Department of the Environment and Local Government. Project Management. Public Private Partnership Guidance Note April 2000

Transcription

1 Project Management Project Management Public Private Partnership Guidance Note 7 14 April 2000 Guidance Note 7 14 April 2000

2 Project Management Contents Section Page I INTRODUCTION...1 SCOPE AND PURPOSE OF GUIDANCE...1 STRUCTURE OF GUIDANCE NOTE...1 PUBLIC PRIVATE PARTNERSHIP ROUTE MAP...2 II BACKGROUND...4 III IV INTRODUCTION...4 LINK WITH PPP ROUTE...4 PROJECT MANAGEMENT IN PPP PROJECTS...4 OVERVIEW OF PROJECT MANAGEMENT...6 EXISTING PROCEDURES...6 EXISTING STRUCTURES...6 PROJECT ORGANISATION...8 INTRODUCTION...8 STEERING GROUP...8 PROJECT MANAGER...11 PROJECT TEAM AND RESOURCES...15 EXTERNAL ADVISERS...16 V PROJECT INITIATION...19 VI CONCLUSIONS AND RECOMMENDATIONS...21 APPENDICES...22 A. PUBLIC PRIVATE PARTNERSHIP POLICY FRAMEWORK...22 B. OUTLINE PROJECT INITIATION DOCUMENT...24 C. ROLE OF ADVISERS...26 Guidance Note 7 14 April 2000

3 Project Management I Introduction Scope and Purpose of Guidance 1.1 This Guidance Note provides guidance for Central and Contracting Authorities on the Project Management of Public Private Partnership ( PPP ) projects. The purpose of this Guidance Note is to outline the recommended structures and techniques to be used in managing projects in the roads, water and waste sectors that are being procured using the Public Private Partnership approach. 1.2 This Guidance Note is one of a series of Guidance Notes which provide contextual information on Public Private Partnerships and procedural guidance for Central and Contracting Authorities covering each stage in the development and implementation of infrastructure projects using the Public Private Partnership approach. The titles of all of the Guidance Notes are set out in Appendix A to this Guidance Note. 1.3 The Guidance Notes are designed to be informative rather than prescriptive and the aim is to reflect good practice. They are generic in that they provide guidance on the use of Public Private Partnerships across a range of projects in the roads, water and waste sectors. However, different projects will give rise to different issues and the guidance provided will have to be reviewed in the context of each individual project. For this reason it is important that Central and Contracting Authorities obtain expert advice to help them to make best use of the Guidance Notes and to complete a successful Public Private Partnership procurement. Structure of Guidance Note 1.4 The Guidance Note is structured as follows: Section Two introduces the two phases of management on Public Private Partnership projects, and explains the distinction between project management phase and contract and performance management; Section Three - examines the existing structures and procedures that are currently used for projects in the roads, water and waste sectors, in order to provide a background against which the approaches to project management on PPP projects can be compared; Section Four describes the requirements of the project organisation, including the roles and responsibilities of the Steering Group, the Project Manager, the Project Team and the external advisors; Section Five sets out the recommended the approach to project initiation, and examines the format and content of the Project Initiation Document. 1.5 The final Section provides a summary of the main issues and recommendations that are identified and discussed within this Guidance Note. Guidance Note 7 14 April

4 Project Management Public Private Partnership Route Map 1.6 The process of project development and implementation changes significantly when a project is taken forward as a Public Private Partnership. For this reason a Public Private Partnership Route Map has been developed. 1.7 The Public Private Partnership Route Map sets out the main stages in the development and implementation of a Public Private Partnership project that must be undertaken by the Central Authority or the Contracting Authority. The Route Map is presented in the diagram shown overleaf. 1.8 The Public Private Partnership Route Map shows how the traditional processes of project development, procurement and implementation change for a Public Private Partnership project. A more detailed description of the Public Private Partnership Route Map is provided in the separate Guidance Note entitled Introduction to Public Private Partnerships. 1.9 This Guidance Note reflects the Best Practice guidelines that have been approved by the Cabinet Committee on Infrastructural Development and Public Private Partnerships. It should be noted that the process of project management depends somewhat on the choice of procurement method. Guidance on procurement is provided in the separate Guidance Note entitled. Guidance Note 7 14 April

5 Project Management Figure 1: Public Private Partnership Route Map Project Identification Assessment of PPP Suitability Project Appraisal PPP Assessment Key No change to existing process Changes to existing process New stage for PPP projects Statutory Process Assessment Procurement Procedure Selection Project Management Stakeholder Consultation If PPP recommended Statutory process risk with contracting authority Statutory Process Statutory process risk with private sector Elements of Statutory Process Retained by Public Sector Preparation of Contract Documentation Preparation of Contract Documentation Tendering Process Tendering Process Contract and Performance Management of Construction and Operation Contract Management of Planning Phase Elements of Statutory Process Transferred to Private Sector Contract and Performance Management of Construction and Operation Guidance Note 7 14 April

