Infrastructure has finally made it to the top of political agenda following many years of neglect and decades of improper planning. Many business leaders are of the opinion that inadequate infrastructure will negatively impact their companies’ long-term growth and the decision of where to do business will be influenced by surrounding and available infrastructure. Government frontrunners are saying that developing countries need new infrastructure, while developed countries need rebuilt infrastructure and almost every country is struggling to finance its infrastructure needs. The common thread of both public and private sector is the need for new infrastructure bridging it with private finance and investment and attracting the same through sensible pricing and better regulatory policies.
The question is how the optimal mix of public and private sector involvement for any given project be determined so that limited public money can create maximum public value. The answer is through Public Private Partnerships.
In order for Public Private Partnerships to prove beneficial to the Government and to the public, they need to answer these following questions:
- Is the project affordable?
- Is the theoretical value for money demonstrated? And;
- Has appropriate transfer of risk between public and private sector achieved?
This can be achieved if the project is executed as it is originally envisaged and if proper contract management and administration is applied throughout lifespan of the project.
The effectiveness of a PPP cannot be guaranteed at financial close. Therefore, contract management is critical to securing value for money by implementing key elements during the construction and operational stage of the PPP in order for the risks to be managed and realised as was envisaged when the project was formulated during the feasibility stage.
APMG International will be launching a PPP certification scheme in partnership with the World Bank Group early 2016, to improve performance of PPP practitioners across all aspects of PPPs. One of the topics that is emphasised in the PPP Certification Guide is contract management. This will give great insight of how proper implementation of contract management is imperative to the success of the PPPs.
Written by PPP Certification Guide author, Irina Unkovski - Infrastructure and Capital Projects Specialist
Irina is a qualified Quantity Surveyor and holds a Master’s Degree in Building specializing in various Infrastructure Procurement Methods. She has more than 15 years of experience working with both Public and Private sector on various Infrastructure initiatives. Currently, Irina is with Deloitte South Africa, leading Corporate Finance Infrastructure Capital Project Team.
Irina has completed various consulting assignments mostly at National and Provincial Government levels specifically development of infrastructure on PPPs within transport, healthcare and commercial buildings. As a result she is familiar with various vehicles, which could be used in alternative service delivery, be it by National, Provincial or Local Government.
Currently, Irina is developing a methodology for Project Management of existing and operating PPPs which will assist government officials in successful delivery, as well as provide a tool for managing the PPP inception for both Transaction Advisors and government officials. She has been involved in projects of monitoring nature such as Gautrain, as well as assisting clients in the public sector with monitoring and assurance of the adjudication of tenders over R 30bn in value.