Due to the nature of PPP transactions, they involve a variety of government agencies, other than the Procuring Authority who will also play a role. Some of those other stakeholders can include:
A high-profile project will be of broader interest to the government, as it has the potential to affect the reputation of the administration in power at the time.
The Procuring Authority should carefully consider what information needs to be passed on to other government departments, such as a ministry of finance or other regulators. As a range of reports will be produced during both the construction and operations phases, there needs to be an assessment made of what exactly the Procuring Authority should report to the relevant government agency. Where there are significant changes made to a project (e.g. significant scope changes) approval is likely to be needed from a department such as the ministry of finance. This emphasises how important it is to consider what information needs to be shared with these departments. Scope changes are detailed in Section 3.5 (Claims).
It is also important for the Procuring Authority to assist these bodies by providing relevant project data to inform future infrastructure development. The combination of information from multiple sources is part of how these organisations, network groups and sector bodies are able to add value and improve the use of PPPs in that particular region. A Procuring Authority should maintain good relationships with these bodies to allow it to have continuing access to such resources. All markets, irrespective of whether they are mature or developing, have scope to improve significantly the strategy and the approach to understanding the value of data, including collecting and sharing it and making smart and effective use of it.
Example – Multiple government agencies
On the Port of Miami Tunnel project in the USA, funds were provided by federal, state, county and city sources, with the City of Miami also granting land access. The promise of ongoing funding to the Procuring Authority is particularly important given the decision not to impose tolls, as this increased the amount of money required from government. The Procuring Authority executed a funding agreement with the city and county, but these authorities had no direct oversight over the project. To assist in the management of the project, weekly meetings were held which included the Procuring Authority, the Project Company and the construction contractor, as well as representatives from city and county governments.
For more information, see the Port of Miami Tunnel Case Study.
Coordination between different levels of government is an important aspect of contract management, which is amplified where financing is being provided by multiple bodies.
Appropriate institutional and governance frameworks should be established to enhance the flow of information between the government agencies. Challenges can also arise where there is overlap in the mandate of different government agencies which needs to be managed.
One method of achieving this is to set up project advisory boards which are made up of representatives from different government agencies.
Example – Project advisory board
An advisory board was set up in one of the case studies to provide assurance, strategic oversight and advice in relation to the project to the Minister of the Procuring Authority. It has an independent chair, two additional independent members and representatives from the ministry of finance, the executive office, as well as other relevant ministries. The advisory board meets every month.
As well as providing assurance, oversight and advice to the Minister, it also acts as a forum for better communication and collaboration across the different relevant government bodies with respect to the project.
Challenges can arise due to differences in regulation between levels of government, such as between the local authority, state/provincial level and national level, and also because different aspects of a project are regulated by different government agencies. If agreements are not reached with relevant local authorities on projects procured (e.g. by a national government before financial close) delays to approvals and potentially additional taxes may be imposed, as has been the case in several jurisdictions.
Example – Construction permits
During construction of the Brabo 1 Light Rail project in Belgium, an issue occurred where the Project Company’s construction permit was revoked because of public objections to the proposed developments. A new permit was, however, issued a few months later. Together with the Project Company, the Procuring Authority worked as a partner to resolve the issue.
For more information, see the Brabo 1 Light Rail Case Study.
It may be appropriate in these circumstances for the Procuring Authority to work with the Project Company in engaging with other government agencies, particularly where the Procuring Authority has a stronger relationship with those other government agencies. Working with other government agencies during key transition phases is detailed in Section 3.1 (Transitions).
There may be government agencies or quasi-government agencies that the Procuring Authority does not have a strong relationship with. In these circumstances, where certain project milestones rely on the input from those other government agencies, the Procuring Authority should plan early, and enter into agreements with those other government agencies to ensure there are no disruptions to the project.
Example – Interfacing projects
The importance of managing interfaces with other projects was highlighted in the Intercity Express Programme project in the UK, where the success of the project depended on interactions with the delivery and electrification of track infrastructure. This was done by Network Rail, which is an arm’s-length public body and therefore not part of the Department for Transport itself.
For more information, see the Intercity Express Programme Case Study.
Example – Land acquisition in India
In India, the issue of land acquisition led to delays and disputes on numerous highways projects. Land management is a state subject under the responsibility of the Competent Authority for Land Acquisition (CALA). The National Highways Authority of India (NHAI), which is the Procuring Authority on many toll roads, has no direct control over CALA and is dependent upon the state governments and its policies. To address this, NHAI has regional offices in charge of the respective states, and they coordinate with the relevant departments in each state. In order to facilitate land acquisition, the NHAI enters into a state support agreement with the concerned state. The NHAI also employs retired officials from the state governments to assist with understanding land regulations.