6 Project Management II Background Introduction 2.1 Contracting Authorities and Central Authorities already have well-established techniques and procedures for managing the procurement of large-scale infrastructure projects. These techniques need to be adapted somewhat to cater for the technical, legal, financial and long-term, operating consequences of having the private sector involved in PPP projects. Link with PPP Route 2.2 The Public Private Partnership Route Map, which is presented in Figure 1 above, indicates that the project management structures that are required to procure a PPP project would be established after the Option Appraisal stage, which incorporates PPP Assessment, Statutory Process Assessment and Procurement Procedure Selection. This representation is accurate, since the Central Authority will not approve a project to be procured as a Public Private Partnership until after the Option Appraisal stage is completed. Nevertheless, there must be a strong degree of continuity between the team responsible for the Option Appraisal stage and those ultimately responsible for managing the project through the Procurement stage to the award of contract. It will also be important to integrate this Guidance Note with existing procedures for managing major infrastructure projects. 2.3 The recommended approach to the management of the Option Appraisal stage is set out in Section Two of the separate Guidance Note entitled Public Private Partnership Assessment. Management of the Option Appraisal stage involves specific input from Central Authorities, Contracting Authorities and technical, legal and financial advisers. Project Management in PPP Projects 2.4 A PPP project requires management in two phases: Development phase - where the technical definition, project structuring, statutory processes, stakeholder consultation, and procurement occur; and Implementation phase which follows on from the development phase and commences with construction and commissioning and continues through operation to the end of the contract, typically after some years. 2.5 This Guidance Note refers primarily to the project management requirements of the development phase. Guidance Note 7 14 April

7 Project Management 2.6 The processes of managing each of the development and implementation phases are very different and can be summarised as follows: Project management this is covered within this Guidance Note, which describes the procedures and organisation required by the Contracting Authority to bring a project from inception through planning, Environmental Impact Statement (EIS), statutory process and completion of the procurement. This mirrors the existing arrangements for management of large-scale conventional projects, but in a PPP context is likely to call for additional expertise, notably in the financial and legal areas; and Contract and performance management this is covered in the separate Guidance Note entitled Contract and Performance Management, which describes the procedures and organisation required to oversee the construction and commissioning of the asset, and delivery of the service in accordance with the Contract. This includes performance monitoring, certification of payments in accordance with the contract terms, dealing with changed conditions, underperformance, Contracting Authority reporting and management of Contracting Authority/Contractor interfaces. This will require specific organisational changes affecting Contracting Authorities responsible for PPP projects. 2.7 Some degree of overlap between project management and contract and performance management functions is likely and desirable. This is because decisions that are made during the project management phase have long-term implications over the life of the PPP project. For example, it will be important to ensure that the rationale for taking a particular approach to the structuring of a contract is reflected in how the contract is operated (see the Guidance Note entitled Contract and Performance Management). Guidance Note 7 14 April

8 Project Management III Overview of Project Management Existing Procedures 3.1 There are well-established procedures for the implementation of major infrastructure projects, which differ slightly between the roads, water and waste sectors. For road projects, these are documented in formal guidance published by the National Roads Authority. For water services, they are set out in a series of circulars issued by the Department of the Environment and Local Government. Existing Structures 3.2 In overseeing these processes, the following project management arrangements are in place:- Lead Authority - Contracting Authority undertaking the project on its own behalf or on behalf of a number of Local Authorities; Project Engineer/Project Manager Early in the life of the project, the Local Authority should nominate a Project Engineer to oversee the advancement of the project. For some major projects, Project Managers have been appointed. The responsibility of the Project Engineer/Project Manager is to co-ordinate the implementation of the project including oversight of budgets, public liaison, Central Authority reporting and management of consultants; Steering Group - comprising representatives of relevant Local Authorities (Technical & Administrative), representatives of Central Authority, and the Project Engineer/Project Manager. Consultants attend at Steering Group Meetings on request, and may not be present for all discussions. The Steering Group oversees the project implementation, acting as a clearing house for issues as they arise and generally facilitating the formal decision-making process by the Central Authority or Contracting Authority Manager. The Steering Group typically meets quarterly, or as key deliverables become available; Technical Steering Group (Project Team) - comprising the technical representatives only. This group generally meets at more frequent intervals in order to review technical issues as they arise and determine the preferred approach based on studies and technical reports developed by the Project Team. For national roads projects, a certain amount of design work, and increasingly project management tasks, are carried out by regional design teams. For water services and waste, there is a strong reliance on private sector consulting engineering firms to provide technical advice and progress projects through the design and planning stages. In a PPP context the technical steering group would have a broader skills base and be known as the Project Team ; and Guidance Note 7 14 April

