Working with internationally oriented contractors Training event on PPP programming and process management 27 May 2008 Twinning Project CZ/2005/IB/FI/04 Mikko AJ Ramstedt Senior Project Adviser Financial Partnerships Unit

Introduction Background Issues Contract Importance of market soundings How to organise the bid selection process Common turn-offs for bidders

Background PPP is an international market –Advisers –Funders –Contractors Local sub-contractors

Issues Great source of experience but beware of differences in practice & standards –Approach to dialogue –Due diligence –Contractual structures –Bid costs

Issues PQQ ‘pitfalls’ –EU procurement law –Define qualifying ‘experience’ –Check deliverability of consortium structure –Financial standing - Reconcile across different reporting standards Currency risk –References –Clarify the advisers to the consortium

Issues Cultural differences between public and private sector parties –Degree of delegated powers –Length / process of decision making –Relationship between public authorities Unitary vs. separation of functions –Relationship between public & private entities

Contract Contract should be tight rather than ambiguous Authority must be clear that contractor proposals fully meet its requirements For the avoidance of doubt all project specific protocols should be agreed and annexed to the project agreement Monitoring rights and requirements Timetable should allow for adequate set-up

Importance of market sounding 1 Market development –Formal & informal tests Competition drives VfM!

Importance of market sounding 2 Allows project to test the market on proposed –Scope –Risk allocation –Contractual structure –Procurement timetable –Procurement strategy

How to organise the bid selection process 1 Study the market; consider depth & bidder capacity Actively engage the market through soundings and bidders days Invest in the Project Prospectus and Information Memorandum

How to organise the bid selection process 2 Be clear on risk allocation Present a detailed and realistic procurement strategy Include details of requirements (information & time) for formal authority approvals throughout the process

How to organise the bid selection process 2 Be clear on risk allocation Present a detailed and realistic procurement strategy Include details of requirements (information & time) for formal authority approvals throughout the process

How to organise the bid selection process 3 Demonstrate commitment and readiness –Consultations / consents –Site surveys –Outline planning permits –Reference designs –Project resourcing –Affordability

How to organise the bid selection process 4 Specification should clearly reference applicable technical standards If information required in particular format provide templates Different standards of due diligence – be specific about requirements Be flexible facilitate bidder access Dialogue - not monologue!

Common turn-offs for bidders: Lack of clarity over scope and requirements Unrealistic affordability position Lack of public sector resourcing Lack of senior and/or stakeholder support Poor timing

Summary Be aware of different practices and facilitate participation through early engagement Define and test your market, identify key drivers and reflect in the structuring of your procurement Use commercial advisers’ international knowledge base to your benefit Only go to procurement when the project is ready and the necessary resources are in place

Mikko AJ Ramstedt Questions?