendering method to be adopted.
In your report you shall consider the procurement systems commonly used. You shall list out and explain the advantages and disadvantages of each system before making your recommendation.
As for the tendering methods, you shall consider all the three methods; i.e. open, selective and direct negotiation methods. Similarly you are to describe the advantages and disadvantages of each method before arriving at your recommendation.
Your report shall clearly explain your reasons for your recommendations.
Based on the above recommendations you are also required to prepare a simple programme or schedule in a form of bar chart showing the various activities commencing from the confirmation of the procurement system until completion of the project.
Understanding Pre Qualification QuestionnairesLloyd Sewell
Tendering for contracts training offers a comprehensive training programme provided by small enterprise support specialists and public sector support specialists for small firms who wish to develop new revenue streams by tendering for public sector contracts.
•What is Contract?
•What is Construction Contract?
•Purpose of Construction Contract
•Contract for Bid and Procurement
•Contract for Pricing Arrangement
•Construction Contract Component
•Contract Document List
•Standard Form of Contract in Malaysia
design bid build or Traditional contract shortcomings and alternative method,...Tehmas Saeed
discussion of time, quality and cost, Factors which shape and influence project success.procurement selection criteria, matrix, risk allocation of different contractual arrangements, procurement strategy,
QUESTION :
Taylor’s University is intending to build a branch campus in Kota Kinabalu, Sabah. Based on Taylor’s University plan they require the branch campus to be operational in mid-2019. Your quantity surveying firm, Innovative Cost Consultant Sdn. Bhd., of which you are a director, has been appointed to provide advice on the procurement system and the tendering methods that are to be adopted in carrying out the project.
The management of the University has informed you that the following requirements are of priority:
i) Cost to completion to be within the budget fixed.
ii) Timely delivery of the facility in order to commence operation in mid- 2019.
You are required to prepare a report to Taylor’s University recommending the procurement system and the tendering method to be adopted.
In your report you shall consider the procurement systems commonly used. You shall list out and explain the advantages and disadvantages of each system before making your recommendation.
As for the tendering methods, you shall consider all the three methods; i.e. open, selective and direct negotiation methods. Similarly you are to describe the advantages and disadvantages of each method before arriving at your recommendation.
Your report shall clearly explain your reasons for your recommendations.
Based on the above recommendations you are also required to prepare a simple programme or schedule in a form of bar chart showing the various activities commencing from the confirmation of the procurement system until completion of the project.
Understanding Pre Qualification QuestionnairesLloyd Sewell
Tendering for contracts training offers a comprehensive training programme provided by small enterprise support specialists and public sector support specialists for small firms who wish to develop new revenue streams by tendering for public sector contracts.
A journey from a bad kpi to an excellent strategyAleksey Savkin
When I face a business challenge I'm trying to see the root of the problem. Having a quick-fix solution is fine, but what if a quick-fix solution is not possible unless fundamental issues are resolved. I see this often with KPIs. People ask to help with KPIs for this or for that, but the problem that they actually experience is a fundamental one - they have a vague strategy that is hard to follow.
Recently I had a conversation with Pablo, one of our Spain-based customers. His company is a leading national manufacturer and his question was about a KPI to help with the poor performance of their business. Our dialog was really insightful for both of us. Pablo sorted out things about strategy and KPIs; I was able to trace verbally the problem of a bad KPI back to its root - a poorly formulated strategy.
The result is not an article, but a dialog between me and Pablo. Together we completed a journey from a pointless KPI request to ideas about formulating a better strategy:
http://www.bscdesigner.com/a-journey-from-a-bad-kpi-to-an-excellent-strategy.htm
Private and Public Partnerships Move MainstreamKerry Carey
All across the country, infrastructure projects are in need of repair, and creative organizational solutions are in-demand. Public-Private Partnerships are long-term contracts between a private party and a government entity allowing for an alternative approach to federal, state and municipal construction projects. The private party bears a large share of risk and management responsibility, and remuneration is linked directly to performance. This webinar discusses the nature of this collaboration across sectors.
Presented by:
Gregory Fitch
Black and Veatch
View the on-demand webinar: http://cpe-wpi.hs-sites.com/construction-project-management-webinar-series
The privatization in Indian port sector has increased significantly in the last decade. The Major Ports capacity is already stretched to its limit and capacity in the Indian port industry need to be augmented. These issues are being addressed by undertaking the Public Private Partnership models and involving captive users. New berths at major ports are constructed on PPP mode and corporatization of Port Trusts has provided better accessibility to funds by encouraging private investment. As a result, Private participation is gaining a major share in the overall investment, enabling a much needed competitive environment that discourages the inefficiencies in the Indian Port Sector.