9 Project Management Technical advisers A consultant team appointed by the Contracting Authority to carry out the work defined in the project brief, reporting to the Project Engineer, Steering Group and Technical Steering Group, including preparation of progress and technical reports. Technical advisers may be appointed for the duration of a project or separately for the separate phases. Currently, in road projects, it is normal to make an overall appointment for the duration of the project (to avoid later procurement delays), with task definition and scope of services agreed in phases, beginning with planning, EIS and statutory process. In water services and waste projects, separate appointments are made in respect of planning, EIS and subsequent stages. The Project Engineer/Project Manager and Steering Group play a key role in the development of a project brief, procurement and management of technical advisers. 3.3 The procedures and project management structures currently employed for major projects, as set out above, are reviewed in this document to assess how they could be adapted to PPP projects. Guidance Note 7 14 April

10 Project Management IV Project Organisation Introduction 4.1 Project Management for PPP projects should be built on, and integrated with, the procedures that are already in place for managing infrastructure projects. The organisation of a PPP project centres on four main elements, namely the Steering Group, the Project Manager, the Project Team (in place of the traditional Technical Steering Group), and the advisers. An indicative project organisation chart and reporting channels are as set out below: Central Authority Contracting Authority Steering Group Project Manager Project Team Technical Advisers Steering Group Financial Advisers Legal Advisers 4.2 A Steering Group is necessary for all major PPP projects. This will be along the lines of the existing arrangements and include representatives of the Central Authority, the Contracting Authority, other Local Authorities involved in the project, and the Project Manager. Technical advisers would be required to attend at and report to Steering Group meetings as required. Guidance Note 7 14 April

11 Project Management 4.3 The role of the Steering Group is to consider, analyse and resolve the range of complex issues, which arise in the course of the planning and implementation of a PPP project, subject to formal approval by the Central Authority (or the Contracting Authority, where appropriate) at the appropriate stages. Among the tasks to be undertaken by the Steering Group are:- to review the Project Initiation Document (see Section Five of this Guidance Note) and authorise the initiation of each project stage; to review the scope and boundary of the project; to review briefs and budgets, and to direct the procurement and appointment of technical advisers, specialists and Contractors, in accordance with Central Authority approvals and guidelines; to resolve procedural issues and manage the agreed work programme; to ensure that the business and technical integrity of the project is maintained; to review the programme and resource plans prepared by the Project Manager and incorporate those of the technical advisers; to guide and direct the Project Manager and Project Team as required; to define and oversee the level of consultation and communication with key project stakeholders, including elected members, relevant bodies and the public, and to contribute to its effective delivery; to review the implementation programme, project resources and budget updates on an ongoing basis, including actions required to meet objectives, and the need for additional Central Authority approvals, ensuring that project outputs are supplied within agreed cost, time and quality constraints; to review issues arising from the project in relation to planning, legislation and regulations, land and wayleaves procurement and statutory process generally; to review and direct the arrangements for the selection of the Contractor, from Official Journal of the European Community (OJEC) Notice, to prequalification of bidders, to invitations to tender, to evaluation of tenders, through to the selection of the preferred bidder; and to review arrangements for contract signing, including insurance and bond, supervisory staff, and contract and performance management functions. Guidance Note 7 14 April

12 Project Management 4.4 The Steering Group should consist mainly of people who have a genuine interest in the project and are able to direct the work and facilitate formal decisions relating to the project, and are committed to seeing the process through to completion. The Steering Group could be selected on the basis of the following guidelines: membership should be compatible with the nature of the decisions that need to be made and should include both technical and administrative personnel; the Steering Group should include senior members of the organisation in order to demonstrate high level commitment to the project, and membership should be confined to public bodies with responsibility for aspects of the project, apart from external advisers. 4.5 The Steering Group should be established once the project has been formally approved as a PPP project. The membership should be agreed by the Central Authority, the Contracting Authority and other Local Authorities involved at an inaugural meeting. The nomination of the Project Chairman and the minutes Secretary should also take place at the inaugural meeting. 4.6 The Project Chairman is responsible for the workings of the Steering Group, and ensuring that the project is ultimately delivered. The Quality Assurance Team is a sub-group of the Steering Group and is responsible for ensuring that the project is delivered to the agreed quality standard. 4.7 Where the PPP project is part of a larger scheme, and other elements of the scheme are being delivered through traditional methods, the remit of the Steering Group should be capable of having responsibility for all aspects of the scheme. Similarly, a Steering Group may cover a number of projects, both PPP and conventional, where appropriate. 4.8 Examples of the composition of Steering Groups for projects in the relevant sectors might be as follows: Roads Local Authority Representative(s) NRA Representative(s) Project Manager Client Representative, (Technical, Legal, Financial) where appropriate Waste and Water Local Authority Representative(s) DOELG Representative(s) Project Manager Client Representative, (Technical, Legal, Financial) where appropriate Guidance Note 7 14 April

