The level of input required from stakeholders should not be underestimated, and feedback at all stages of a project can ensure the project is continuing to deliver value for money to the government and the community. Members of the local community will typically know the area well and may be able to contribute positively to project planning and enhance the value of the project.
On the other hand, insufficient consultation can be detrimental to the completed project. For example, many PPPs globally have been adversely affected by land acquisition issues, and other communication failures with stakeholders, identifying a strong lesson to be learned from past experience.
Example – negative impacts of poor stakeholder engagement
The relationship with the end-users is a key ingredient to the success of a project. On the Segarra Garrigues Irrigation project in Spain, farmers were required to agree to and provide their own capital to connect to the water network. This only occurred after an improved stakeholder management plan was implemented and much of the delay that occurred on that project was due to the reluctance of these landowners to engage with the development.
For more information, see the Segarra Garrigues Irrigation System Case Study.
Public stakeholder engagement can also provide great opportunities to enhance the design of the infrastructure, to increase employment or to better serve otherwise underserved members of the community.
There may be other challenges faced by the Procuring Authority and the broader government with respect to delivering infrastructure generally, and also delivering infrastructure using a PPP model. The PPP model can have negative public perceptions, and an understanding of the benefits of the model on a broader scale, particularly the benefits to end-users, should be communicated to the public. Negative publicity created by the media following a project specific failure may negatively impact a much wider public perception of PPPs, as a result of which the overall benefits of a specific project or of the PPP model in general may be overlooked.
Focus groups, comprising end-users and people living in or close to the area affected by the project, can be used for a qualitative assessment of expectations and feelings on the project’s features and specific issues. Surveys are commonly used for gathering feedback from larger groups.
Example – Design input and serving underserved groups
The I-495 Express Lanes project in the USA highlights that public engagement with key stakeholders can deliver a better project for the community and for the project sponsor. Initial plans for the project included just one access point into the region’s largest employment centre. After early feedback from major employers, elected officials and transit advocates, the project team changed the scope of the project to include three major entry and exit points to serve the busy commercial area. By proactively engaging stakeholders early, the parties were able to work collaboratively to develop a transportation solution that provided a better outcome
On the same project, the Procuring Authority mandated that the Project Company utilise ‘Disadvantaged Business Enterprises’ where possible, with $490 million contracted to small and disadvantaged businesses. At the time, it was the largest contribution in Virginia’s history for such businesses from a single transportation project.
For more information, see the I-495 Express Lanes Case Study.
Example – engaging with stakeholders on design particulars
The Zaragoza Tramway project in Spain highlights the benefit that all stakeholders can achieve by including the public in the decision-making process. In that project, for every tree that had to be removed for the construction of the tramway, two trees have been planted elsewhere, with the selection being carried out through a participative process, improving the overall outcome of a project.
For more information, see the Zaragoza Tramway Case Study.
Example – Prioritised community engagement
Community engagement was prioritised on the Port of Miami Tunnel project in the USA, with local employment programmes during construction, and continuing work with local schools continuing throughout the project. This focus was seen as a key enabler of success, as construction of public projects was controversial at the time of financial close.
For more information, see the Port of Miami Tunnel Case Study.
Transparency is one of the underlying principles of the relationship governing PPP procurement and delivery. It is particularly important during PPP contract management as it enables the Procuring Authority to obtain adequate information to manage the contract effectively.
Transparency is also an important component of wider stakeholder engagement and promoting public acceptance of a project. Disclosing information on the project’s contract and performance helps to promote transparency and obtain acceptance of the PPP model and the project by the community, as well as allows for performance auditing of the PPP project and a wider PPP program.
Public stakeholders should be provided with an accurate understanding of what to expect both during construction and once service delivery commences. This will include an understanding of the positive impacts (including the scope of additional services to be provided and increased level of service), as well as the negative impacts (such as increased traffic noise, business disruptions and community relocation). This is particularly important during the construction phase when the community may be inconvenienced by the construction activities and stakeholders’ support is particularly important.
