Institutional Collaboration Management 1 US : Plan and implement public-private partnerships (PPP) for municipal service delivery Zwelinzima Ndevu

Assessment Policy Assessment conditions summary (see full policy) Each Unit Standard will have at least two individual assessments for determining competence (or not yet competent (NYC)). One assessment will be scheduled to take place during the contact session and the other to be submitted one calendar month after the last day of the contact session The facilitator/assessor of the particular Unit Standard must prepare an assessment plan and explain it at the beginning of a Unit Standard contact session It is possible for a participant to only complete the Unit Standard registration form and do the assessments as scheduled, while not attending the rest of the contact time BUT A participant found NYC from the first assessments will only be given a second (concession) opportunity for assessment if he/she has attended at least eighty per cent of the contact time A participant that has – for proven work-related / serious health reason – not been present at the contact session assessment(s), will only be given one other opportunity with participants referred to above if he/she has attended at least fifty per cent of the contact time The concession assessment opportunity referred to in the previous two paragraphs will be scheduled as a consultative process between facilitators and SDF’s involved A participant that has completed the contact time assessment, but has for a proven work-related or serious health reason been prevented from submitting the take-home assessments by the due date, will be granted a maximum of two weeks extension of time to submit, where after no further extension will be given The second assessment opportunity for resubmission of the take-home assignment must be resubmitted within one calendar month of the release of results to the SDFs All communication with participants involved will be done through the municipal SDF

Module Outcomes 1.Explain the rationale for PPP and different PPP options as systems for municipal service delivery 2.Prepare a feasibility study report showing opportunities fro selected PPP options so as to ensure value fro money is obtained in the use of public funds 3.Contribute to institutionalisation of the PPP processes within local government 4.Apply legal principles in the development of PPP design and implementation of operational frameworks and contracts 5.Contribute to the monitoring compliance with regulations for selected PPP projects

Assessment plan NrTypeWeight Start date / time Submission date /time Nature, content and conditions 1. Formative in class as plenary P8; P65 – 66; P ; P ; 196; class activities 2. Contact session individual 40%Date TBA Assignment on own work place-related application based on p 92; 127;179; 251 and 309 activities from Learner Guide (P : Portfolio of Evidence) of LG 3.Examination60%06 July July Case study application of LG examination

Unit 1A: Introduction to regulations and rationale for PPPs 1.Introduction: 1.1What are PPPs? 1.1.1PPPs are long-term contracts between the public and private sector which ensures well maintained, cost- effective public infrastructure by leveraging private sector expertise and transferring risk to the private sector The public sector buys a full set of services, including infrastructure from private sector, it pays for these over the term of the PPP agreement and based on successful delivery. 1.13PPPs where fees are generated on a user-pay basis, derive income from which government can share benefits.

Unit 1A: Introduction to regulations and rationale for PPPs 1. Introduction 1.1 What are PPPs? 1.1.4PPPs follow a project cycle that show various phases and stages of the regulations and applicable portions of the legislation PPP can deliver better value for money for government that traditional procurement PPP route is only one of a number of options for procuring infrastructure and associated services SA has established a firm regulatory framework that enables municipal, provincial and national government institutions to enter into PPP agreements. (see P30)

Unit 1A: Introduction to regulations and rationale for PPPs 1. Introduction 1.2The guidelines: 1.2.1They are founded on the MFMA and the Municipal PPP Regulations, with appropriate references to the Municipal Supply Chain Regulations and the MSA There are key elements to the Guidelines A clear description of municipal services and guidance on which activities are subject to the MSA and MFMA 1.2.4Municipal Systems Act (Act 32 of 2000)- section 76; section 77 and section MFMA’s addresses PPPs & sets forth the conditions & processes for their establishment

Unit 1A: Introduction to regulations and rationale for PPPs 1.Introduction 1.3 Municipal PPP regulations: 1.3.1It provide precise and detailed instructions for PPPs Gives guiding notes for frequently asked questions What is a private party? 1.3.4What does a PPP entails? 1.3.5How can PPPs be used at municipal level? 1.3.6What PPP financing structures and funding sources do the regulations provide for? 1.3.7What is a typical PPP structure? 1.3.8What does the PPP project cycle involve? 1.3.9What are the tests for a PPP?

