The European PPP Expertise Centre (EPEC), part of the advisory services of the European Investment Bank, has been set up to help public authorities across Europe deliver better public-private partnerships (PPPs). Its main mission is to share good practices amongst its membership (EU member PPP units), and more generally the public sector, on how to prepare, procure and manage PPP projects.
In this context, EPEC has just released a new publication, the “EPEC Guide to PPP”, available on its website www.eib.org/epec. The Guide is a revised version of the “Guide to Guidance” released in 2011, which purpose was to help public authorities going through a typical process of preparation, procurement and implementation of a PPP project in a European context. This original publication addressed the fact that procuring PPP projects could appear complex for many public authorities, partly due to their novelty, and therefore required some guidance based on good practices from experienced countries. Since then, several updates have been published, such as the 2015 version, which reflected the revised Eurostat treatment rules for PPPs.
The EPEC Guide is a gateway to 124 PPP publications
The new “2022 version” goes much further than its predecessors as it recognises that public authorities across Europe have developed their own good practices and vision on the use of PPP for infrastructure projects and as PPP models have evolved. Therefore, there is much more PPP experience to be shared across the public and private sectors, as evidenced by the wealth of references to external sources contained in the Guide (including the ESG handbook from the LTIIA).
Nevertheless, the topic of PPP is vast and complex. Even what constitutes a PPP can be subject to debate. The Guide does not pretend to cover the subject comprehensively, nor to dictate how to undertake the intricate task of procuring a large infrastructure project under a specific model. Instead, the Guide tries to provide a reliable framework for public contracting authorities to navigate through the different topics that are important from a PPP perspective, with a specific focus on the European market. The Guide addresses this in two ways:
- By describing what a contracting authority should do and when it should do it. This is articulated over the four phases that constitute the project cycle. For each phase, the Guide provides a checklist that can help the contracting authority progress through its own process.
- By describing key PPP topics that are recurrent throughout the four phases of the project cycle. For each topic, the Guide provides many external references that address the topic in more detail or in a particularly relevant fashion.
Despite being a relatively long document (175 pages), the sections of the Guide can be consulted independently, to reflect the fact that many contracting authorities will have some understanding of the project process or of certain PPP topics. To ease navigation, the Guide includes cross-references that will guide the reader. Navigation is further facilitated by the “read online” version that is easily accessible from laptops and mobile phones.
True partnership starts during the preparation phase of a PPP project
We at EPEC always stress that PPPs are about partnerships, that their real value arises when the public and the private sectors work together towards the same goals set out in the contractual arrangement. However, this partnership does not start only once the parties formally enter into the PPP arrangement (e.g. signature of the PPP contract). Instead, the partnership ought to commence as soon as the contracting authority knows that it will involve the private sector in the delivery of its project – in other words, as soon as the contracting authority prepares the project for procurement. Besides, a sound partnership requires that each party not only delivers what it is supposed to do but also understands what to expect from the other party.
As a result, we have set the Guide’s core objective as strengthening the expertise of the contracting authority in preparing and procuring a PPP project. The Guide gives an overview of the main activities that the process involves and explains the purpose and the importance of each activity in the four phases of the project cycle. The benefit for the contracting authority is to understand what it has to do, i.e. its part of the partnership.
The Guide also helps set out what the contracting authority ought to expect from the private sector in this process. Indeed, consultants, advisers, financiers and companies bidding for the PPP contract will provide various inputs throughout the project cycle. A contracting authority can use the Guide to set out clear instructions or negotiate efficiently the involvement of the private sector in the preparation, procurement and implementation phases of the project cycle. It then becomes easier for the private sector to fulfil the requirements and bring value to the project.
A good read for private investors
PPPs are unique in that they create a long-term contractual performance relationship between the public and the private sectors. The private sector is involved into the design, build, finance, maintenance and/or operation of the infrastructure in a coherent way. For this reason, PPPs require the parties to understand and fine-tune in a bespoke way concepts such as lifecycle approach, performance-based payments, project financing, risk allocation, contract management…
With its thematic approach, the Guide offers a good overview of project and process features that are important from a PPP viewpoint. The Guide discusses 17 topics, complemented by key outputs and external publications for each of them.
Therefore, for the private sector, the Guide offers an opportunity to understand the language, processes, mindset and objectives of a typical contracting authority developing a PPP project. This could help private investors identify ways to add value on many aspects of a project.
Although the EPEC Guide to PPP is primarily aimed at contracting authorities, it provides a common framework for the preparation, procurement and implementation of PPP projects that can ultimately help public and private sector work together in close partnership. The more people use the Guide for their PPP projects, the better quality of those projects, ultimately leading to a bigger pipeline of good PPP projects to invest in.