One approach is to require the Project Company to set up a project website to introduce the project and provide regular updates on its development. A specific office for managing community enquiries can also be set up to manage inquiries.
There are several project specific issues that will be of interest to the public. They include:
In some jurisdictions, the lack of transparency on the return on investment to the Project Company’s equity investors creates negative publicity surrounding not only a specific project, but the PPP model in general. This leads to a lack of confidence in achieving value for money from the Procuring Authority’s point of view and a public opposition to the use of PPP projects. In this sense, transparency is very important for and highly correlated to effective stakeholder management.
The Procuring Authority should also publish performance statistics, reviews, contract renegotiations and any other changes or issues that are relevant to the public. It also needs to consider what information will be made publicly available and what may be the subject of confidentiality obligations owed by the Procuring Authority.
The PPP contract typically defines the requirements for information sharing between the Project Company and Procuring Authority and public disclosure requirements, as well as any exceptions from disclosure. Disclosure of the contract may be limited to protect the legitimate interests of the Project Company by keeping commercial information confidential, as well as to recognise the need for the Procuring Authority to protect its position for future negotiation.
While it may be in the Procuring Authority’s interest to aim for as much transparency as possible in order to protect public interests and ensure value for money, it is always challenging to achieve an optimum balance between the level of detail desired and the limitations imposed by confidentiality on commercially sensitive information required by the private sector.
The reference tool does not cover specific disclosure requirements of project information by the Procuring Authority and associated requirements as defined by applicable laws, codes of practice and standard national guidance that may exists in each jurisdiction. The relevant laws, regulations and guides typically set out specific and well-defined requirements with regard to both pre-procurement and post-procurement disclosure responsibilities placed upon the Procuring Authority.
Both the Procuring Authority and Project Company can have responsibilities to engage with the community on the current status of the project and any issues affecting end-users and local community. It is important that the communication from both sides is well-coordinated and consistent.
It may be difficult however for the Procuring Authority to properly incentivise the Project Company to undertake the same level of community engagement as what the Procuring Authority desires. Where the Project Company is primarily driven by profit objectves, undertaking additional community engagement where there is no associated payment mechanism may not sufficiently incentivise the Project Company.
One method for addressing this issue is to be very prescriptive about what is required in the PPP contract. This could involve setting specific requirements for staffing or meeting frequencies with community stakehodlers.
As detailed in Section 3.2 (Performance monitoring), the Procuring Authority should closely monitor the Project Company’s actions when the Project Company is required to enagage with community stakeholders. If not done correctly, the issue will not just be a Project Company issue, but will also affect the Procuring Authority irrespective of where the obligations and the risks are allocated.
Example – Zaragoza Tramway
During the construction phase of the Zaragoza Tramway project, the Project Company employed a communications director, and information offices were set up so any individual or business could seek information about the project or any issues arising regarding the construction. During operations, there was a customer service office to respond to complaints and questions from members of the public. This was seen as a useful way of engaging with users, as well as an opportunity to gather feedback to improve the service itself.
For more information, see the Zaragoza Tramway Case Study.
Example – prescriptive contractual requirements
The Project Company in one of the case studies was required under the PPP contract to hire a certain number of staff dedicted to community engagement and to hire staff with defined qualifications.
Different community groups have different interests and it may be beneficial to adopt specific communication strategies for each relevant group. For example, end-users should be given the chance to give feedback on the quality and effectiveness of the service being provided; whereas residential communities may be concerned about the noise, and businesses concerned about business disruption caused by construction or maintenance works.
Groups meetings can be scheduled with key stakeholders and can be determined and sub-divided by relevant interests to be responsive to their needs.
Example – differentiating interest groups
The Procuring Authority and the Project Company in one of the case studies took a coordinated approach to community engagement and set up key consultative forums. The consultative forums were referred to as the ‘Business Reference Group’ and the ‘Community Reference Group’. The former was made up of business representatives, with the latter being made up of community representatives. The business and community forums are organised by the Project Company, which then reported back to the Procuring Authority.