Using ppps on projects that involve significant changes during the term - DLA...John Smith
Overview:
Using PPPs on projects that will involve significant changes during the term
• Many recent rail projects were delivered as PPPs
• In each case extensions were contemplated
• But the PPP model is known to be inflexible
• So, why was the PPP model used?
• What challenges did the PPP model create?
• Solutions
• Questions
Burness NHS Procurement Seminar - 30 March 2010Elaine Creamer
How does the NHS ensure that it obtains best value when procuring its construction needs? No doubt this will be a question that will increasingly concern the NHS should they be called upon to bear a share of the widely anticipated cuts in public spending.
Over the last 18 months, the NHS has sought to achieve best value through the application of Frameworks Scotland. HFS Frameworks Scotland operates on a design and build basis along with a target cost payment mechanism. Will HFS Frameworks Scotland always be the most appropriate way to procure the construction needs of the
NHS? Can local frameworks be used to procure projects for which Frameworks Scotland is not suitable? Burness, with the assistance of procurement specialists within the NHS and the private sector, will be offering answers to these questions.
Frameworks are no longer the only option for the NHS and a new era of the hub is now dawning. How will hub operate and how will it interact with national and local frameworks? Burness, as legal advisors to the hub South East Territory, is ideally placed to offer views of these important issues.
The presentation elucidates the study aimed at exploring the need of PPP model in India, with respect to capacities and capabilities of municipal governments to handle finance and governance of large scale urban infrastructure projects.
People are taking control.
They’re tuning out messages that are impersonal and interruptive and using Google to help make their next decision instead of speaking to you or your team.
What's more, they’re independently minded and highly connected.
If you really want to influence decisions, you need an approach that reaches and persuades the individual.
Sarah Tennison (Tees Valley Unlimited) - Teesside Collective: Current Progress on the Industrial CCS Project in Teesside - UKCCSRC Cranfield Biannual 21-22 April 2015
The Roman Empire A Historical Colossus.pdfkaushalkr1407
The Roman Empire, a vast and enduring power, stands as one of history's most remarkable civilizations, leaving an indelible imprint on the world. It emerged from the Roman Republic, transitioning into an imperial powerhouse under the leadership of Augustus Caesar in 27 BCE. This transformation marked the beginning of an era defined by unprecedented territorial expansion, architectural marvels, and profound cultural influence.
The empire's roots lie in the city of Rome, founded, according to legend, by Romulus in 753 BCE. Over centuries, Rome evolved from a small settlement to a formidable republic, characterized by a complex political system with elected officials and checks on power. However, internal strife, class conflicts, and military ambitions paved the way for the end of the Republic. Julius Caesar’s dictatorship and subsequent assassination in 44 BCE created a power vacuum, leading to a civil war. Octavian, later Augustus, emerged victorious, heralding the Roman Empire’s birth.
Under Augustus, the empire experienced the Pax Romana, a 200-year period of relative peace and stability. Augustus reformed the military, established efficient administrative systems, and initiated grand construction projects. The empire's borders expanded, encompassing territories from Britain to Egypt and from Spain to the Euphrates. Roman legions, renowned for their discipline and engineering prowess, secured and maintained these vast territories, building roads, fortifications, and cities that facilitated control and integration.
The Roman Empire’s society was hierarchical, with a rigid class system. At the top were the patricians, wealthy elites who held significant political power. Below them were the plebeians, free citizens with limited political influence, and the vast numbers of slaves who formed the backbone of the economy. The family unit was central, governed by the paterfamilias, the male head who held absolute authority.
Culturally, the Romans were eclectic, absorbing and adapting elements from the civilizations they encountered, particularly the Greeks. Roman art, literature, and philosophy reflected this synthesis, creating a rich cultural tapestry. Latin, the Roman language, became the lingua franca of the Western world, influencing numerous modern languages.
Roman architecture and engineering achievements were monumental. They perfected the arch, vault, and dome, constructing enduring structures like the Colosseum, Pantheon, and aqueducts. These engineering marvels not only showcased Roman ingenuity but also served practical purposes, from public entertainment to water supply.
Acetabularia Information For Class 9 .docxvaibhavrinwa19
Acetabularia acetabulum is a single-celled green alga that in its vegetative state is morphologically differentiated into a basal rhizoid and an axially elongated stalk, which bears whorls of branching hairs. The single diploid nucleus resides in the rhizoid.
Operation “Blue Star” is the only event in the history of Independent India where the state went into war with its own people. Even after about 40 years it is not clear if it was culmination of states anger over people of the region, a political game of power or start of dictatorial chapter in the democratic setup.
