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Presentation on theme: "Infrastructure: Buildings (Infrastructure delivery and planning) NAMIBIAN MINISTRY OF HEALTH AND SOCIAL SERVICES (MoHSS) HEALTH PUBLIC-PRIVATE PARTNERSHIPS."— Presentation transcript:

1 Infrastructure: Buildings (Infrastructure delivery and planning) NAMIBIAN MINISTRY OF HEALTH AND SOCIAL SERVICES (MoHSS) HEALTH PUBLIC-PRIVATE PARTNERSHIPS (PPP) CONFERENCE 8 th December 2014

2 Agenda: Page 1.Models in Public-Private Partnerships (PPP’s)5 2.Management of PPP’s14 3.Agreements in place for Infrastructure27 4.Partnerships and its Committee’s29 5.Lessons Learnt32 2

3  Bachelors of Science in Construction and Project Management  10 Years with a major contractor in the United Kingdom  7 Years leading Consulting teams in the UK and South Africa  Led biddings team in the UK for major PFI /PPP Hospitals  Supported the South African National Treasury and National Department of Health with various hospital project Feasibility Studies  Managing Director, Profica – Development, Project and Construction Management across African Continent Who am I? 3

4 Profica 4 Mauritius Libya Zambia Zimbabw e Botswana Lesot ho Namibia Ugand a Central African Republic Burk ina Faso Algeria Niger Chad Egypt Sudan Ethiopi a Eritre a Djibo uti Soma lia Malawi Kenya Tanzania Madag ascar Swazil and Mozambiqu e South Africa Con go Angola Equit orial Guine a Be nin Gh an a Nigeria Cameroon Gab on Cote d’Ivore To go Libe ria Guine a Sie rra Le on e Guinea Bissau Gambi a Mali Mauritani a Sene gal Western Sahara Morocco Tunisia Buru ndi Democratic Republic of Congo Rwanda Niger SECTORS  Social Infrastructure Healthcare Education  Mixed-Use  Retail & Shopping Centres  Industrial & Processing Plants  Warehousing & Logistics  Residential & Housing  Educational & Institutional  Hotel & Leisure  Infrastructure SERVICE OFFERING  Technical Advisory (Public-Private Partnerships)  Development Management  Construction Management  Project Management Integration Management Scope Management Time Management Cost Management Quality Management Human Resource Management Communications Management Risk Management Procurement Management COMBINING SERVICES TO ENSURE THE HANDS-ON DELIVERY OF SUCCESSFUL PROJECTS

5 Two types of PPPs are specifically defined:  Where the Private Party performs an Institutional/Municipal function;  Where the Private Party acquires the use of State/Municipal property for its own commercial purposes  A PPP may also be a hybrid of these types (Concessions, Leasing, JV’s BOT, etc.) Section 1: Models in Public-Private Partnerships 5

6 Typical PPP Project Cycle 6

7 A New Virtuous Circle Asset & Infrastructure Procurement 7 Strategy Funding & Financing ConstructionOperation Change National Infrastructure Plan A New Approach to Financing Government Construction Strategy Placing responsibility & risk where it can best be managed Improved Flexibility

8 Long Term Relationship Traditional Design & Build Prime Type Contracting DBO & BOT PPPPFI The Established Construction & Infrastructure Delivery Models 8 Perceived Risk Transfer Flexibility Commercial Competitiveness

9 Long Term Relationship Evolving Models 9 Capital Funding Loan / Grant Funding Alliancing Partnering Competitive Partnership Private Developer Scheme LEP / LIFT Local Asset Backed Vehicles PPP’s Perceived Risk Transfer Flexibility Commercial Competitiveness

10  PPP’s enable public sector to spread the cost of infrastructure  It gets clear private sector buy-in to risk  It encourages a whole life cost approach to be taken, ignoring cash affordability constraints  It drives on time delivery and the maintenance of defined service standards  PPP’s can be off balance sheet PPP’s historically... 10

11 Financiers have differing approaches to risk The project finance model needs to recognise this Real risk is in construction (and perhaps life cycle) Hence the construction industry has a clear role & responsibility to drive efficiency Speed (or lack of) to market is a huge issue Adds significant cost and risk – faster procurement is much more attractive Market Confidence is essential Need to seek to reduce bidding costs whilst still delivering VfM The procurement route needs to be appropriate to the risk profile Select a procurement option with care, once the long term business needs are properly assessed And … Some of the real issues linked to PPP’s 11

