Specialized knowledge is required to ensure a winning bid, and the consortium bidding for the procuring authority’s PPP project will be keen to put this in place as soon as possible. Despite the fact that large sponsors have internal resources that can be used to deal with the preparation of the consortium’s RFP response, it is common practice to use external advisers as well. See diagram 6A.8 below that sets out how the consortium’s sponsors and staff work together with external advisers.
External advisers will work alongside the consortium’s members to support and assist them in their review and assessment of the procuring authority’s PPP project, and in particular, the review and assessment of the documentation issued by the procuring authority.
External advisers will provide specialist technical, legal, and financial advice, as well as general support to enable timely preparation of tender documents and deliverables. Some advisers, although not all, may provide additional bid planning and management services.
External advisers to the consortium will provide advice to the consortium as a whole. Each sponsor may also have its own independent adviser.
Making significant decisions for and on behalf of the consortium is, as a rule, outside the advisers’ scope of work. However, the external advisers, in their supporting role, will ordinarily act as the ‘agent’ of the consortium. External advisers used by the consortium will attend meetings called by the procuring authority, and they may respond in writing to questions raised. However, they do so in consultation with and after taking advice from the bid manager and ultimately the consortium members. As such, their role is to act as the conduit through which the consortium’s views will be expressed.
External advisers do not determine what these views are. Indeed, that is the sole function of the consortium. However, by virtue of the advice provided by the advisers to the consortium, the advisers can rightly be said to have helped shape and influenced the consortium’s decisions. Occasionally, the consortium may receive conflicting advice from advisers, and in such situations the bid manager or the SC will act as the final arbiter and determine the way forward.
The typical areas covered by the external advisers are legal, technical, and financial.
FIGURE 6A.8: Bid Working Team: Areas of Responsibility and Main Activities.
Note: CapEx= capital expenditures; FC= financial Close; OpEx= operation expenditure; PIM= Project Information Memorandum ; FM = Financial model; RFP= Request for Proposal.
The consortium will be aware that it is advisable to start using expert advisers, whether in-house or external, as soon as possible — and certainly by the time a decision has been taken by the consortium to go ahead with a PPP project. If not appointed early, there is a risk that the best advisers will not be available and might be advising competitors.
In some instances, and depending on the complexity of the PPP project, the consortium may chose a large international multidisciplinary consultancy firm to provide all (or the majority) of the required advisory services at once. Normally, however, the consortium will appoint several specialized advisers for particular tasks, such as advising on just technical or financial aspects of the project.
Typically, the consortium will try to secure the best international external advisers. The importance of using local advisers should not be underestimated, and it is common for the international advisers to help select suitable local advisers.
Working with leading regional/local advisers (likewise with local bidding consortium partners) is essential and the consortium should expect to obtain such advice. This practice will help ensure that the consortium gets a good understanding of the local context of the PPP project, including project risks. Having local advisers will also facilitate the development of relationships and meaningful interaction with local stakeholders, policy makers, and local communities because local advisers will be working in the same environment. The consortium will be keen to develop these relationships.
The key considerations to take into account when the consortium appoints advisers can be summarized as follows.
- Professional advice is about people and skills: the consortium will therefore want to ensure that key individuals from the adviser community are available for their PPP project.
- The length of time taken to appoint advisers can be considerable. Consequently, the timing of their appointment must not jeopardize compliance with the procurement timetable.
- Advisers should have the relevant experience, capacity, and resources to deliver on time and quality work through the tender process. It would be helpful if they had experience in working with the procuring authority.
- Advisers should provide an assurance that the advisory team initially appointed will be the team that advises throughout the tender process.
- Advisers should have no conflicts of interest and should confirm this to the consortium on a regular basis. Where an advisory organization has multiple teams advising multiple bidding consortia, then they should put in place information barriers (“Chinese walls”) so that there are no breaches of commercial confidences.
- The consortium’s and the advisers’ working cultures must be fully aligned.
- Advisers’ Terms of Reference (ToRs) must be prepared and structured accordingly in order to ensure Value for Money. These will set out the scope of work that the advisers need to provide and the corresponding fee structure. The ToRs must be drafted to ensure a strong alignment of interests, and a clear definition of goals, deliverables, milestones and incentives.
The appointment of the consortium’s advisers is normally undertaken with the support of the sponsors. The sponsors will have experience of working with certain advisers and will have a good understanding of what activities could usefully come within the advisory scope, as well as the price that should be charged for providing the advice.
However, although sponsors might have preferences when appointing an adviser, the appointment will be a consortium’s decision, that is, a combined decision of the consortium members. When appointing advisers, the consortium will know how important it is to follow a structured procurement process; this ensures the receipt of competitive proposals that give Value for Money and which are transparent.