Unit 1A: Introduction to regulations and rationale for PPPs 2. Regulations- Inception phase 2.1As stated in the guidelines municipal services may be provided through either an internal or external mechanism. 2.2In a PPP project the accounting officer must appoint a Project Officer either from within or outside. 2.3Before a feasibility study: 2.3.1Send notification to National and relevant provincial Treasury 2.3.2If required or instructed by the above institutions appoint an adviser with appropriate skills and experience either from within or outside

Unit 1A: Introduction to regulations and rationale for PPPs 3. Regulations- Feasibility phase 3.1The phase provides the municipal council with the information to arrive at a decision to procure 3.2Risk- a key characteristic of PPPs is the transfer of risk from public to the private sector. 3.3Affordability- lack or limited resources in the public sector 3.4Value for money- a value for money test needs to be applied

Unit 1A: Introduction to regulations and rationale for PPPs 4. Regulations- Procurement phase 4.1Legislation and regulations applicable should be implemented 4.2Section 4(1) of the Municipal PPP regulations, Chapter 11 of MFMA and Municipal Supply Chain Regulations 4.3 Preferential Procurement Policy Framework Act (2000), BBBEE Act and the Construction Industry Development Board Act (2000) 4.4Section 4(2) of the Municipal PPP Regulations relates to section 33 of the MFMA 4.5Section 4(3) requires that a municipal accounting officer solicit inputs from National Treasury and the relevant treasury

Unit 1A: Introduction to regulations and rationale for PPPs 4. Regulations- Procurement phase 4.6Section 5(1) describes the basic requirements to which PPP agreements between a municipality and private party must comply 4.7Section 6 of the Municipal PPP regulations that only the accounting officer of a municipality may sign a PPP agreement on behalf of the municipality 4.8 Section 4(1) requires that a municipal accounting officer solicit inputs from National and the relevant treasury prior to issuing any bid documentation 4.9The Municipal PPP and Municipal Supply Chain Regulations set out clear phases that must be followed and distinct points at which inputs should be solicited 4.10 Guidelines on how to apply BEE in the PPPs 4.11 Are unsolicited bids provided for?

Unit 1A: Introduction to regulations and rationale for PPPs 5. Regulations- Contract management phase 5.1Section 6: Management of PPP agreements 5.1.1MFMA section 116(2) and section 8 of the Municipal PPP Regulations provide that the accounting officer of the municipality that is party to a PPP agreement is responsible for proper management of the PPP agreement 5.2 Section 7: Amendments and variation of PPP agreements 5.2.1MFMA section 116(3) and section 9 of the Municipal PPP Regulations state that a PPP agreement may be amended by the parties 5.2.2At least 60 days before a PPP agreement is amended, the accounting officer must solicit the inputs of the National and the relevant provincial treasury on the reasons for the amendments

Unit 1A: Introduction to regulations and rationale for PPPs 5. Regulations- Contract management phase Item to checkYesNo- what action needs to be taken? The reasons for the proposed amendment have been tabled in the Council of the municipality The local community has been given reasonable notice of the intention to amend the PPP agreement The local community has been invited to submit representations to the municipality The amendment is consistent with the basic essentials of PPP agreements set out in Municipal PPP Regulations section 5 and other applicable provisions.

Unit 1B: Code of Good Practice for Black Economic Empowerment in PPPs 1. Introduction 1.1The policy is devised to achieve a broad based and sustainable BEE outcome in every PPP project 1.2It’s the National Treasury’s official framework for BEE in municipal PPPs 1.3 The code follows the gazetting of the FSC and the CSC and complements their commitments 1.4The code apply in the selection of an Adviser and a Private Party 1.5What are the policy objectives for BEE in PPPs? 1.6What is the legal basis for PPP BEE policy? 1.7 What are the challenges for BEE in PPPs?