The people of Punjab felt alienated from main stream due to denial of their just demands during a long democratic struggle since independence. As it happen all over the word, it led to militant struggle with great loss of lives of military, police and civilian personnel. Killing of Indira Gandhi and massacre of innocent Sikhs in Delhi and other India cities was also associated with this movement.
2024.06.01 Introducing a competency framework for languag learning materials ...Sandy Millin
http://sandymillin.wordpress.com/iateflwebinar2024
Published classroom materials form the basis of syllabuses, drive teacher professional development, and have a potentially huge influence on learners, teachers and education systems. All teachers also create their own materials, whether a few sentences on a blackboard, a highly-structured fully-realised online course, or anything in between. Despite this, the knowledge and skills needed to create effective language learning materials are rarely part of teacher training, and are mostly learnt by trial and error.
Knowledge and skills frameworks, generally called competency frameworks, for ELT teachers, trainers and managers have existed for a few years now. However, until I created one for my MA dissertation, there wasn’t one drawing together what we need to know and do to be able to effectively produce language learning materials.
This webinar will introduce you to my framework, highlighting the key competencies I identified from my research. It will also show how anybody involved in language teaching (any language, not just English!), teacher training, managing schools or developing language learning materials can benefit from using the framework.
Welcome to TechSoup New Member Orientation and Q&A (May 2024).pdfTechSoup
In this webinar you will learn how your organization can access TechSoup's wide variety of product discount and donation programs. From hardware to software, we'll give you a tour of the tools available to help your nonprofit with productivity, collaboration, financial management, donor tracking, security, and more.
Palestine last event orientationfvgnh .pptxRaedMohamed3
An EFL lesson about the current events in Palestine. It is intended to be for intermediate students who wish to increase their listening skills through a short lesson in power point.
Instructions for Submissions thorugh G- Classroom.pptxJheel Barad
This presentation provides a briefing on how to upload submissions and documents in Google Classroom. It was prepared as part of an orientation for new Sainik School in-service teacher trainees. As a training officer, my goal is to ensure that you are comfortable and proficient with this essential tool for managing assignments and fostering student engagement.
Synthetic Fiber Construction in lab .pptxPavel ( NSTU)
Synthetic fiber production is a fascinating and complex field that blends chemistry, engineering, and environmental science. By understanding these aspects, students can gain a comprehensive view of synthetic fiber production, its impact on society and the environment, and the potential for future innovations. Synthetic fibers play a crucial role in modern society, impacting various aspects of daily life, industry, and the environment. ynthetic fibers are integral to modern life, offering a range of benefits from cost-effectiveness and versatility to innovative applications and performance characteristics. While they pose environmental challenges, ongoing research and development aim to create more sustainable and eco-friendly alternatives. Understanding the importance of synthetic fibers helps in appreciating their role in the economy, industry, and daily life, while also emphasizing the need for sustainable practices and innovation.
June 3, 2024 Anti-Semitism Letter Sent to MIT President Kornbluth and MIT Cor...Levi Shapiro
Letter from the Congress of the United States regarding Anti-Semitism sent June 3rd to MIT President Sally Kornbluth, MIT Corp Chair, Mark Gorenberg
Dear Dr. Kornbluth and Mr. Gorenberg,
The US House of Representatives is deeply concerned by ongoing and pervasive acts of antisemitic
harassment and intimidation at the Massachusetts Institute of Technology (MIT). Failing to act decisively to ensure a safe learning environment for all students would be a grave dereliction of your responsibilities as President of MIT and Chair of the MIT Corporation.
This Congress will not stand idly by and allow an environment hostile to Jewish students to persist. The House believes that your institution is in violation of Title VI of the Civil Rights Act, and the inability or
unwillingness to rectify this violation through action requires accountability.
Postsecondary education is a unique opportunity for students to learn and have their ideas and beliefs challenged. However, universities receiving hundreds of millions of federal funds annually have denied
students that opportunity and have been hijacked to become venues for the promotion of terrorism, antisemitic harassment and intimidation, unlawful encampments, and in some cases, assaults and riots.
The House of Representatives will not countenance the use of federal funds to indoctrinate students into hateful, antisemitic, anti-American supporters of terrorism. Investigations into campus antisemitism by the Committee on Education and the Workforce and the Committee on Ways and Means have been expanded into a Congress-wide probe across all relevant jurisdictions to address this national crisis. The undersigned Committees will conduct oversight into the use of federal funds at MIT and its learning environment under authorities granted to each Committee.