13 Project Management 4.9 The frequency of Steering Group meetings will depend on the stage of the project. In the early phases, during the Project Appraisal and Statutory Process stages, meetings might be less frequent, typically quarterly, but with written monthly updates from the Project Manager. During the Procurement stage, when many of the critical commercial issues are considered, Steering Group meetings may be required as frequently as once per month. Project Manager 4.10 The role of the Project Manager is to manage and co-ordinate the decision-making by planning an appropriate process and setting up systems for providing information to the Steering Group. The Project Manager will have primary ownership of the project within the Contracting Authority and will drive the project within that body, arranging for rapid policy decisions, implementation of procedures, and harnessing the internal resources required for the project The Project Engineer is generally appointed early in the life of a project. For PPP projects, there will be a need for a dedicated Project Manager. The appointment of the Project Manager should take place once the project has been formally approved as a PPP project, and the Steering Group has been appointed. In many cases, the Project Engineer will become the Project Manager, and take on the role in a full time capacity Where the project is sufficiently large or complex, the Project Manager is likely to be engaged on a single project on a full-time basis. Depending on the scale and complexity, the Project Manager may require support at peak times in the project (e.g. start up) and should have substitute arrangements in periods of absence. A full-time Project Manager is required for major contracts involving complex technical, as well as legal and financial issues. In general, such projects are likely to be of significant value (IR 20m plus). Where circumstances allow, the Project Manager may oversee a number of projects with similar characteristics, provided adequate assistance is provided. Some more modest projects may be managed in conjunction with related projects being procured in a conventional manner The Project Manager co-ordinates the work of a set of technical, financial and legal advisers (some or all of whom could be external advisers) The Project Manager oversees the day-to-day management of the project and the main responsibilities are: defining the scope of the project and the proposed phases of project activity; preparing the Project Initiation Document and agreeing it with the Project Steering Group; preparing the detailed Project Plan and agreeing it with the Steering Group; defining the objectives and responsibilities of each member of the Project Team; Guidance Note 7 14 April

14 Project Management setting work plans for each member of the Project Team and reviewing output quality; updating the detailed Project Plan and presenting regular reports to the Steering Group; liaising with professional advisers and related projects to avoid omissions and duplications; monitoring project progress and ensuring the delivery of all project outputs as planned; advising the Steering Group of deviations from the Project Plan and initiating corrective action; liaising with the Quality Assurance Team, which would guarantee the overall quality and integrity of the project; and preparing the project evaluation review after the closure of the project Another important role of the Project Manager will be to ensure that the objectives of the project are clearly communicated to the general public and the opinion formers generally. These communications can be handled by the Project Manager, or a dedicated project champion in order to ensure that the benefits of the project are widely understood The Project Manager, who can be recruited internally or sourced externally on a contract basis, facilitates the communication and information flows between the parties. Given the need to integrate the various departments of Local Authorities as well as other public bodies, the Project Manager should ideally have a good working knowledge of the public sector systems and procedures, therefore it is recommended that the Project Manager is recruited from within the Public Service The volume of work envisaged in the National Development Plan will make significant demands on Local Authority resources in terms of providing project management personnel of adequate experience and expertise. There is already evidence of difficulty on the part of the some Local Authorities in recruiting and retaining resident engineering staff in temporary grades in accordance with existing procedures. The National Roads Authority has developed Regional Offices whereby projects in a number of Local Authorities can be centrally managed and planned. A similar pooled approach might be considered for major water and waste management projects. This approach could facilitate establishment of permanent grades, which would contribute to accumulation of the experience and expertise necessary for these complex projects. A similar approach may be necessary to cater for contract and performance management. Guidance Note 7 14 April

15 Project Management 4.18 In managing the decision-making process, the Project Manager needs to undertake several tasks. These are listed in the paragraphs that follow, together with notes on some of the issues relating to them The Project Manager must establish a list of the decisions that the Steering Group is expected to make. The Project Manager needs to ensure that this list is agreed with the Steering Group, and that the list becomes the basis for establishing the data needed for consideration of each issue, and deciding on the reports that are to be delivered. This process helps the Project Manager to decide on any specific processes that would help the Steering Group in considering these issues A critically important task is the planning of the timetable for the entire process. This can be done using simple diary-type planning, but this may not fully reflect the extent of interaction of activities. A task definition, which provides a logical sequence of steps, is required with a realistic timeframe allocated to each task. Techniques such as critical path analysis, which are more sophisticated and have a proven track record in project management, are very desirable to ensure that the programme is robust and viable, by identifying the interdependencies between tasks and the consequences of slippage on individual task timetable The plan should be based on measurable milestones so that the Project Manager is able to monitor progress. Experience in project management and planning suggests that: the plan can be difficult to establish, with key tasks often impacted upon by third parties, and so are not fully within the contracting authority's control; in the early stages, the Project Manager needs to spend a lot of time working on the plan; the milestone elements of a plan should be developed at an early stage, and appropriate deliverables defined, review periods agreed with the Steering Group and critical dates set; it is important to recognise that it may not be possible to plan in detail the sequence of activities relating to later processes; the Project Manager should be guided by current experience on timescales for each phase, and to allow appropriate levels of contingency in the timetable; and the plan should be communicated to all participants. Guidance Note 7 14 April

