Greater collaboration between the public and private sector in emerging markets is transforming property and infrastructure and providing exciting opportunities for economic growth. We are now seeing public private partnerships (PPPs/P3s) in a wider range of countries, as well as in new sectors (e.g. water and wastewater) both in established PPP/P3 markets and in those where PPP/P3 project pipelines have paused - such as the UK.
What is often lacking in these partnerships is the expertise, experience and credibility to fully unleash the huge potential of PPPs/P3s. However, with specialist PPP/P3 training it is possible to equip public sector organisations with the capabilities to prepare, procure and manage these valuable partnerships. The benefits of having these skills are very clear, because the more skilled public sector teams manage to secure better value bid prices from the private sector partner and the funders.
PA is the first consultancy able to deliver the newly launched APMG PPP Certification Program, sometimes referred to by its awarded credential - the Certified PPP Professional (CP3P). We have partnered with the Chartered Institute of Public Finance and Accountancy (CIPFA) to provide this training and have just returned from delivering this training to World Bank and Government PPP Unit staff in Kenya, Uganda and Rwanda.
As part of the CP3P training we needed to understand the national scale of the PPP/P3 opportunities in these countries and so ran a “readiness assessment”. This allowed us to consider the views of the World Bank and PPP Unit staff and understand their perceptions from an international investor stand point. The issues covered in this assessment included the institutional framework for progressing PPPs/P3s; the state of the economy; the level of political engagement; and support for a PPP/P3 pipeline.
We identified that there are a number PPP projects in the pipeline, including those in procurement, under construction and operating, and that these are supported by strong GDP growth – 5.6% in Kenya, 5% in Uganda and 7.5% in Rwanda. It was also clear that, at an individual level, staff were enthusiastic, they had a good level of existing skills and they recognised the importance of having programme/project managers, technical, financial / commercial and legal experts in their teams.
A key principle of the CP3P training and accreditation is to drive the use of a standard global language for describing PPPs. This is not to say that local terminology, legislation, guidance and approach will change, but a CP3P professional will be able to recognise and reconcile the differences between the approach in their own and other jurisdictions. At a national scale, the benefits of this accreditation programme include equipping organisations with the know-how to champion vital collaborative infrastructure programmes and projects.
We drew on our own experience as practitioners to ensure that the staff understood how to implement a project effectively, based on a strong business case process, and a good PPP/P3 arrangement. In particular, we wanted to underline the importance of not spending time and resource developing a theoretically perfect PPP/P3 arrangement, which is then not implemented. We were also able to use our experience from working on both the public and private sector side to provide insights into private sector motives in PPP/P3 deals and on the importance of post contract signature contract monitoring. It is vital to recognise that these are long term (25 years) relationships where the public value / VFM of a PPP/P3 accrues throughout the operational phase and so these projects need ongoing scrutiny.
These partnerships are going to remain high on the agenda in many countries. Property and infrastructure spending is forecast to hit $9trillion by 2025, a proportion of which will be PPPs P3s. In addition, the World Bank has approved 407 loans with a PPP component, between 2002 and 2016 totalling $15.6 billion and the UK Defence Infrastructure Organisation has announced that it will explore and analysis alternative funding sources, such as PF2 (private finance), to meet £2 billion of required investment. All that means that the CP3P training and accreditation is a very timely addition to the support available to those embarking on PPP projects.
Mark Williams, Director and Property & Infrastructure Lead at PA Consulting and member of CIPFA's Governments Faculty Board - specializes in providing financial and commercial advice on a range of complex contract PPP/PFI savings projects across defence, transport, education and health.