1. Project Selection and Evaluation How to Choose the Right Project
Martin Darcy
Regional Workshop on Concessions/Public-Private Partnerships Tirana, December 2007

2. The Importance of Selecting Good Projects
Capital investment is vital
Good projects:
create economic benefits and growth
create confidence in a country
create value for money solutions thus minimising tax-take
Bad projects:
create ongoing liabilities for many years
big projects = big risks
failure is often high profile: nationally and internationally
can undermine investor confidence in the country
can make the good projects unaffordable

3. How Poor Quality Projects Happen
Poor Objective Setting
Weak Option Appraisal
Inadequate Cost/Benefit Analysis (CBA)
Political rather than economic decisions
Poor Identification of recurrent costs
Under estimation of Capital costs
Inability or unwillingness to hire appropriate expertise
Fear of peer review
Transparent and fair Procurement processes

4. Something to Remember There is no such thing as a ‘PPP Project’
There are only Public Investment Projects
Sometimes Public Investment Projects can be realised through PPP
But not always; since PPP is not always suitable.

5. Issues to Consider 1
Does the proposed project reflect the current policy environment of the government?
Is there political support?
Are the objectives of the proposed project clear and easy to communicate?
Have the project governance arrangements been agreed?
Skills and capacity (and funds to pay for it all)

6. Issue to Consider 2
Have all the options for realising the objectives been identified and evaluated?
How do you test the capital cost estimates?
How do you identify the recurrent costs?
Is the proposed project affordable to the State / to the Ministry’s budget
What is the likely impact on the National Debt?

7. Issues to Consider 3
Have all the Risks to the Project been identified?
Have the ‘worst case’ costs been evaluated and considered?
What other factors could influence the outcome?
Who are the stakeholders in the project?
Are project delivery times realistic?
Is there likely to be a competitive market to allow a healthy procurement process?