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

2. Agenda: Page Models in Public-Private Partnerships (PPP’s) 5
Management of PPP’s
Agreements in place for Infrastructure 27
Partnerships and its Committee’s
Lessons Learnt 1

3. Who am I? 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 1

4. Democratic Republic of Congo
Profica
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
Mauritius
Libya
Zambia
Zimbabwe
Botswana
Lesotho
Namibia
Uganda
Central
African Republic
Burkina Faso
Algeria
Niger
Chad
Egypt
Sudan
Ethiopia
Eritrea
Djibouti
Somalia
Malawi
Kenya
Tanzania
Madagascar
Swaziland
Mozambique
South Africa
Congo
Angola
Equitorial Guinea
Benin
Ghana
Nigeria
Cameroon
Gabon
Cote d’Ivore
Togo
Liberia
Guinea
Sierra Leone
Guinea Bissau
Gambia
Mali
Mauritania
Senegal
Western Sahara
Morocco
Tunisia
Burundi
Democratic Republic of Congo
Rwanda 1

5. Section 1: Models in Public-Private Partnerships
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.) 1

6. Typical PPP Project Cycle1

7. Asset & Infrastructure Procurement
Strategy
Funding & Financing
Construction
Operation
Change
National Infrastructure Plan
A New Virtuous Circle
A New Approach to Financing
Improved Flexibility
Placing responsibility & risk where it can best be managed
Government Construction Strategy 1

8. The Established Construction & Infrastructure Delivery Models
Long Term Relationship
Perceived Risk Transfer
The Established Construction & Infrastructure Delivery Models
Traditional
Design & Build
Prime Type Contracting
DBO & BOT
PPP
PFI
Flexibility
Commercial Competitiveness 1

9. Evolving Models Long Term Relationship Perceived Risk Transfer
Capital Funding
Loan / Grant Funding
Alliancing
Partnering
Competitive Partnership
Private Developer Scheme
LEP / LIFT
Local Asset Backed Vehicles
PPP’s
Evolving Models
Flexibility
Commercial Competitiveness 1

10. PPP’s historically...
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 1

11. Some of the real issues linked to PPP’s
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 … 1

12. Effective Programme & Project Management is Essential to Success
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 1

13. And give confidence regarding the project pipeline
And what must Government do?
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 1

14. Section 2: Management of PPP’s
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.
New South Glasgow Hospital (1,109 beds) 1

15. Approach and Methodology
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. 1

16. Approach and Methodology
Text... 1

17. Approach and Methodology
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. 1

18. Approach and Methodology
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. 1

19. Approach and Methodology
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. 1

20. Approach and Methodology
Phase 2 – Procurement
Indicative Timeframe
Prepare RFQ Months
RFQ Release, Evaluation and Shortlist
Draft RFP and Evaluation Manual 4 Months
Draft Project Agreement and Technical Schedules 4 Months
Issue RFP
RFP Response Period 7 – 9 Months
Respond to Bidders Written queries
RFP Evaluation Months
Appoint Preferred Bidder
Negotiations to Financial Close 4 – 6 Months
Financial Close 1

21. Efficiencies in Procurement and the Delivery of Construction
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 1

22. The problem... Research directs us to a new approach: From:
Lack of Integration
Poor collaboration in problem solving
Adversarial approach
Short term relationships
Poor customer focus
No supply chain management
Lack of learning culture
Lowest price
Poor Health & Safety record 1

23. The Problem Better Performance To: Lack of Integration
Poor collaboration in problem solving
Adversarial approach
Better Performance
Construction meets user requirement
Lower whole life & operational costs
Greater cost and time predictability
Eliminate waste
Short term relationships
Poor customer focus
No supply chain management
Lack of learning culture
Lowest price
Poor Health & Safety record 1

24. The desired Culture Shift
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 1

25. Achieving Excellence 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 1

26. Achieving Excellence 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 1

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

28. Section 3: Agreements in place for Infrastructure
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 1

29. Section 3: Agreements in place for Infrastructure
Phase 2 Procurement (cont’d)
Works Programme
Independent Certifier (IC) Agreement
Payment Mechanism
Reviewable Design Data (RDD) 1

30. Typical Structure 1

31. Lesotho Hospital PPP 1

32. Planning, Planning, Planning
Section 5: Lessons Learnt
Planning, Planning, Planning
1. Develop a clear Brief
Adopting international best practice
2. Appoint the right team (Advisors, Specialist etc)
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. 1

33. Section 5: Lessons Learnt (cont’d)
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. 1