16 Project Management 4.22 The Project Manager should seek the Project Team's agreement to the plan and this agreement should be communicated to all concerned. It is important to allow sufficient time for agreeing and communicating the plan. This agreement should be sought at two levels: Firstly, among team members through discussions, meetings, and circulation of drafts, so that their views and experiences can be considered; and Secondly, in a formal manner at an early Steering Group meeting where the Project Manager tables the decision to endorse the process The Project Manager should establish procedures for communications between all parties to the project, establish points of contact within relevant authorities, establish the extent of circulation of documentation, and establish the format of reporting including scope of electronic, facsimile and formal hard-copy communications Quality assurance considerations dictate that the Project Manager put in place arrangements for assuring the quality of the process. This includes the following arrangements: review and audit procedures to evaluate the work of technical, financial and legal Advisers and individual Project Team members; and a system of quality assurance, implemented through the Steering Group and Technical Steering Group review process, where the work of each person is reviewed and challenged by others The methods of quality assuring the project management of these projects include: comparison of technical work done with appropriate standards, guidelines and policy documents, Central Authority circulars and available technologies; comparison of the project timeplan in the Project Initiation Document with milestones achieved to date; comparison of costs incurred on an ongoing basis with the budget agreed in the Project Initiation Document; comparison of individual team member performance with deliverables and responsibilities set out in the Project Initiation Document; and comparison of the quality of the output being obtained by the public sector with the requirements of the Output Specification The quality assurance function needs to be a planned process and the result of any review work should be documented on the project files. The Project Manager reports to the Quality Assurance Team on the outcome of the quality assurance arrangements set out above. Guidance Note 7 14 April

17 Project Management 4.27 The Project Manager should also establish arrangements for controlling the costs of the procurement exercise, by setting clear parameters for the project, such as: setting budgets for consultants and advisers, together with appropriate contingency levels; establishing terms of reference for the appointment of advisers that reflect as fully as possible the scope of work required of them, enabling realistic budgets to be agreed; and preparing an analysis of internal resource requirements and planning the required inputs accordingly The procedures governing the appointment of Consultants to the Civil Service is set out in Guidelines for Engagement of Consultants in the Civil Service (Department of Finance, March 1999). Appointment of Consultants by local authorities is covered by the Government Guidelines on Public Procurement (1994 Edition) also issued by the Department of Finance. In choosing advisers for PPP transactions, the tender chosen will be the most economically advantageous, with cost only as one of the criteria and having due regard to the importance of quality criteria to the success of the project The Project Manager should establish arrangements for maintaining the audit trail for documents, analyses and decisions. This will include regular formal reporting to the Steering Group and Technical Steering Group, minuting of all meetings, etc The Project Manager should monitor the progress of activities and review or adjust the project plan accordingly. This should be done in a forward-looking manner, checking the impact of progress to date on the achievement of future milestones. Any amendments to the process need to be presented to the Steering Group and need to be agreed. Project Team and Resources 4.31 In order to assist him in managing these activities, the Project Manager will require administrative support. Depending on the scale and complexity of the project, the formality of the systems, and the remit of the Project Manager, this support can vary from a part-time secretary, to perhaps two or three full-time support staff with different skills and qualifications In addition, the Project Manager needs to pay attention to ensuring that the administrative side of the project, both in terms of facilities and procedures, is properly resourced. A checklist of procedures to be followed should be made drawn up and made available for guidance. Procedures for reporting to the Steering Group should be established. Local Authorities have administrative structures in place, which may need strengthening to accommodate the demands of an increasing number of major capital projects. Guidance Note 7 14 April