Unit 1B: Code of Good Practice for Black Economic Empowerment in PPPs 2. Apply BEE in a PPP Critical points and stages of the PPP project cycle for BEE ActivityStage 1. Appointment of AdviserInception phase- Unit 2 2. Preparation of feasibility studyFeasibility Study- Unit 3 3. Request for Qualifications (RFQ)PPP Procurement- Unit 4 4. Request for proposals (RFP)PPP Procurement- Unit 4 5. Negotiations stagePPP Procurement- Unit 4 6. PPP AgreementPPP Procurement- Unit 4 7. Managing the PPP AgreementManaging the PPP Agreement- Unit 5

Unit 1B: Code of Good Practice for Black Economic Empowerment in PPPs 2. Apply BEE in a PPP 2.1BEE in the appointment of the municipal adviser 2.1.1Its government’s intention to increase the numbers of skilled black advisers 2.1.2A minimum threshold of 60% of the total BEE points must be set 2.1.3Provided the above criteria is met, a formula will be used to calculate the bidder’s overall score Bidder’s overall score formula:

Unit 1B: Code of Good Practice for Black Economic Empowerment in PPPs 2. Apply BEE in a PPP 2.1.4An adviser scorecard has been adopted Adviser scorecard: ElementMaximum score Scoring criteriaWeightingPoints total % of black equity in the Adviser team 525%-35% =3 >35%=5 630 % of black people playing leading professional roles in the Adviser 525%-35%=3 >35%=5 630 Skills transfer plan5Poor plan= 1 or 2 Incomplete plan= 2 or 3 Credible plan = 4 or 5 420

Unit 1B: Code of Good Practice for Black Economic Empowerment in PPPs 2. Apply BEE in a PPP 2.2BEE in the preparation of the PPP feasibility study 2.2.1The study must be sufficiently robust to enable the municipality to determine sound benchmarks for the BEE impact it can expect to achieve 2.2.2Establish the BEE contributor levels that can realistically be achieved in the project 2.2.3The BEE targets to be set for the PPP BEE scorecard shall be the standards required 2.2.4An investigation and cost each of the scorecard 2.2.5The study phase is crucial to ensuring a sound BEE outcome in a PPP 2.2.6Willingness to pay a certain premium for BEE targets to be met

Unit 1B: Code of Good Practice for Black Economic Empowerment in PPPs 2. Apply BEE in a PPP 2.3BEE in the request for qualifications (RFQ) 2.3.1RFQ stage requires that bidders submit a range of information about their consortiums enabling the municipality to select those suitably qualified to prepare bids with communication being key at various stages 2.3.2A number of instruments should be applied in analysing bidders consortiums and proposals in terms of BEE (See P60-87)

Unit 1B: Code of Good Practice for Black Economic Empowerment in PPPs 2. Apply BEE in a PPP 2.3BEE in the request for qualifications (RFQ) Generic scorecard weightings:

Unit 1B: Code of Good Practice for Black Economic Empowerment in PPPs 2. Apply BEE in a PPP 2.4BEE in the request for proposals (RFP) 2.4.1It is part of the procurement phase of a PPP and it is issued to pre-qualified bidders subjected to the receipt of TVR IIA 2.4.2BEE outcomes must be clearly presented based on the recommendations in the feasibility study, presented as a required contributor level under the scorecard 2.4.3The BEE level of each bidder will be evaluated in accordance with the contributor level demonstrated and added to the technical and price scores in accordance with the formula 2.5BEE in the negotiations stage

Unit 1B: Code of Good Practice for Black Economic Empowerment in PPPs 2. Apply BEE in a PPP 2.6BEE in the PPP agreement 2.6.1The negotiated PPP agreement must make provision for the BEE outcomes 2.6.2Private Party is obliged to report on its BEE performance, including specific achievements in relation to agreed-upon targets 2.6.3Any proposed deviation from the foregoing provisions requires specific justification by the municipality as part of its TVR application

