stage gate approach towards project management training event on ppp programming and process...
TRANSCRIPT
Stage Gate approach towards project management
Training event on PPP programming and process management 27 May 2008
Twinning Project CZ/2005/IB/FI/04
Mikko AJ RamstedtSenior Project Adviser
Financial Partnerships Unit
Introduction
• Background
• Stage Gate approach
• The need for Process discipline
• PPP vs. conventional projects
• Resource planning
Background
• Why is PPP different?– Contracted outputs
• Fixed• Performance & availability requirements
– Concession• Longevity• Contractually defined obligations – limited flexibility• Mutual liability• Incentives
Background
• PPP programming and process management– 6 stage process:
• Conception• Development• Procurement• Construction• Operation• Handback
– Each element has a number of sub-stages
Background
• PPP process– Resource intensive (at all levels)– ‘Front loaded’ inputs– Long lasting consequences
• Accountable bodies need an effective way of tracking projects and monitoring risks.
Stage-Gate approach: Principles
• Self-assessment tool• Expert independent review• Guard central government investment
– Mandatory for Scottish Government Departments & Agencies & PPP projects receiving central funding or requiring central approval.
• Maintain local accountability• Accumulation of sector specific & market
experience
Stage-Gate approach: Purpose
• Establish clear and transparent criteria for project evaluation
• Audit projects at key stages• Consistency of review / control• Reassurance to public sponsors• Reassurance to market: minimum standards • Develop best practice• Share lessons learnt
Quality Assurance
Stage-Gate approach: Context 1
Top 10 risks that have materialised during
PPP procurements:
• Land acquisition
• Site ownership
• Planning permission
• Lack of consensus among stakeholders
Stage-Gate approach: Context 2
• Affordability
• Lack of competition
• Project scope unstable
• Unsecure bid price
• Commercial agreement
• Due diligence “unforeseens”
Stage-Gate approach
Process - at each review:1. Submission2. Clarifications & Independent review against
set criteria 3. Independent recommendations
• Essential vs. desirable
4. Response / action to recommendations5. Central Government review of actions taken
• No action –> HOLD / STOP• Positive action –> GO
Stage-Gate approach: Focus
Outline Business Case
Sound fit between need, policy and project scope:
• Clear demonstration of need, full options appraisal, comprehensive VfM assessment over procurement routes, project is affordable within relevant sensitivities and key deliverability issues have been identified.
Stage-Gate approach: Focus
Gate 1 - Pre-OJEU notice
Readiness to go to market:
• Governance• Scope• Stakeholders• Competition• Procurement Risks• VfM Assessment
Stage-Gate approach: Focus
Gate 2 - Pre-Invitation to Participate in Dialogue
Readiness to go to start dialogue and conductnegotiations which will secure high quality, sustainablebids, with minimal bidder qualifications:
• Affordability• VFM• Commercial Issues• Deliverability• Data Room and background Information
Stage-Gate approach: Focus
Gate 3 - Pre-Invitation to Submit Final Tenders
Is there sufficient technical and commercial certainty to end competition?
• Affordability• VfM• Risk transfer• Commercial / Legal Funding issues• Technical solution• Deliverability
Stage-Gate approach: Focus
Gate 4 - Pre-Preferred Bidder appointment
Ensure projects have minimised opportunitiesfor ‘deal creep’ and reallocation of risk:
• Affordability• Financial / Risk issues• Commercial / Legal issues• Technical issues• Deliverability
Stage-Gate approach: Focus
Gate 5 - Pre-Financial Close
To assist Authorities in considering whatneeds to be put in place in terms of staffing andresources ahead of the construction and operationalstages of their PPP projects, to support and managetheir PPP contract going forward:
• Contract management & Governance• Payment Mechanism• Stakeholder management
Stage-Gate approach: Focus
Post Occupation Evaluation
Has the project delivered its strategic project
objectives?
• Reflection
• Documenting & disseminating lessons learnt
Stage-Gate approach: Options
• Peer review
• Independent review
• Ownership• Central requirement & local accountability• Avoid conflicts of interest
The need for process discipline
• Maximise VfM• Market confidence• To counter external pressure• Minimise procurement cost & time
– Time = money– Every change requires resources and time
• Individual responsibility to meet the critical path really is critical!
PPP vs. conventional projects
• Differences process controls are necessary because:
– New forms of project delivery require a higher degree of scrutiny
– Fixed risk transfer impacts on available mitigation strategies resulting a need to manage future liabilities
– Public-Private relationship regulated through a single contract resulting in a greater interdependency within the public sector
– Projects often negotiated with a highly developed and competitive market requiring an increased level of delegated authority.
Resource planning 1
Get it right from the start!
• Each of the 6 stages have different resource requirements
– Conception – technical, financial– Development – management, commercial (L/F/T),
specialist input– Procurement – management, specialist commercial– Construction – management, monitoring, specialist
technical– Operation – management, monitoring– Handback – monitoring, specialist technical
Resource planning 2
Competitive Dialogue issues:
– A number of separate but parallel negotiations– Each bidder may come up with different
technical solutions needing specialist advice to the authority
– Financial, legal and technical input requirements increase inline with the number of bidders
Resource planning 3
• Resource Planning is key for successful project delivery
• Upfront investing into a long term partnership
• Continuity is key for successful delivery of benefits and continuous improvement
• Project Management requirement does not end at FC!
Summary
• A well structured Stage Gate -type review process in an invaluable project management & monitoring process and can help in market creation.
• In order to deliver successful outcomes all PPP projects should prepare a resource management plan covering the period from project development to handback.