18 Project Management 4.33 The Project Team draws on different departments within the Contracting Authority including: Law Agent (in-house or external), who may seek external assistance where necessary; Valuers Department in relation to negotiation of land and wayleave acquisition. Again, this department may need external assistance where the volume of work in a project exceeds the in-house capacity; Development/Planning Departments in relation to land-use planning, zoning and strategic vision of the Authority, which may impact on the project; Roads, Sanitary Services and Waste/Environment Departments both in relation to the service needs to be satisfied and interaction with existing or proposed infrastructure or services; and Personnel Department, in relation to the recruitment of staff, remuneration and other employment issues, and redeployment or work practice implications of the PPP project For PPP projects, the Project Team will work closely with the Consultants appointed to advise on the project, the Clients Representative. The Project Manager will be responsible for directing and managing the Consultants engaged on the project, reviewing technical reports and administering budgets PPP projects involve a range of skills and knowledge, both in terms of the PPP process itself and the specialist skills involved. It is recommended that a critical mass of contract and project management skills and knowledge needs to be retained and utilised in the public sector. Contracting and Central Authority personnel, who are involved with PPP projects, should receive specialised training in these processes and skills in order to be properly prepared to discharge their duties. External Advisers Appointment of Advisers 4.36 The range of advisers that the Project Manager may require clearly has to match the technical, financial and legal content of the project, and the nature of the services that are being procured. The advisers must be capable of supporting the Project Manager in the tasks listed above. A summary of the role of each of the advisory disciplines, at each stage of the PPP process, is set out in Appendix C In selecting advisers, the experience that the firms, and the nominated individuals, have in dealing with PPP projects is vital. Experience in the relevant technical and statutory processes is also essential. The bigger and more complex the transaction, the greater the need for experienced advisers. Technical, financial and legal advisers, who are inexperienced, may require a learning curve leading to timeline and cost inefficiencies. Guidance Note 7 14 April

19 Project Management 4.38 The complexity and timescales of PPP projects means that it will be very difficult to define a role for advisers for the duration of an individual project, at the commencement of the project. For this reason, it is recommended that the procurement of advisers take place in two separate stages, firstly for the Option Appraisal stage, and secondly for the Statutory Process and Procurement stages In some instances, particularly for the proposed pilot projects, where it is known that the PPP approach is to be adopted in advance of a formal PPP Assessment, the appointment of advisers may take place earlier in the process and they may continue in place until the procurement is completed. This will help to ensure that there are minimum delays in implementing pilot projects (to overcome the fact that the learning curve for early projects will be longer). For the pilot projects, the technical, legal and financial advisers will assist in the preparation of the PPP Assessment. Subject to this exception, the general recommendations on procurement of advisers at each stage of the process is set out in the following paragraphs. Option Appraisal Stage 4.40 The Project Identification stage concludes with the issue of an approval from the Central Authority to the Contracting Authority to initiate the project and to commence the Option Appraisal stage. The Option Appraisal stage comprises four assessments: Project Appraisal; Public Private Partnership Assessment; Procurement Procedure Selection; and Statutory Process Assessment Initially, the Option Appraisal stage is the same for traditional projects and PPP projects, and the Contracting Authority should appoint technical advisers to assist with the Project Appraisal. However these advisers will require wider expertise than under traditional procurement so that they can participate in the other elements of the Option Appraisal stage. The definition of the scope of their role should include working with the financial and legal advisers to the Central Authority on the PPP Assessment (see below) As set out in the Guidance Note entitled PPP Assessment, there are a number of specific activities involved in the Option Appraisal stage, and in order to conduct these activities the Contracting Authority will need access to legal and financial advice. These could be provided by the Central Authority on the basis on a general "call down" basis. It is expected that, for most PPP projects, the recourse to this central resource will be limited as an experienced technical adviser should be in a position to carryout the Option Appraisal stage, including the PPP Assessment, and such other PPP related tasks as may be necessary. Guidance Note 7 14 April

20 Project Management 4.43 For certain types of projects, the financial adviser may be required to prepare a Financial Comparator, which would be used at the end of the procurement process to determine whether the preferred PPP tender represents value for money. In relation to the preparation of a Financial Comparator, the financial adviser will report directly to the Central Authority. Further details are provided in the separate Guidance Note entitled PPP Assessment A full report setting out the results of the Project Appraisal, PPP Assessment, Statutory Process Assessment and Procurement Procedure Selection will be forwarded to the Central Authority for review and approval. For privately financed projects involving long term commitments for the Exchequer, the Central Authority will approve the project in consultation with the Department of Finance. Procurement Stage 4.45 The Option Appraisal stage concludes with approval from the Central Authority to proceed with the project, and this approval outlines the preferred form of PPP, procurement route and statutory process route. The Contracting Authority will appoint a Client Representative to represent their interest during the Procurement stage, which includes the development of contract documentation and the tendering process Under conventional procurement, the Client Representative is a technical advisor who calls on other expert advice (including the Contracting Authority's legal adviser) as required. The skills required by the Client Representative to develop a PPP project will depend on the nature and scale of a project. With the exception of the pilot projects, the arrangements for which are set out above, two possible approaches are recommended: in order to ensure consistency of advice and the interpretation of standard documentation, the Central Authority may appoint legal and financial advisers who would be made available to Contracting Authority. The Contracting Authority would procure a technical adviser, with appropriate PPP experience, to act as their Client Representative. for large, complex PPP projects, particularly those involving private finance, Contracting Authorities may consider it more appropriate to procure advisers from each discipline to form their Client Representative team, on the basis of a competition as outlined previously Where a multi-disciplinary team is required, the competition to appoint advisers can be run separately for each discipline, or can be run as an integrated advisory consortium. While an integrated team may be desirable, separate financial, legal and technical teams may be appropriate initially, in order to ensure the selection of the most qualified advisers in each discipline. As experience is built up and the process of PPP implementation matures, the option of procuring a single integrated team of advisers may be preferable in terms of efficiency and control of the process. Where the client retains qualified advisers in a particular discipline (e.g. legal advisers), it may be appropriate to recruit the remaining services as a single team. Guidance Note 7 14 April