12 The way the Ministry manages their programmes plays a key role in achieving success and value for money So: Effective Programme & Project Management is Essential to Success 12

13 Maintain a stable and credible policy and regulatory framework for infrastructure across the sectors, so that investors can plan and invest with confidence, and political and regulatory risk is minimised. And give confidence regarding the project pipeline And what must Government do? 13

14 Phase I – Feasibility The objective of the feasibility study is to enable the Ministry to make an informed decision as to the best option for the redevelopment or new build of a facility. The feasibility study will calculate the affordability and value for money to the government through comparing the PSC and PPP models. The feasibility will also assess the marketability of the project and the opportunity for the Ministry to raise additional funding should this be required. Section 2: Management of PPP’s 14 New South Glasgow Hospital (1,109 beds)

15 Needs Analysis  This stage is to obtain an understanding of the Ministry’s needs and requirements from the Project.  The needs analysis will document the User Requirements for the hospital, the service levels to be achieved and any other User driven aspects of the development that the Ministry might wish to achieve.  This stage in the process is critical in that it is the foundation on which the rest of the project is built. Options Analysis  The Option Analysis stage is used to identify, at a high level the options available to the Ministry, including delivery and service options as well as procurement options.  The site has been identified and thus there will not be an option assessment for the site. The process will culminate with the selection of the Preferred Option.  The options agreed upon will be evaluated in terms of their benefits, constraints, risks, service delivery, market capability and other qualitative aspects. Approach and Methodology 15

16 Text... Approach and Methodology 16

17 Project Due Diligence  The Project Due Diligence stage is conducted to complete technical due diligence in relation to the preferred option.  Existing data from the previous work or new data is used to assess the suitability of the site and any associated costs.  The Engineers will carry out a review of the utilities and services available to the site and assess their suitability for the envisaged project. The technical site review will include a desktop review of the geotechnical characteristics of the site, the utility services (water, electricity, sewerage, and telephone), access, planning constraints, future infrastructure development, surrounding development planning, space standards, technology and security requirements. Approach and Methodology 17

18 Value Assessment  The objective of the VfM Assessment stage of the Project will be to determine the overall feasibility of the Project, having regard to the project needs, the preferred option and any issues identified from the Project due diligence. The VfM Assessment is conducted in the following stages:  Project specifications – the Project specifications will be amended, as appropriate, and costed for the purposes of input into the financial models, such specifications shall include the Department’s user requirements, the output specifications, availability and performance standards;  Whole life-cycle costing – the capital, operating and lifecycle costing of each element of the Project shall be conducted at this stage. The whole life cost carried out at an elemental level will include the capital costs, operating costs including consumables, maintenance costs, and refreshment cots.  Risk Analysis – the Advisor, in consultation with the Project Team, will workshop the risks in the Project and will prepare a comprehensive Risk Allocation Matrix. The risk matrix will involve the identification of the risks, allocation of the risk to Government or the Private Party, the probability of a risk event occurring and the consequential value of a risk event. The risk quantification is an important input to the financial model and impacts the resulting value for money. Approach and Methodology 18

19 Procurement Plan  Development of procurement strategy and timelines Reference Design  The design brief requires a clear vision for the functionality of the hospital based on design principles derived from the client department’s strategic plan. This will require input from various key stakeholders. The methodology should includes engagement with clinical and technical user groups which will be led by our Clinical and Architectural team.  Design principles that underlie the approach to good hospital design:  Excellent clinical functionality  Listening to the client, clinicians and user groups  Therapeutic design, and a building environment that generates a feeling of well-being in patients, staff and visitors  Value for money – not just in terms of the capital cost, - but over the whole life cycle of the facility. Approach and Methodology 19

20 Phase 2 – Procurement Indicative Timeframe  Prepare RFQ2 Months  RFQ Release, Evaluation and Shortlist  Draft RFP and Evaluation Manual4 Months  Draft Project Agreement and Technical Schedules4 Months  Issue RFP  RFP Response Period7 – 9 Months  Respond to Bidders Written queries  RFP Evaluation2 Months  Appoint Preferred Bidder  Negotiations to Financial Close4 – 6 Months  Financial Close Approach and Methodology 20

