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Going for Excellence; Best Practice is essential to deliver PPPs fast and successful

Jan, you are working on the UNECE initiative. Why is this so important?

Governments have the difficult task of protecting the public’s interest while meeting the diverse needs of their citizens. Citizen expectations continue to rise as they demand more and better government services at lower costs. What’s more, citizens’ confidence in their governments and leaders, hinges on the quality of these services. State governments are continually challenged to deliver existing government services faster and cheaper, as well as make use of them to create new services and new roles for government to enhance social progress and foster prosperity for its citizens. The need for infrastructural and social improvements is high. National budget and traditional state procurement cannot meet the demand in developing countries as time and money is short.

Jan Van schoonhoven. Executive Programme Leader International PPP Center of Excellence

Jan, why is PPP so high on the agenda but the resuls somewhat lacking that ambition?

The tradition approach of PPP development is based on ‘trial and error’. It is time and money consuming and does not meet the demands of today. For example, Germany started in 2003 with the first visible PPP involvement, but did not have a real pipeline of projects until late 2010. The PPP centre in Belgium PPP initiative started in 2002, only having their first PPP pipeline became visible around 2009. In the Netherlands, PPP became a political issue in 1997, having its first real infrastructural project (high Speed Rail) in 2003 and a pipeline of PPP Projects in 2009, although an OECD report urged the Netherlands to speed up on PPP’s in 2003 already but needed time to implement. The same counts for Kazakhstan were the PPP unit started in 2008 having their first projects in 2012 but a real pipeline is still a challenge. Thailand started in 1997 with a PPP ambition and they have created a PPP Pipeline since 2009.

Normal time from a PPP ambition to a pipeline of projects in countries is about 12 to 15 years. Although there are no real investigations in the financial burden of this process, it clear, it does not come cheap. Average costs to make a (PPP) Law alone is about US$1-2 million, the running of a PPP unit with about 15 staff around US$3 million annually and training cost for governments on PPP is around US$2 million annually (comparison of 4 PPP units). So without doing projects, but merely creating a good PPP environment by a PPP Law and setting up a PPP will cost a government around 7 million a year. The interviewed PPP units spent around 3 million annually on consultants. Looking at a period of around 10 years of PPP development it becomes a staggering 100 million US to have a pipeline of PPP projects ready. Not calculating the project that had to be stopped or had to be taken over by the government

So 10 years later and spending at least 100 million dollars you have a PPP pipeline.

This does not look very promising. Could you give any reason for why it is so costly and time consuming?

One of the main reasons to my experience is that each country is seeking a PPP concept that’s fits best to their needs and to their way of working, the best solution. What’s not helping; the world is full of case studies and an endless reservoir of advice, combined with more than 90 different combinations of PPP contracts and procurement strategies. While designing the PPP Law, new information and more business cases are coming available and in most cases there is a deadlock: The law doesn’t fit a desired national PPP concept and the initial concept turned out not the be the best concept. Projects started with the old concept do not run properly. So, after travelling around the world, studying tons of PPP information, hiring countless external advisors and spending an enormous amount of money, most countries are back at square one after 5 or 6 years.

The first 5 – 7 years in PPP development are used inefficiently as case studies are not solid enough to create a viable national PPP environment.

Everybody will agree that there is neither a staff nor a golden solution, but there are case studies and there are best practices. Best practices may differ for each sector and country, but there is, with over more than 4.500 PPP projects operational and running smoothly around the world, always one which suits best to the national need.

The only question is how to find this best practice. The answer is simple, lets define by the real experts which case study is a real best practices in a specific area and suitable for specific national needs. Not only as a projects, but also running well after it is operational. That’s why the 56 countries of UNECE decided that only the best examples should be available for countries and that why they agreed upon the establishment of an UNECE PPP International Centre of Excellence. It becomes a place for defining best practices and disseminates them around the partners. The small but efficient centre at Geneva will work closely with national PPP Specialist centres in developing countries, exchanging the information only on best practices in the different areas.

Can you give some more details?

The centre in Geneva will determine with the National PPP Centres the these best practices by having access to the resources of the developed countries, international recognised high level experts from both the public as well as the private sector but equally important the local presence of a National PPP Specialist Centre that will deliver valuable contributions to the training and development of new best practices and improve existing. The UNECE PPP International Centre of Excellence will only be satisfied with the best, as it will save the emerging and developing countries because it will abolish the first five years of struggling and experimenting on PPPs; the time to a PPP pipeline will e reduces by 50%, an average of 5 years, the financial burden at least with 50%, an average of 50 million US dollars, not counting the gains by not having bad or lost projects.

Only the best is good enough in PPP, as it saves time and money which is precious and sometimes not available.

How can countries and people apply?
We encourage governments to setup a National PPP Centre of Excellence and get the best of the best in a PPP policy and not losing time in experimenting. Then the countries get a solid and continuous assistance during the implementation, we never let them on their own. We have available the best training and for the projects we have and continuous developing, most suitable contracts, and projects examples there is, learning from the best experts and the best PPP units from experienced countries. But the National Centres will also work hard and develop new ideas and show their best practices, and share them with their partners in this initiative. We takeout the loss in the equation of starting PPP. The output goal is to have a real and solid PPP project within 2-3 years after joining the UNECE Centre, and therefore reduce the time from by 4-10 years.

After that time, the National PPP Specialist Centres main goals is not to learn, but provide best practices to the UNECE initiative, develop additional and better trainings and become also the best of the best in PPP.

Wonderful words and a high ambition you present here. Could you give a one-liner to this initiative?
To become successful in PPP, only the best is just good enough.

UNECE PPP Center of Excellence’s role