• The Committee on Education and the Workforce has been investigating your institution since December 7, 2023. The Committee has broad jurisdiction over postsecondary education, including its compliance with Title VI of the Civil Rights Act, campus safety concerns over disruptions to the learning environment, and the awarding of federal student aid under the Higher Education Act.
• The Committee on Oversight and Accountability is investigating the sources of funding and other support flowing to groups espousing pro-Hamas propaganda and engaged in antisemitic harassment and intimidation of students. The Committee on Oversight and Accountability is the principal oversight committee of the US House of Representatives and has broad authority to investigate “any matter” at “any time” under House Rule X.
• The Committee on Ways and Means has been investigating several universities since November 15, 2023, when the Committee held a hearing entitled From Ivory Towers to Dark Corners: Investigating the Nexus Between Antisemitism, Tax-Exempt Universities, and Terror Financing. The Committee followed the hearing with letters to those institutions on January 10, 202
The French Revolution, which began in 1789, was a period of radical social and political upheaval in France. It marked the decline of absolute monarchies, the rise of secular and democratic republics, and the eventual rise of Napoleon Bonaparte. This revolutionary period is crucial in understanding the transition from feudalism to modernity in Europe.
For more information, visit-www.vavaclasses.com
2. Procurement (CONS6817) Lara Tookey
Public Procurement
Engineer / Architect
D
Contractor
B
Bank / Financier
F
Operator
O
Public Authority
Investors Users
Shareholders
Agreement
Consultancy
Agreement
Construction
Contract
Loan
Employment /
O&M Contract
Tax/Rates/Tolls/Le
ase
3. Procurement (CONS6817) Lara Tookey
PPP Procurement
Engineer / Architect
D
Contractor
B
Bank / Financier
F
Operator
O
Special Purpose
Vehicle
Investors Users
Shareholders
Agreement
Consultancy
Agreement
Construction
Contract
Loan
Employment /
O&M Contract
Tax/Rates/Tolls/Le
ase
Public Authority
Concession
Agreement
9. Procurement (CONS6817) Lara Tookey
Risk in practice
$
Time
Government exposed to time and cost overruns
Government exposed to asset performance over time
Series of maintenance contracts tendered over time
10. Procurement (CONS6817) Lara Tookey
PPP Risk in practice
$
Time
Construction Service delivery
Payments are reduced if service doesn’t
meet the contracted performance
standards
11. Procurement (CONS6817) Lara Tookey
Special Purpose Vehicle (SPV)
• A company incorporated solely for the
implementation / management of the
project.
• Enters into contracts with the Government
and sub-contractors.
• Finances, develops, builds, maintains and
operates the project (or any other
combination).
• Guarantee and secure cash flows.
12. Procurement (CONS6817) Lara Tookey
Concession Agreements
• P3 contracts are generally long-term
contracts
• Contractor’s obligations
• D,B,F, O,M – or other combinations
• 15 – 25 year concessions
• duration increases relative to the level of
financial involvement of the private sector in the
provision of investments.
13. Procurement (CONS6817) Lara Tookey
Concession Agreements
• Authority provides a concession (in return
for performance of obligations) allowing
Contractor to:
• Generate revenue from Project (e.g. toll); and
• Do things normally precluded by law (e.g. toll)
or reserved to Public Authority (e.g. control
roads, operate prisons).
• Various legislations have been updated to allow
for PPPs
14. Procurement (CONS6817) Lara Tookey
Roads – LTMA 2003
• For PPP/DBFO/BOOT – Concession
Agreement required for a Toll
• Needed legislative authority to grant Road
Controlling Authority entitlements to private
sector
15. Procurement (CONS6817) Lara Tookey
Water & Wastewater
• Pre LGA 2002 – no restriction on PPPs
• Local Government Act 2002:
136. Contracts relating to provision of water
services-
(1) Despite section 130(2), a local government organisation may enter
into contracts for any aspect of the operation of all or part of a water
service for a term not longer than 15 years.
16. Procurement (CONS6817) Lara Tookey
Water & Wastewater cont…
(2) If a local government organisation enters
into a contract under subsection (1), it must
retain control over all matters relating to –
• The pricing of water services; and
• The management of water services; and
• The development of policy related to the
delivery of water services.
17. Procurement (CONS6817) Lara Tookey
Prisons
• Penal Institutions Amendment Act 1954
(amended 1995):
4A Management of Penal Institutions under
contract-
(1) Subject to this Act, the Secretary may from time to time, in the name
and on behalf of the Crown, enter into any contract with any other
person for the management by that person, of any penal institution.