Unit 1B: Code of Good Practice for Black Economic Empowerment in PPPs 2. Apply BEE in a PPP 2.7BEE in PPP contract management 2.7.1Managing the PPP agreement involves 3 main functions 2.7.2The municipality and the Private Party need to establish systems for managing the BEE obligations throughout the development and delivery phases 2.7.3The Private Party is responsible for reporting on all contractual commitments 2.7.4The quality of the partnership management and the parties abilities to identify impediments to BEE and to resolve disputes effectively are key to the PPP’s success

Unit 2: Project Inception 3. Introduction 3.1What legislation is applicable when setting up a project? 3.1.1Depending on the service in question, MSA and MFMA applies 3.2Steps in setting up a project 3.2.1Identify the project 3.2.2Notify Government 3.2.3Appoint the project officer and secretariat 3.2.4Set up the project team

Unit 2: Project Inception 3. Introduction 3.3Procuring an advisor 3.3.1What is an adviser and what does she or he do? 3.3.2What skills and experience are required? 3.3.3Tips on getting the best from advisers 3.3.4Determine applicable procurement regulations 3.3.5Establish the bid specification committee and bid secretariat 3.3.6Define the adviser’s terms of reference 3.3.7Prepare the rest of the bid package 3.3.8Publish the advertisement, brief bidders and respond to queries

Unit 3: Feasibility Study 3. Introduction 3.1It assesses which of the different service delivery methods is in the best interest of a municipality 3.2Each project will be assessed in terms of standard instruments to decide whether it offers value for money, is affordable and transfer significant financial and operational risk 3.3Municipalities and advisers should follow the stages and steps prescribed carefully for all types of delivery options 3.4 The importance of a feasibility study at the beginning of the project 3.5Legislation applicable to a feasibility study 3.6Public participation required for municipal services

Unit 3: Feasibility Study 3. Introduction 3.7The participation that is required for municipal support activities and the use of municipal property 3.8The needs analysis 3.9Technical options analysis 3.10 Service Delivery options analysis 3.11 Delivery mechanism summary and interim recommendations 3.12 Due diligence 3.13 Value assessment 3.14 Procurement plan 3.15 Submit report to council 3.16 Revisiting the feasibility study

Unit 4: Procurement 2. Introduction 2.1The Municipal PPP regulations and the Municipal Supply Chain Management Regulations state that it is the responsibility of the accounting officer to design and manage the procurement process in a way that meets the requirements of these regulations, the unit gives steps to be followed 2.2Each project will further refine the process and add to the pool of best-practice knowledge 2.3Procurement guidance for more complex municipal PPPs is provided 2.4 The process of procurement of PPPs 2.5Legislation applicable to procurement 2.6Stages involved in a PPP procurement 2.7Linkage between procurement stage and feasibility study 2.8Critical questions for the procurement phase

Unit 4: Procurement 3. Stage 1: The request for qualifications (RFQ) 3.1The process should meet all the requirements of relevant legislation, regulations and best practice 3.2The objectives of the RFQ 3.3The critical considerations in the RFQ stage 3.4 The bid bond is required before the RFP is issued 3.5BEE 3.6Steps involved in the RFQ

Unit 4: Procurement 4. Stage 2: The request for proposals (RFP) 4.1Can bidders participate in preparing the RFP? 4.1.1Value for money 4.2What steps are involved in preparing the RFP 4.3Prepare the draft RFP and get TVR IIA 4.4 Get feedback from bidders 4.5What should the final RFP document contain 4.6Calculation of the bidder’s overall score 4.7 What happens to the RFP and draft PPP agreement documentation?

Unit 4: Procurement 5. Stage 3: Choosing the preferred bidder 5.1Steps involved in choosing a preferred bidder 5.2The critical points to remember in managing the bid process 5.3How are bids to be evaluated? 5.4 What tasks and processes are involved in the bid evaluation process?