21  Construction Procurement is different from procurement of most other commodities and services  Any procurement (particularly complex procurements) must adopt a Gateway process to make sure a project is in a fit state to progress  Early Contractor Engagement and Integration bring real and measurable benefits  Bundling contracts and the establishment of frameworks allow the centre to drive required quality, service and behavioural standards Efficiencies in Procurement and the Delivery of Construction 21

22 The problem... 22 Short term relationships Lowest price Poor Health & Safety record Adversarial approach No supply chain management Poor customer focus Lack of learning culture Poor collaboration in problem solving Research directs us to a new approach: From: Lack of Integration

23 The Problem 23 Short term relationships Lowest price Poor Health & Safety record Adversarial approach No supply chain management Poor customer focus Lack of learning culture Poor collaboration in problem solving Better Performance Construction meets user requirement Lower whole life & operational costs Greater cost and time predictability Eliminate waste Lack of Integration To:

24 The desired Culture Shift 24 Poor management Risk adverse culture Design & construction in isolation Poor project flow Non-value oriented approach to procurement Misinterpretation of need for public accountability From Leadership Risk assessment and mgt Integrated teams Reviews and decisions Design quality and value for money To

25 Management & Culture Change  Commitment and Leadership  Empowerment and Skilling  Consistent and Skilled Project Management Measurement  Standard Key Performance Indicators  Post Project Implementation Reviews  Client Performance Surveys Achieving Excellence 25

26 Standardisation  Key standard practices on:  Procurement decisions on total value for money  Use of risk and value management  Output / performance specifications  Whole life costing  Robust change control  IT and standardised document handling Integration  Teamwork and partnering  Procurement strategies – focus on:  Design & build  PPP  Prime contracting Achieving Excellence 26

27 Phase 1: Feasibility Study / Business Case Feasibility Study Relevant Treasury, Finance and Ministry of Health Approvals Land Ownership Reference or Sample Design (Optional) Section 3: Agreements in place for Infrastructure 27

28 Phase 2: Procurement  PPP Agreement  Common Terms Agreement (CTA) - Lenders  Construction Subcontract  Operations Subcontract  Private Party Proposal  Output Specifications  Clinical & Operational Narratives  Design & Build  Mechanical, Electrical and Plumbing  Medical Equipment  FM Services Section 3: Agreements in place for Infrastructure 28

29 Phase 2 Procurement (cont’d)  Works Programme  Independent Certifier (IC) Agreement  Payment Mechanism  Reviewable Design Data (RDD) Section 3: Agreements in place for Infrastructure 29

30 Typical Structure 30

31 Lesotho Hospital PPP 31

32 Planning, Planning, Planning 1. Develop a clear Brief  Adopting international best practice 2. Appoint the right team (Advisors, Specialist etc)  Adopting international best practice 3. Consultative Meetings with bidders during the RFP process  Adopting international best practice of engaging in robust and frank consultative meetings with individual bidder teams during the RFP exposure period. It’s possible achieve effective results in a manner that would ensure fairness and transparency during the process and thus realise the considerable benefits of this practice for the Project.  It is a proven observation that those projects which undertake this practice have easier evaluations, are able to select a preferred bidders quickly, spend less time in negotiations and thus reach financial close sooner than those projects which only rely upon a written question and answer process. Section 5: Lessons Learnt 32

33 4. Client to establish Technical and Clinical Lead teams  Create specialist teams for the technical and clinical work streams. These teams will have consistent membership over time, delegates should be avoided if at all possible (unless both principle and delegate routinely attend together). Each team would be allocated a terms of reference and each team member delegated specific areas of responsibility.  Teams tasked to interface with the TA team and assist in the process of clinical planning, the development of the PSC design solution, Output Specification and the PPP Agreement. 5. Academic single point of contact for interface with TA Team  Similar concept to the one above but rather focused on the academic / higher education stakeholder group. The principle is the same, a single point of contact will make the process of creating the documentation for the project and initially arriving at an accurately articulated solution much simpler and increasing the probability of a high quality outcome. Section 5: Lessons Learnt (cont’d) 33

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