18. Procurement (CONS6817) Lara Tookey
Underlying Philosophy
• Government does not have funds to do all projects
the public can benefit from whereas the private
sector has a surplus of investment money.
• The private sector executes projects and delivers
services more efficiently and manages the risks
better.
• If the private sector bears both the initial capital and
operating costs it will make better “whole of life” cost
judgements.
• The Government see public good in ensuring projects
are undertaken which are not core government
business e.g. Auckland Convention Centre.
20. Procurement (CONS6817) Lara Tookey
Typical motivators of public
sector
• Obtaining services or infrastructure without
deployment of public funds
• Transfer of maintenance cost risks to private
sector
• Transfer of operating cost risks to private sector
• Transfer of volume of use costs to private sector
• Roads, stadiums etc
• Avoidance of activities which are not the core
business of the public sector
21. Procurement (CONS6817) Lara Tookey
Service
Partnerships
Integrated
Partnerships
Finance
Partnerships
Development
Partnerships
22. Procurement (CONS6817) Lara Tookey
Finance partnerships
• Private partner provides capital funding for
government activity
• Lease of plant or equipment
• Lease of building
23. Procurement (CONS6817) Lara Tookey
Service partnership
• Private partner provides management
expertise for public asset
• Example Auckland trains
• Track owned by central government through Ontrack
• Stations and rolling stock owned by regional government
through ARTA (Auckland Regional Transport Authority
• Service operated by Veolia, a French company with
expertise in operating railways.
24. Procurement (CONS6817) Lara Tookey
Development partnerships
• Typically government owns land it wishes to
have developed and combines with a private
sector developer to do the development.
• Government may be a partner in the development
(and share the risk and reward) or simply sell the
development rights to the developer often with
restrictions on the type and scale of development.
• Example: Britomart area. ACC sold above
ground development rights to private
developers and used funds received to develop
a station below ground.
25. Procurement (CONS6817) Lara Tookey
Development Partnership
examples
Hobsonville Development
• Government and Council own land through
Hobsonville Land Co and have produced a
strategic plan and done the sub-division
work.
• Development and sale of houses by private
sector housing companies.
26. Procurement (CONS6817) Lara Tookey
Development Partnership
examples
Wynyard Quarter
• Auckland Council own land through
Waterfront Auckland Ltd and have produced
a strategic plan.
• Land is released to developers on long term
leases with controls on the developments they
can do:
• Kiwi Income Property Trust: ASB headquarters
• Goodman Property: Fonterra headquarters
• Precinct Properties: Commercial developments
• Willis Bond: Apartment developments
27. Procurement (CONS6817) Lara Tookey
Development Partnership to
provide public asset
Hobsonville Schools:
• Land owned by government.
• Private sector developer has concession to
build and maintain the school for a period of
30 years and is paid an annual payment.
• School is operated by public sector in normal
way.
• At end of concession period building
transfers to government.
28. Procurement (CONS6817) Lara Tookey
Development Partnership to
provide public asset
Paremoremo Prison
• Land owned by government.
• Private sector developer has concession to
build and maintain the prison for a period of
30 years and is paid an annual payment.
• Prison is operated by public sector in normal
way.
• At end of concession period building
transfers to government.
29. Procurement (CONS6817) Lara Tookey
Integrated partnerships
• Private sector provides a combination of
finance, development expertise and service
expertise to:
• Develop
• Fund
• Operate
a facility.
30. Procurement (CONS6817) Lara Tookey
Example 1 - Clearwater Project
Wellington (waste water treatment plant for Wellington City)
• Client - Wellington City Council
• Contractor - Anglian Water International Ltd
• DBO (design build operate) 25 year period
• Single lump sum payment for plant constructed
on WCC land once commissioning complete
• Annual fee to operate the plant
31. Procurement (CONS6817) Lara Tookey
Example 2 - Vector stadium
Auckland
Auckland City Council – project initiator
Motivation:
• Modern cities need stadiums (amongst other
things) to enrich the life of the city and make it
an attractive place to work for the well
educated and skilled who provide the key
element to develop a high value economy.
Sports, rock concerts etc. (based on work by Richard Florida
“The Rise of the Creative Class”)
• Stadiums are an important element of the
major conference business
32. Procurement (CONS6817) Lara Tookey
Vector stadium
Auckland City Council Perspective
(cont)
But ACC:
• Has limited capital and many other demands
on its money
• Has no expertise in operating stadiums
• Has learnt from its experience of owning the
Edge (Aotea centre, Civic theatre, Town hall)
that ownership can lead to taking event
promotion risks (and resultant losses)
33. Procurement (CONS6817) Lara Tookey
Vector stadium
Auckland City Council Perspective
(cont)
• It therefore wished to see the city acquire a
stadium but avoid the commercial risks
associated with owning and operating the
stadium.
