1.7.3 Ensuring Coordination and Best Practice

Sector agencies may lack some of the skills needed to identify and develop PPP projects successfully. Particularly at the early stages of a PPP program, sector agencies may have little experience in engaging with the private sector on privately financed projects. Sector agencies may also lack expertise in rigorous project analysis, or they may have an inadequate focus on achieving Value for Money for the government as a whole. Moreover, coordination across the government is needed, something that sector agencies cannot provide. For this reason, other entities are often also involved, including those listed below.

• Specialized PPP units. These units are a repository of skill and experience in developing PPPs. They support contracting authorities in implementing PPP projects. They are often an extension of one of the central agencies such as the ministry of finance. Section 4.6.6 provides several more examples of PPP units and the extent of their roles in implementing PPPs; and
• External PPP transaction advisors. Even governments with long PPP experience do not have all of the in-house expertise and skills needed to develop PPP projects. All engage external specialist advisors for detailed, technical tasks, such as conducting feasibility studies and drafting PPP contracts. The extent and nature of external advisory support needed will change as the program evolves. For example, in the Netherlands, initially external advisors constituted about 75 percent of the personnel engaged on any given PPP. This slowly changed in favour of internal staff as they became more familiar and better qualified to prepare and procure PPP deals. Moreover, the Dutch government initially used UK advisors as they were more experienced with PPPs. Over time these were replaced by local Dutch advisors who had demonstrated their skills in this area.^[90]

It is important to highlight that some commercial skills are required in-house in order to appoint and manage appropriate advisors. If the wrong advisers are appointed or the advisers are not managed appropriately, the project will not start out well.

• Inter-departmental committees to oversee each PPP transaction. These committees often include representatives from the sector ministry as well as ministries of finance and planning, and legal representatives. Of course, ways need to be found to make the processes of such committees streamlined and efficient. Without this, there is a risk that they become bureaucratic bottlenecks. One country which does this is Jamaica which forms “enterprise teams” for all privatizations and PPPs. Such teams can ensure coordination between agencies, and they bring in senior skilled practitioners to guide the transaction. Similarly, in British Columbia, Canada, each project has a “steering committee” established before procurement begins. This committee has representatives from the ministries of finance and infrastructure, as well as the procuring authority. The steering committee remains in place through the Design and Construction Phase;
• Specialist entities in different implementing roles. This is done in Perú where the procurement agency is responsible for implementing the PPP transaction, and sector regulatory agencies are responsible for monitoring the private parties’ compliance with the PPP contract; and^[91]
• Central Agencies. Central agencies are those with “whole of government” (rather than purely sectoral) functions. They typically include the ministry of finance, the body responsible for economic planning and coordination (where this is separate from the ministry of finance), and the body responsible for legal compliance across government (such as an attorney general’s department). It is usual for these central agencies to be involved in commenting on all major policies initiatives and projects involving expenditure, economics or legal matters. The central agencies are generally involved in the creation of the PPP framework. The framework then generally requires that the advice from the central agencies be sought at particular points in the PPP project development process.

Since the central agencies are involved in all PPP projects, their input can ensure consistency, coordination, and best practice. For example, the ministry of finance might demand that cost benefit analysis and Value for Money analysis are done for all projects, in consistent ways. The attorney general might demand that certain legal templates be used, and that the government always avoid certain legal risks. Typical central agency roles include the following.

Ministry of finance roles: The finance ministry is often central to the controlling function for PPPs. Finance ministry involvement helps ensure that the PPP program is focused on achieving Value for Money and that fiscal risks are managed. Examples of finance ministry control processes are shown in Box 2.14.

Planning agency roles: In countries where national planning agencies perform a strong coordination function in infrastructure or economic policy generally, they may also be given the role of regulating the PPP process. Where a planning agency is involved in a control function, the program generally works best when there is also a mechanism for effective coordination with the finance ministry. Box 2.14 (bis) provides some examples.

Attorney general’s role: In many countries, the attorney general’s signoff is required for major contracts, including PPPs. The PPP law of Tanzania (2010) requires that the implementing agency submit the final draft PPP contract for approval by the attorney general, before the contract is executed.[97] This is also required in Jamaica.

However, this is not universally required. Australian state governments tend to engage leading private law firms to advise the government on PPPs. Australian governments recognize that private law firms have greater expertise in fields such as construction and project finance than their attorney-general’s departments (which tend to have more expertise in administrative law).