21 Project Management V Project Initiation 5.1 One of the early tasks for the Project Manager is to set up the process for delivering the project requirements. In order to do so, the Project Manager needs to gain a rapid understanding of the objectives of the project, the programme, procedures for ensuring quality, process for obtaining client and Central Authority approvals, and the various parameters that relate to the project. The objectives should be documented and agreed in the Project Initiation Document. The document will reflect the stages of the project defined in the Public Private Partnership Route Map for each of the sectors. 5.2 The following paragraphs provide set out the parameters that relate to projects in the roads, waste and water sectors, together with notes on issues relating to them. 5.3 The initial tasks in project identification and establishment include: an understanding of the definition of the project and the development of the project to date, from Project Identification, through Option Appraisal, including PPP Assessment, Statutory Process Assessment and Procurement Procedure Assessment; an understanding of the approval status of the project brief; and establishment of the Steering Group and the arrangements for management of the project (Section 59 Agreements where the Lead Authority is to act for other Local Authorities, for example). 5.4 The Project Initiation Document should set out an understanding of the detailed requirements of the project, which will include knowledge of: the scope of service delivery and the project brief; the size, type and quality of the project; the service delivery criteria; and the criteria and procedures for the appointment of advisers. 5.5 The Project Initiation Document should provide an understanding of the objectives of the process including details in relation to: the overall project budget in terms of capital cost, overheads (land costs, advisers fees, EIS costs, investigations, etc); an indicative level of operating costs of the service and value for money criteria; Guidance Note 7 14 April

22 Project Management the expected timescale for delivery of the project, and an indication as to how critical achievement of this timescale is; and quality considerations, both in terms of the service that is sought, and of the process for delivering the project. 5.6 The Project Initiation Document should also provide an understanding of the main risks to the project and any constraints that are likely to be imposed on the project. Typically, this will include areas such as: the requirement to comply with statutory process procedures, and the latest PPP guidelines; any land restrictions, such as site and wayleave requirements, planning conditions, or compulsory purchase orders; the availability of an adequate level of resources, in terms of personnel and skills availability, and the financial capacity to undertake the project; and; any constraints or delays arising from the procurement process. 5.7 The technical content of the project will include a range of issues to be examined, options and constraints. This is likely to include a range of statutory and other relevant consultees, the nature and phasing of surveys and investigations (topographical, preliminary and detailed ground investigations, load surveys, traffic flows etc), analysis and project definition. This leads to the development of site/land requirements, budget costs and programme for all stages of planning, procurement and implementation. 5.8 Participants in the project will have priorities and needs to be catered for and dealt with, including for example the interfaces with the Contracting Authority and Central Authority. The role of other statutory bodies such as Dúchas, The Department of the Marine and Natural Resources, or the Environmental Protection Agency, should also be identified at this stage. 5.9 On the basis of the above information the Project Manager should be in a position to map out the process for delivering the project. This should be written up into the Project Initiation Document, illustrating the logic behind the choice of the process The Project Initiation Document should be developed in conjunction with the Project Team and should be agreed, having due regard to the tasks to be carried out, with realistic timescale and resource provisions. The Steering Group should formally review and approve the Project Initiation Document The Project Manager needs to review progress both periodically and at crucial turning points and to modify timescale and resource provisions so as to correspond to the latest knowledge of the project. The programme status should be communicated to the Steering Group at the regular project meetings and approval sought as appropriate. Guidance Note 7 14 April