• It accepted that private enterprise would not
provide such a stadium without public input as
the capital involved and commercial risks were
too high.
• It could provide the land, was prepared to put in
some significant money, was prepared to take
most of the planning (resource consent) risks.
34. Procurement (CONS6817) Lara Tookey
The Partnership
Auckland City
Council
Jacobsen Venue
Management
(Sydney) 75%
Worldwide
Entertainment
(Miami) 25%
Quay Park Arena
Management
Quay Park
Stadium
$68.2m $11m
Right to operate the
stadium for 40years
Stadium
returned to
Council at
the end of
40years
35. Procurement (CONS6817) Lara Tookey
Creation of the Stadium 1
Design Phase
Quay Park Stadium
Auckland
City Council
Quay Park Arena
Management
Crawford Architects (USA)
36. Procurement (CONS6817) Lara Tookey
Creation of the Stadium 2
Detailed Design and Construction
Phase
Quay Park Stadium
Auckland
City Council
Quay Park Arena
Management
Crawford Architects (USA)
Mainzeal Construction
Engineers (NZ)
Note: this information is deducted from press reports and may not be correct in detail
37. Procurement (CONS6817) Lara Tookey
Problems
• Stadium completion delays causes
cancellation of Cold Play Concert
• Crawford Architects takes legal action against
Mainzeal for non-payment of fees. Mainzeal
counter-claims re non-performance
• “Roof problem delays arena” Herald 8th April 06
• “Auckland arena investor charged with
$470m United States fraud” Herald 20th April 06–
company in liquidation – shares passed to a Court in Florida
38. Procurement (CONS6817) Lara Tookey
Wiri Prison
• BOOT scheme
• Government owned land
• Private sector has a concession to build and
operate the prison for 30 years.
• Agreement includes incentive payments
around KPIs such as prisoner rehabilitation
and penalties for matters such as prisoner
escapes
39. Procurement (CONS6817) Lara Tookey
Puhoi to Warkworth
Motorway
http://www.nzta.govt.nz/about/media/releas
es/4178/news.html
• What will the private sector be required to
do?
• What is the length of the concession?
• Is this a demand risk or availability risk PPP?
40. Procurement (CONS6817) Lara Tookey
Wellington Gateway
Partnership (WGP)
Go to http://www.tg.co.nz/
• What will this PPP provide?
• What is the concession period
• Who are the equity partners in WGP
• How is WGP procuring the design and
construction of the project
• Who are providing services to the PPP
• What performance criteria will there be during
the operation of the road
42. Procurement (CONS6817) Lara Tookey
Transparency in Public
Procurement
• For Public Procurement in general, where
governance, and in particular corruption
problems are still widespread, stringent
disclosure requirements are seen as a
potentially powerful remedy…
43. Procurement (CONS6817) Lara Tookey
Probity
• Queensland Premier Anna Bligh enjoyed a free holiday at
the Sydney mansion of Thiess director Ros Kelly just before
the contract was awarded.
• Patrick Lion and Steven Wardill, "Anna Bligh fails to declare free
holiday in Sydney mansion", Courier-Mail, 17 July 2008
• Former Labour ministers Terry Mackenroth and Con Sciacca
were paid a "success fee", (as government relations
advisors) believed to be about $500,000, by BrisConnections
after the consortium won the tender.
• Steven Wardill, "Terry Mackenroth, Con Sciacca share fee on airport
link contract", Courier-Mail, 23 January 2009
44. Procurement (CONS6817) Lara Tookey
Probity issues
• Difficulty of proving a PPP is a better deal
from the government than traditional
government investment and ownership.
• Issue is dealt with by requiring public sector
entity to produce a “public sector
comparator” which estimates the cost of
carry out the project in the normal way over
the life cycle of the project, taking account of
the risks.
45. Procurement (CONS6817) Lara Tookey
PPP Contracts
• Public and Private Sector each retain their
own identity
• They collaborate on the basis of a clear division
of tasks and risks
• Activities performed by those most capable
46. Procurement (CONS6817) Lara Tookey
PPP Contracts – Private side
• Private sector finances, builds, owns and
operates a public asset
• Designed to maximize the use of Private Sectors
Skills
• Used elsewhere for:
• Economic infrastructure: roads, railways, ports
• Social infrastructure: schools, hospitals, housing,
prisons.
