Constituting the right consortium for a PPP project

Complex projects require a high degree of innovation development in the construction and operation stage. Consortium which consists of private partners needs knowledge and skills to respond to market demands. Therefore it provides a practical solution in construction, new materials and techniques, as well as, logistics and responds quickly to changes in demand, manages income and collateral costs, provides the wide range of payment mechanisms, the sale of services, etc. Effect of the mechanism of competition among private sector in delivering public goods and services is an essential element of the economy of PPP projects.

Private sector combined with the public sector share the risks of the project in a way that each of the partners takes risks that are capable of managing the best (e.g. public partner assumes the risk of demand for services, and the private partner assumes the risk of availability of buildings). Supervision and quality control is an essential factor in determining the method of delivery of public services that is a great responsibility of private partners (internal audit, internal control, quality systems).

The public sector has the possibility of introducing a penalty if a private partner provides a service below the standards determined by the PPP Contract. Application of penalties must be clearly stated in the contract and should have a clearly defined impact on the partners income. Monitoring or quality control of standards and services at Contractual forms of public-private partnership is a prerequisite for a successful implementation of the project until Contract ends.

At this point the concept of criteria is developed for measuring the success of the PPP/PFI project for a Client. The principles to take into account for a productive and effective partnering, and consequently, for ensuring a successful consortium is as follows.

  • Early involvement of key sponsors across institutions.
  • Commitment of each of the sponsor’s senior management.
  • Common goals between sponsors.
  • Clear understanding of responsibilities, risks, and rewards between the consortium’s members and key suppliers.
  • Identification of key individuals/teams who will work together.
  • Selection of bidding partners based on value (not price).
  • Common cultural values and processes across consortium members and key suppliers.
  • Ideally, practical experience among consortium members of having worked together and of having built successful joint bidding/working teams.
  • Previous PPP experience and track record of consortium members.
  • The relationship a proposed partner has with the procuring authority.
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