1. © OECD A joint initiative of the OECD and the European Union, principally financed by the EU Case Study Water and Waste Water Infrastructure Northern Ireland Martin Darcy

2. © OECD A joint initiative of the OECD and the European Union, principally financed by the EU Drivers  EU Directives  Scale of overall investment needs  Water reform and lack of internal implementing resource  Strategic Investment Board (SIB)

3. © OECD A joint initiative of the OECD and the European Union, principally financed by the EU Options  Mix of public and private sector investment  New build or renovate  Greenfield or existing sites  Low technology or new technology

4. © OECD A joint initiative of the OECD and the European Union, principally financed by the EU Preferred Solution  Publicly financed investment only to the credible limit of the public sector’s ability to implement effectively  Private sector investment would deliver the rest - estimated at €350m of €1.4bn total  Private sector investment programme (PPP Programme) broken into two major multi-site procurements:  Drinking Water projects – named ‘Project Alpha’  Waste Water projects – named ‘Project Omega’

5. © OECD A joint initiative of the OECD and the European Union, principally financed by the EU Project Alpha - Objectives  To provide 50% of Northern Ireland’s drinking water capacity  To achieve quality standards compliant with EU Drinking Water Directive  To achieve the above to meet legal deadline

6. © OECD A joint initiative of the OECD and the European Union, principally financed by the EU Water Treatment – Project Alpha  5 Existing sites  Estimated €200m of investment  No land acquisition issues  Few planning difficulties anticipated  Relatively straight forward contract structure  One procurement process for all five

7. © OECD A joint initiative of the OECD and the European Union, principally financed by the EU Water Treatment Issues – Project Alpha  The most attractive and bankable structure had ‘balance sheet’ issues; this led to a major crisis of confidence amongst some stakeholders  Raw water data  Raw water consistency  Sludge management

8. © OECD A joint initiative of the OECD and the European Union, principally financed by the EU Preparation, Procurement and Initiation– Project Alpha  May 2003 – Inception  January 2004 – Project Launch  May 2004 – Call for competition  May 2006 – Financial Close (ahead of schedule by 3 months)  March 2008 – construction work almost complete and ahead of schedule

9. © OECD A joint initiative of the OECD and the European Union, principally financed by the EU Outcomes – Project Alpha  Winning bid = €70m capital cost saving over initial engineers estimates  Whole life savings of 19%  Project procured 3 months ahead of schedule  Claimed by the advisers to be a ‘World Record’ time for a major infrastructure financing

10. © OECD A joint initiative of the OECD and the European Union, principally financed by the EU Waste Water – Project Omega  Renovation / new build and rationalisation with investment requirement estimated at €150m  Three key geographical areas  One procurement process for all three areas  Rationalisation element gave great scope for innovation  No preconceptions about which technical solutions to use  Several bankable templates already in existence

11. © OECD A joint initiative of the OECD and the European Union, principally financed by the EU Project Omega Issues during Preparation Stage  Sludge management  Trade effluents  Infiltrations  Flow and Composition base data  Planning issues concerning some sites  Land acquisition required on at least one site

12. © OECD A joint initiative of the OECD and the European Union, principally financed by the EU Project Omega Issues During Procurement Stage  Urgent investment need requiring an Advance Works Contract – high risk strategy for Authority  Reform of the Northern Ireland Water Service – ‘the Authority’  The sale of the Preferred Bidder to a private equity consortium  Inadequate leadership from senior management at Preferred Bidder

13. © OECD A joint initiative of the OECD and the European Union, principally financed by the EU Project Omega – Key timings  Advisers appointed January 2004  OJEU December ’04  Preferred Bidder appointed January ‘06  Financial Close March ’07  Construction almost complete – on schedule

14. © OECD A joint initiative of the OECD and the European Union, principally financed by the EU Project Omega – Outcomes  Project signed one month later than forecast  11% improvement in whole life vfm compared to the Public Sector Comparator  Construction on Schedule  Represented the successful conclusion of a major PPP Programme

15. © OECD A joint initiative of the OECD and the European Union, principally financed by the EU Main Lesson Learned on the Entire Programme  Investment in thorough evaluation and good preparation pays back through good results in:  On time delivery  Value for money  Avoidance of legal challenges