• Transfer of risk to the private sector
47. Procurement (CONS6817) Lara Tookey
PPP Contracts – Public Sector
side
• P3 offers to the Public Sector greater Value
for Money:
• P3 transaction facilitates technology transfer
• Private Sector shares its experience with Public Sector
• P3 delivers high quality of infrastructure in the shortest
possible time
48. Procurement (CONS6817) Lara Tookey
PPP Contracts
• Emphasis on ‘outputs’ not ‘inputs’
• IE output specification approach
• public-sector party defines the basic standards
of service
• private-sector party chooses how to meet and
possibly improve upon these basic standards.
49. Procurement (CONS6817) Lara Tookey
Wiri Prison example – output
specification
• The use of the facility;
• The number of people to be accommodated;
• The type of equipment that would be used in
the facility and the operational environment
that it requires;
• The nature of the customer services that the
facility must support;
• Performance criteria in terms of components
and outputs; and
• Any constraints in the design or specification of
the facility.
50. Procurement (CONS6817) Lara Tookey
PPP Contracts
• This approach incentivises innovative
solutions,
• allowing for private sector's skills and
knowledge to feed into public service provision,
• but comes at the cost of greater risk of contract
misspecifications for the public sector.
51. Procurement (CONS6817) Lara Tookey
PPP Contracts
• The bundling of project phases into a single
contract is the main characteristics of P3
contracts.
• Various options of bundling exist:
• the design (D),
• the building (B),
• the finance (F) and
• the operation and management (O) (M)
52. Procurement (CONS6817) Lara Tookey
PPP Contracts... Payment
Mechanism
• P3 arrangements aim at maximizing
incentives for the private-sector party to take
into account
• whole-life costing and to
• undertake innovative approaches leading to cost
reduction and quality improvement.
53. Procurement (CONS6817) Lara Tookey
PPP Contracts... Payment
Mechanism
• Therefore the payment scheme under P3s
must be output oriented & in the spirit of
fixed price arrangements:
• the payment must depend on output (and thus
on the service being provided)
• rather than on input (the cost of the service)
and
• payments should only occur once the service is
provided (and not before the infrastructure is
built).
54. Procurement (CONS6817) Lara Tookey
PPP Contracts
• Upon contract expiry, the public-sector party
regains possession of the assets
• and can re-tender aspects of the service
provision to other providers or take provision in-
house.
56. Procurement (CONS6817) Lara Tookey
Risks and Rewards
• Project risks are allocated to the party that is
the best equipped to manage them.
• Usually the contracts include incentives that
reward private partners for mitigating risk
factors.
57. Procurement (CONS6817) Lara Tookey
Risk issues when contracting
with government
• Private sector views government as having
special powers which unbalance the
commercial relationship
• General perception that the private sector
partner is ‘contracting with the umpire’
58. Procurement (CONS6817) Lara Tookey
Risk issues when contracting
with government
• Govt’s role in law making is perceived as
giving it the opportunity to ‘change the rules’
• Risk transfer should be fair and offer the
private sector incentives to perform.
• This may be achieved through ‘optimum’ risk
transfer
59. Procurement (CONS6817) Lara Tookey
Risk - Private Partner
Perspective
• Would take on risks if appropriately priced,
managed, and mitigated.
• This may involve transferring the risks to third
party- by sub-contract or insurance.
• Accepts the financial consequences of the
risk, provided a premium is there for taking
on that risk.
• Would be unwilling to take on a particular
risk, when the risk is not within its control.
60. Procurement (CONS6817) Lara Tookey
Risk - Private Partner
Perspective
• Generally, private sector (and lenders) view
the project as a whole - willing to accept
higher risks in certain areas if balanced by
lesser risks in others.
61. Procurement (CONS6817) Lara Tookey
In general….
• Choose the Private sector partner well
• Get the Briefing right
• Get the Banks on side
• Use the FM Partner to assist in design and
definition
• Use long term relationships, not single
project partnerships
62. Procurement (CONS6817) Lara Tookey
ACTIVITY (20 MIN) Working with your peers
1. What are the
benefits to the SPV?
2. What are the risks to
the SPV?
64. Procurement (CONS6817) Lara Tookey
Channel Tunnel (BOOT with Concession)
• 50.5KM rail link (Folkestone & Calais)
• 37.9km – longest undersea portion of any
tunnel in the world
• 75m deep - lowest point
• Ideas began 1802!
• Began 1988 – opened 1994
• 80% over budget
65. Procurement (CONS6817) Lara Tookey
Funding
• The British and French governments gave
Eurotunnel a 55- (later 65-) year operating
concession to repay loans and pay dividends.
