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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.

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Presentation on theme: "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."— Presentation transcript:

1 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 Ramstedt Senior Project Adviser Financial Partnerships Unit

2 Introduction Background Stage Gate approach The need for Process discipline PPP vs. conventional projects Resource planning

3 Background Why is PPP different? –Contracted outputs Fixed Performance & availability requirements –Concession Longevity Contractually defined obligations – limited flexibility Mutual liability Incentives

4 Background PPP programming and process management –6 stage process: Conception Development Procurement Construction Operation Handback –Each element has a number of sub-stages

5 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.

6 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

7 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

8 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

9 Stage-Gate approach: Context 2 Affordability Lack of competition Project scope unstable Unsecure bid price Commercial agreement Due diligence unforeseens


11 Stage-Gate approach Process - at each review: 1.Submission 2.Clarifications & Independent review against set criteria 3.Independent recommendations Essential vs. desirable 4.Response / action to recommendations 5.Central Government review of actions taken No action –> HOLD / STOP Positive action –> GO

12 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.

13 Stage-Gate approach: Focus Gate 1 - Pre-OJEU notice Readiness to go to market: Governance Scope Stakeholders Competition Procurement Risks VfM Assessment

14 Stage-Gate approach: Focus Gate 2 - Pre-Invitation to Participate in Dialogue Readiness to go to start dialogue and conduct negotiations which will secure high quality, sustainable bids, with minimal bidder qualifications: Affordability VFM Commercial Issues Deliverability Data Room and background Information

15 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

16 Stage-Gate approach: Focus Gate 4 - Pre-Preferred Bidder appointment Ensure projects have minimised opportunities for deal creep and reallocation of risk: Affordability Financial / Risk issues Commercial / Legal issues Technical issues Deliverability

17 Stage-Gate approach: Focus Gate 5 - Pre-Financial Close To assist Authorities in considering what needs to be put in place in terms of staffing and resources ahead of the construction and operational stages of their PPP projects, to support and manage their PPP contract going forward: Contract management & Governance Payment Mechanism Stakeholder management

18 Stage-Gate approach: Focus Post Occupation Evaluation Has the project delivered its strategic project objectives? Reflection Documenting & disseminating lessons learnt

19 Stage-Gate approach: Options Peer review Independent review Ownership Central requirement & local accountability Avoid conflicts of interest

20 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!

21 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.

22 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

23 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

24 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!

25 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.

26 Mikko AJ Ramstedt 0131 244 4940 Questions?

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