Presentation made by Jo Fox, Infrastructure and Projects Authority, United Kingdom, at the 9th annual network meeting of Senior Infrastructure & PPP Officials held at the OECD, Paris, on 1 March 2016

1. Maintaining and enhancing value
from existing PPPs
Jo Fox
Head of Public Private Partnerships
Infrastructure and Projects Authority
1st March 2016

2. 2
Current operational situation
Maintaining & enhancing value from existing deals

3. 3
Revenue liability
Maintaining & enhancing value from existing deals

4. 4
Some challenges
Public sector
• Poor governance
• Lack of authority contract management capacity and capability
• Stand alone projects – not a portfolio
• Market intelligence
• Contracts poorly drafted, didn’t adequately anticipate change
• Public (and political?) perception – lack of confidence
• Lessons learned not captured systematically
Private sector
• Not all investors are equal
• Thin ‘post box’ SPVs
• View PPPs as financial assets
• Secondary market acquisitions – poor due diligence?
Maintaining & enhancing value from existing deals

5. 5
Maintaining value of projects
The project must have demonstrated value for money before
agreement entered into – so, if deals are operating as originally
intended value should be being ‘maintained’.
Maintaining value for money = ensuring we receive the services we
contracted for. Are we getting what we paid for?
Maintaining value for money = excellent contract management =
preventing value leakage
Maintaining & enhancing value from existing deals

6. 6
Enhancing value of projects
The start point for enhancing value from existing deals has to be the
assumption that value is being maintained as originally intended =
getting what we contracted for.
Enhancing value for money = improvements and changes to the
contract to the net benefit to an authority.
Maintaining value for money = excellent and proactive contract
management.
Maintaining & enhancing value from existing deals

7. 7 Maintaining & enhancing value from existing deals
Operational Efficiency Programme
• Collect and analyse data on operational projects
• Case studies and lessons learned
• Guidance – how to conduct compliance and efficiency reviews
• Thematic reviews e.g. value testing, insurance
• Pilots e.g. change in law provisions
• Operational compliance interventions e.g. fire
• Department specific support e.g. health bond portfolio
• Network and training events
• Market and stakeholder engagement
Central team of commercial specialists with ministerial backing
Direct support to departments and individual projects
Next steps – refocus on central government; contract management upskilling

8. 8
So how are we doing?
Maintaining & enhancing value from existing deals
• Better use of assets
• Changes to services specifications
• Deploying advances on technology – street lighting
• Change in risk ownership e.g. change in law, insurance
• Refinancing
OPEP Phase 1 – circa 200 projects, £2.2bn signed savings mainly arising from
better use of assets and service related changes
OPEP Phase 2 (Refocus) – Start point Phase 1 pipeline of
£2.1bn – expect more

9. 9
Where are efficiencies coming from?
Maintaining & enhancing value from existing deals

10. 10
Key points for maintaining and enhancing value
Public sector
• Value excellent contract management
• Manage projects proactively and ruthlessly
• Lot at all the options for enhancement and changes
• Consider centralised sponsorship where fragmented contracting base
Private sector
• Address ‘thin’ SPVs; better portfolio management
• Stop treating projects as financial assets
• Support authorities to ensure contracts are operationally fit for purpose
• Bring forward ideas – we’re in this together
Maintaining & enhancing value from existing deals
Maintaining and enhancing value = inextricably linked
Still much to be done