66. Procurement (CONS6817) Lara Tookey
• Initial equity of £45 million was raised
• Increased by £206 million private
institutional placement,
• £770 million was raised in a public share
offer that included press and television
advertisements,
• A syndicated bank loan and letter of credit
arranged £5 billion.
67. Procurement (CONS6817) Lara Tookey
• Privately financed, the total investment costs
at 1985 prices were £2600 million.
• At the 1994 completion actual costs were, in
1985 prices, £4650 million: an 80% cost
overrun.
• The cost overrun was partly due to enhanced
safety, security, and environmental demands.
• Financing costs were 140% higher than
forecast.
68. Procurement (CONS6817) Lara Tookey
Problems….
• Fires
• Illegal immigrants
• Asylum seekers…..
• Operating revenue less than anticipated
69. Procurement (CONS6817) Lara Tookey
Technical difficulties
• Special machines had to be built to bore
through the rock under the Channel.
• Required working in two languages, and
using two sets of national construction,
safety and legal codes.
• It involved ten contractors and 220 syndicate
banks.
70. Procurement (CONS6817) Lara Tookey
Inflation…..
• The Channel Tunnel costs became inflated
due to several reasons mostly unrelated to
the actual construction.
• Included in these reasons was the inefficiency of
a complex organisation for procuring the project
with five French Contractors and five British
contractors working for a newly created
company called Eurotunnel that had no
experience managing a project of this
magnitude.
71. Procurement (CONS6817) Lara Tookey
• Further, the fact that the tunnel connected
two countries that had a history of
disagreeing created arduous decision
processes.
• These were particularly demonstrated within
the vehicle procurement when the shuttle
railcars were redesigned many times, greatly
increasing their cost and complexity and
delaying the operation date for the facility.
74. Procurement (CONS6817) Lara Tookey
• SecureFuture were able to better the public sector
comparator by 17%. This was achieved by:
• They commenced design pre-award.
• They were on site the day of financial close.
• To mitigate missing design milestones, Fletchers conducted risk
workshops to ensure that there was no single supply source or
person who could delay the construction programme. Multiple
options were always available.
• Continuous peer review. All key elements (from financial
models to the construction method and everything in between)
were peer reviewed.
• Fletchers built mock-ups so everyone could have a clear
understanding of what a prison cell module looked like.
• Pre-cast concrete was used to overcome the problem of pouring
concrete over two winters.
• Revit modelling software was used.
76. Procurement (CONS6817) Lara Tookey
GMR Hyderabad International
Airport Limited
• GMR Hyderabad International Airport
Limited (GHIAL) is a joint venture company
• The Company was incorporated to design,
finance, build, operate and maintain a world
class greenfield airport at Shamshabad,
Hyderabad.
77. Procurement (CONS6817) Lara Tookey
• Consultants from Norway and India for
design / engineering input
• MC#1 (airside and landside works)
• (US$115m)
• MC#2 from HongKong (construction of the
passenger terminal)
• (US$153) – came in under budget.
78. Procurement (CONS6817) Lara Tookey
Innovation!!
• Open Access Fuel farm
• Reliance Industries (RIL) was given the contract
to operate and maintain India's first unique
open access model inside the airport (seven-
year contract).
• Means any oil company can supply fuel to
airlines as per their agreements.
• Developed in consultation with internationally
reputed companies: Red Mallee, an Australia-based
consultant, and Hong Kong Airport Services, Hong
Kong.
79. Procurement (CONS6817) Lara Tookey
Kakinada Deep Water Port
• The procurement process for KDWP was
based on international competitive bidding
for development of the port on the
OMST/BOMST format.
• Operate Maintain Share and Transfer / Build Operate
Maintain Share and Transfer
• It was a two stage process with a
prequalification stage and an RFP stage
80. Procurement (CONS6817) Lara Tookey
• The concession agreement was signed on the
19th March 1999
• with M/s International Seaports Pte Ltd (ISPL), a
joint venture company registered in Singapore,
promoted by Larsen & Toubro Ltd, India,
Stevedoring Services of America (SSA), USA and
Precious Shipping Company, Thailand. ISPL
subsequently inducted Konsortium Perkaplan
Berhard (KPB), Malaysia
• and floated a Special Purpose Company in the name
of Cocanada Port Company Ltd (CPCL) for managing
the port operations.
Editor's Notes
PPPs should always cost more because of the cost of finance
Reverse the impact of risk
This places the onus of responsibility on the private sector (equity investors): if they want to get paid they must deliver on time, to budget and to specification
Equity investors therefore exert a discipline upon the project that is difficult to achieve through the public sector alone
OECD – Organisation of Economic Cooperation and Development
Rose-Ackerman, 1999
Kaufmann, 2005