Unit 4: Procurement 6. Stage 4: Best and final offer (BAFO) 6.1When is BAFO appropriate 6.2What are the steps involved in a BAFO process

Unit 4: Procurement 7. Stage 5: Value assessment report 7.1The municipal PPP regulations require that the municipality must solicit the views and recommendations of the National and the relevant provincial treasury 7.2TVR IIB- Before the preferred bidder is announced and appointed 7.3The report contain a number issues for consideration 7.4 The value assessment report should be presented to council 7.5Both the preferred and the reserve bidders are required to accept the outcomes 7.6The reserve bidder is critical

Unit 4: Procurement 8. Stage 6: Negotiations 8.1The desirable outcome of negotiations 8.2The stages of the negotiations process

Unit 4: Procurement 9. Stage 7: TVR III/section 33 of the MFMA 9.1Two submissions required as outputs for this process 9.2The TVR III submission should contain 9.3The main purpose of the PPP agreement management plan 9.4 Stages involved in the TVR III process 9.5Stages involved in preparing the MFMA section 33 report 7.6The reserve bidder is criical

Unit 4: Procurement 10. Stage 8: Close-out report and case study 10.1The terms of reference for PPP advisers require that, the adviser should produce a close out report and a case study be made available to the public 10.2The differences between a close-out report and a case study

Unit 5: Managing the PPP contract 2. Approaches and roles and responsibilities 2.1Introduction 2.1.1Its important to focus on the general principles of good contract management and effective governance as they provide a map and guidelines for contract management 2.1.2They assist the municipality to meet its PPP contract management responsibilities in terms of section 116(2) of the MFMA and Municipal PPP Regulations, section What is contract management 2.3The outlook of the PPP contract management framework

Unit 5: Managing the PPP contract 2. Approaches and roles and responsibilities 2.4 The approach to contract management 2.4.1What is the best approach to managing PPP contracts? Focus is on quality assurance, spot checking, performance monitoring and corrective action Different contract management approach 2.4.2What could go wrong if there is too much or too little intervention The type and stage of the PPP project would inform the municipal approach Key issues for successful project management

Unit 5: Managing the PPP contract 2. Approaches and roles and responsibilities 2.4 The approach to contract management 2.4.3What can go wrong and why? The municipality could lose control, decisions not taken at the right time and failure Possible reasons why parties fail to manage PPP contracts successfully 2.5 Municipal roles and responsibilities 2.5.1Clarification of the roles and responsibilities of key individuals 2.5.2List of roles and responsibilities-Appendix B

Unit 5: Managing the PPP contract 3. The four stages of contract management 3.1 PPP Contract management stages 3.2Procurement stage 3.3Development stage 3.4 Delivery stage 3.5Exit stage 3.6During each stage the following considerations needs to be made, partnership, service delivery and contract management 3.7Important tasks to be carried out during each contract management stage must be identified and detailed 3.8 Exit strategy 3.9Items to be included in the exit strategy 3.10 The three contract management functions

Unit 5: Managing the PPP contract 4. Partnership management 4.1 Involves the development of processes to ensure accountability and manage the relationship 4.2Five key dimensions 4.3Partnership management plan 4.4What is corporate governance and what does it involve? 4.5What initiatives and commitments must the municipality take to ensure good governance? 4.6How can trust be built? 4.7What can be done to improve communication and information sharing? 4.8How do we know if the parties involved are satisfied with the way the partnership is working? 4.9What is an appropriate way of resolving disputes? 4.10 What is a partnership management plan?

Unit 5: Managing the PPP contract 5. Service delivery management 5.1 Two main parts of service delivery plan 5.2Steps in service delivery management plan

Unit 5: Managing the PPP contract 6. Contract administration 6.1 Administrative processes ensure effective management 6.2Three main categories of contract administration 6.3Variation management 6.4Contract maintenance 6.5Financial Administration 6.6What to do next: Planning and implementing contract administration 6.7The contract management plan and manual 6.8Key challenges and tasks of contract management

Thank you Zwelinzima Ndevu

The Manager of Public Value Competent in: Policy making and evaluation (research) Sustainable development Leadership & change management Project management & organisational design Information & communication technology for management Macro governance / local governance People management Financial management