Appraisal of Outline Business Cases - World Bank

Appraisal of Outline Business Cases - World Bank

Quality Control in Preparing and Managing PPP Projects Edward Farquharson 8 March 2007 Impact 100% Gate 5 Ability to Influence Whole Life Cycle Expenditure Gate 4 Gate 3 Gate 2 Gate 1 Gate 0

0% Benefits Evaluation Readiness For Service Investment Decision Procurement Strategy Business Justification Strategic Assessment Confirm Strategy

Confirm Justification Competitive Procurement Time Contract Award In-Service Confirm Benefits Key Lessons From OGC Gateway reviews/ Essentials for Project Success include: Effective stakeholder

communication Sound financial controls Market knowledge and procurement advice Robust business case Adequate skills and resources Ongoing risk management process Contract Management and delivery skills Clearly defined roles and responsibilities Benefits realisation process Pre-agreed Critical Success Factors

Project Governance Tools Processes Incentives Institutions Queen Elizabeth Bridge, Second Dartford Crossing Project process Project identification Project preparation Affordability Output specs VFM Risk allocation Managing advisors Timing and management

Project procurement Project Boards Contract Standardization Project operation Contract Management Feedback mechanisms Gate 2 check-list 1. Programme, project, procurement level review (scope, term) 2. Risk Allocation 3. Key Terms and Conditions 4. Indication of commercial interest 5. Affordability 6. Suitability of Proposed Advisers 7. Indicative Timetable 8. Project Team

9. Commitment of Sponsors/Users 10. Statutory Processes Value for Money Assessment Commercial Interest Assessment Project Management Assessment Incentives Peer review PRG Guidance Central funding conditionality Governance Project Boards Central support e.g.

PUKs role on Project Boards Wolds Remand Prison Project process Project identification Project preparation Affordability Output specs VFM Risk allocation Managing advisors Timing and management Project procurement Project Boards Contract Standardization Project operation

Contract Management Feedback mechanisms Procurement 2 stages ahead approach Bid evaluation methodology and teams Single parameter bidding vav quality/price evaluation Governance Standard contracts and enforcement British Embassy, Berlin Project process Project identification Project preparation Affordability Output specs VFM

Risk allocation Managing advisors Timing and management Project procurement Project Boards Contract Standardization Project operation Contract Management Feedback mechanisms Background Over 750 signed projects Over 500 operational projects

Central focus hitherto predominantly on procurement Project management support Contract terms Bid times and costs High profile issues: Contractor distress Benchmarking Major changes Proposition that focus needs to change!

PUK Review of operational performance for HMT West Middlesex Hospital Service Provider Performance Performance measurement shows that the contract service levels are being achieved... 77% 12% 10% 1% Always Almost always

About half of the time Almost never 0% Never Relationships Please rate the day-to-day operational relationship between the public and private sector contract management teams 40% 32% 25% 3% 0.0%

Very good Good Satisfactory Poor Very poor User Satisfaction Did the last user satisfaction assessment find that services were being delivered to an acceptable standard? 65% 20% 14% 1%

Always Almost always About half of the time Almost never 0% Never Were operational problems resolved in the time allowed? 3% 15%

Always or Almost Always Half of the time Almost never Never = 0% 82% Main Findings High standards of Performance High Levels of Contract Manager Satisfaction Good Relationships High Levels of User Satisfaction Problems Resolved in Time Payment Deductions Generally Effective Dispute Resolution Rarely Used

Forest Enterprise Ardgartan Site Operational Taskforce To assist the public sector in improving the operational performance of PFI contracts To support individual projects in dealing with operational issues Run by PUK Nottingham Trams Helpdesk and Project Support Services Contract Management Strategy and Best Practice Benchmarking and Market Testing Contract variations Contractor difficulties

Change in ownership Mediation Insurance costs for insurance reviews Refinancing Payment mechanisms GCHQ Programme Delivery Units Opportunity created by long term national programmes Achieve optimum value and impact from strategic programmes

Balance needs based prioritisation with deliverability and capacity Procurement and contract standardisation Removal of repeated bidding (for public and private) Strategic partnering drive economies of scale from long term volume

Centre Manor Park Primary Care Centre Example: Partnerships for Schools National delivery vehicle (DfES/PUK) Roll out of national programme across c3500 schools (Building Schools for the Future) Delivery model with standard procurement and contractual documentation Team to provide local transaction support Manage allocations of funding Plan timetable of prioritisation, procurement, construction and delivery Good practice examples and innovation opportunities/ideas Benchmark costs to facilitate long term local partnering

Brentside School Recap Procurements have programme issues Quality control is a continuous process Critical importance of Gate prior to release to competition Conclusions Gateways Governance Standardisation Incentives Importance of operational phase Feedback mechanisms HM Treasury

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