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Body of Knowledge:
Project Identification and PPP Screening
There are multiple techniques for identifying the best technical solution for a project and hence which projects best meet public needs. This section will briefly introduce those techniques.
The government should have a policy of using a particular technique so that all projects are compared in a...
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Body of Knowledge:
Project Identification and PPP Screening
The next step after defining the technical solution is to clarify the technical scope, including a detailed description and set of requirements for the most important aspects of the project (that is, a technical outline of the project).
This step includes a description of the project that covers...
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Body of Knowledge:
Project Identification and PPP Screening
Most projects have constraints and dependencies that must be clarified before beginning the full appraisal, such as land availability and environmental studies. The main purpose of these considerations is to identify potential difficulties or obstacles that will have to be considered during the...
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Body of Knowledge:
Project Identification and PPP Screening
This section introduces[16] the concepts of Cost-Benefit Analysis and economic analysis.
FIGURE 3.3: Sequence of the CBA Analysis
Note: CBA= cost-benefit analysis; eIRR= economic Internal Rate of Return; eNPV= economic Net Present Value.
The most refined form of economic analysis is the Cost-...
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Body of Knowledge:
Project Identification and PPP Screening
The main performance indicators in economic-analysis are the economic Net Present Value and the economic Internal Rate of Return (eNPV and eIRR, respectively). Mathematically speaking, the eNPV consists of the projected costs and benefits, duly discounted using a suitable discount rate, and the...
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Body of Knowledge:
Project Identification and PPP Screening
In general terms, cost and revenue cash flows need to be adjusted in order to reflect the real value or cost for society. The current market prices for many costs (but also revenues) usually reflect the real costs for the society as they appropriately provide opportunity costs. However, some cost...
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Body of Knowledge:
Project Identification and PPP Screening
The risks that are inherent to a project have to be considered and included in the appraisal. This must be done through proper adjustments and/or showing the ranges of values for certain sensitivities/future movements or the deviations on critical factors and variables. For this purpose, risks have...
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Body of Knowledge:
Project Identification and PPP Screening
Scoping the PPP project means defining the work that must be done by the future private partner to deliver the project objectives. Potentially some portions of the project scope (technically speaking) may be refined and removed from the PPP project (for example, if the project selected is a bus...
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Body of Knowledge:
Project Identification and PPP Screening
To avoid the risk of sinking resources into the analysis and structuring of a non-feasible PPP project, the government must determine whether the project makes sense as a PPP, provided that it has been satisfactorily tested as economically sound or sensible (under the CBA as explained).
This issue...
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Body of Knowledge:
Project Identification and PPP Screening
Before confirming the decision to move to the next stage (appraisal), a list of tasks to be carried out and a schedule should be developed. This will:
Serve as the basis for the Request for Proposals for external advisors, if needed; and
Assist the government, in the Appraisal Phase by identifying...
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Body of Knowledge:
Project Identification and PPP Screening
The interaction between stakeholders, or the parties involved, has an important role in the project cycle. The main goal is not just to communicate about PPPs. Communication with stakeholders is an essential element of all projects, whether through a PPP or traditional procurement process.
The...
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Body of Knowledge:
Project Identification and PPP Screening
It is common to think of stakeholders as an external audience. The external audience is composed of all the stakeholders interested in the project, outside the internal scope of the government and of bidders in the procurement process. This audience includes banks, investment funds, government and...
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Body of Knowledge:
Project Identification and PPP Screening
During the Screening Phase, but not only then, successful PPP projects often make a specific effort to communicate the results of the various steps of the PPP process, as well as the decisions made during the phase, to the general public and to those specific groups with a particular interest in...
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Body of Knowledge:
Project Identification and PPP Screening
As explained, if a project is identified as the appropriate solution to a need and the results of the PPP suitability test are positive, before moving ahead within the project cycle, a “project team” should be defined, which will carry out the next phases: the Appraisal and potentially the...
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Body of Knowledge:
Project Identification and PPP Screening
The capabilities necessary for an appraisal process can be divided into five main groups.
Technical:
In charge of the project’s design, with expertise in the type of infrastructure that is the subject of the contract;
Expertise in the technical aspects of the services involved.
Environmental:
In...
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Body of Knowledge:
Project Identification and PPP Screening
The importance of advisors in PPPs has been emphasized by Jangun and Marques (2006): [34]
“As governments transition from their role of monopoly provider of infrastructure services to setting the framework for private provision of infrastructure services, independent “third party” advisory...
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Body of Knowledge:
Project Identification and PPP Screening
The procurement and selection of advisors may be done as a group, that is, selecting a consortium of firms under a single advisory contract to cover all the areas of work, or under separate procurement and contracts.
There are pros and cons to both of these options. A single integrated team will...
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Body of Knowledge:
Project Identification and PPP Screening
It is good practice to complete a report containing at least the following sections before entering the full appraisal process and, specifically, before committing staff and/or hiring advisors.
1. Executive summary and recommendations;
2. Project description: Outline of technical solution;
3. Needs...
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Body of Knowledge:
Project Identification and PPP Screening
There are three possible outcomes of the project analysis in this phase: move on to the next stage (the project appears to be economically sound and is a suitable PPP candidate); it is not suitable to be a PPP; or since some relevant information is missing, or there is a need to clarify some...
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Body of Knowledge:
Project Identification and PPP Screening
Name of Document (including version if more than one)
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Defining Success for Software Projects: An Exploratory Revelation
Agarwal, N....