23 Project Management VI Conclusions and Recommendations 6.1 The key issues arising in connection with the project management of PPP projects are derived from a combination of the complexity of PPP projects and the volume of projects that are due to be delivered. The conclusions on the key issues that have been identified in this Guidance Note are set out below. 6.2 The need for additional resources, skills and expertise for the project management of PPP projects may require changes in the way in which Local Authorities resource staff to manage projects to provide the necessary skills. It is suggested that a critical mass of contract and project management skills and knowledge be retained and utilised within the public sector. These resources could be pooled and shared between Authorities to suit needs. 6.3 For DBOF projects in particular, Contracting Authorities will require access to legal and financial advisers as well as technical specialists who have been retained for traditional procurements. It is recommended that there be two separate procurements for advisers, the first being for the Option Appraisal stage, and the second for the Procurement stage. 6.4 The project management function for a project should be established once the project has been formally approved as a PPP project. However, the project management structure should be largely derived from personnel who have been responsible for bringing the project from the Project Identification stage through to its approval as a PPP project. 6.5 The role of project management must evolve into or overlap with the roles of contract and performance management, which is required to oversee service delivery in the longer term. 6.6 A high level of involvement by different departments of the Local Authority will need co-ordination in order to cover issues such as stakeholder consultation, procurement issues, and alternative approaches to statutory process. 6.7 PPP projects involve a range of skills and knowledge, both in terms of the PPP process itself and the specialist skills involved. It is recommended that Contracting and Central Authority personnel, who are involved with PPP projects, should receive specialised training in these processes and skills in order to be properly prepared to competently discharge their duties. Guidance Note 7 14 April

24 Project Management Appendices A. Public Private Partnership Policy Framework Guidance Note 7 14 April

25 Project Management Public Private Partnerships Policy Framework The Public Private Partnerships Policy Framework comprises a series of fifteen Guidance Notes, the titles of which are as follows: Introduction to Public Private Partnerships Financial Context Legal Context Public Private Partnership Assessment Statutory Process Assessment Procurement Procedure Selection Project Management Stakeholder Interest Output Specifications Risk Assessment Payment Mechanisms Key Contractual Issues Accounting Treatment Contract and Performance Management Guidance Note 7 14 April

26 Project Management Appendices B. Outline Project Initiation Document Guidance Note 7 14 April

27 Project Management Outline Project Initiation Document I Introduction Purpose Background Current Position II Project Definition Objectives Scope Outputs III Project Organisation Project Structure Project Steering Group Project Chairman Project Manager Project Team Quality Assurance Team IV Risk Management Constraints and Risks Countermeasures Project and Stage Tolerances V Project Management and Control Project Initiation Project Closure Other Matters VI Reporting Arrangements Project Steering Group Project Manager Quality Assurance VII Project Timing and Resources Project Plan Resource Plan Project Costs Principle Project Contacts Appendices A Project Timetable B Allocation of Project Activities C Principle Project Contacts Guidance Note 7 14 April

28 Project Management Appendices C. Role of Advisers Guidance Note 7 14 April

29 Project Management Role of Technical Advisers Technical Advisers Project Identification At the project identification stage, the technical advisory role will involve: Assisting the Contracting Authority in the development of strategies and projects for inclusion in regional or national development plans. Option Appraisal Statutory Process Procurement At the option appraisal stage the technical advisers will assist the Contracting Authority with: Development of corridors and constraints studies, route and site selection (as appropriate), and preliminary reports; Development of NRA tolling studies (where appropriate); Preparation of the PPP assessment * Preparation of the preliminary risk assessment*; and Preparation of the statutory process assessment*. The role of the technical advisers at the statutory process stage will depend on whether the Contracting Authority is taking the statutory process risk. If the statutory processes are being taken by the Contracting Authority, then the role will include all of the traditional functions of preliminary design, EIS preparation, CPO and land acquisition, EIA, public enquiries, statutory approvals and licensing. If elements of the statutory process are being undertaken by the PPP Contractor, then the role of the technical advisers will be to provide assurance to the Contracting Authority that the Contractor is fulfilling their technical obligations. In the course of the procurement, the technical advisers will assist the Contracting Authority with: Drafting OJEC and pre-qualification notices, and evaluating technical aspects of responses to those notices; Drafting contract documentation, including the output specification, and the risk allocation for inclusion with the Invitation to Tender (ITT); Evaluating and reporting on technical aspects of responses to the ITT; and Assisting with negotiations with bidders (where appropriate). Construction Under a PPP contract, the technical advisers may be required to assist the Contracting Authority in monitoring the performance of the PPP Contractor during the construction phase. Technical Advisers may be required to certify payments under DB and DBO contracts Operation Under a PPP contract, technical advisers may be required to assist the Contracting Authority in monitoring the performance of the PPP Contractor during the operating phase. Review Under a PPP contract, technical advisers may be required to assist the Contracting Authority in evaluating the project: After the asset has been commissioned; and After five years of operation on the contract as a PPP project. *For complex projects, they provide input rather than having responsibility for the preparation of reports Guidance Note 7 14 April