David Freer

1. Bridging the gap – meeting the needs of PPP
projects
David Freer, Alex Sundakov, Vishal Joshipura
July 2016

2. Presentation Outline
a) Paper Objectives
b) Public Private Partnerships: Overview
c) What normally happens
d) What can alternatively happen – an example
e) How to make this the norm

3. Paper Objectives
• PPPs are popular for transport projects
– They however have a spotty track record of meeting traffic
projections
• One potential reason for this track record is that traffic advisor
and the financial advisor often do not work in harmony on such
projects
• The traditional approach for developing transport projects does
not work for PPPs
• We worked on a project where the two advisors worked as a
team successfully
• We want to share this experience with you…

4. Public Private Partnerships
• Long term contract between
public and private sector
• Concessionaire is compensated
based on performance
• Most PPPs are project financed
– Only project cash flows
available to repay debt
• PPPs may or may not transfer
revenue risk to the private
sector
– Where revenue risk is
transferred, traffic forecasting
is critical
Some Australian examples..

5. What normally happens
Traffic Expert Financial Expert
Develops T&R
model and
forecasts
Conducts financial
analysis using
T&R forecasts
They start and end in isolation

6. What normally happens

7. What normally happens
Traffic Expert Financial Expert
Develops T&R
model and
forecasts
Conducts financial
analysis using
T&R forecasts
Complains that:
- Traffic forecasts need
to be higher
- Several additional
sensitivities required
- T&R model is not
reliable
Complains that:
- Traffic forecasts should
be conservative
- T&R budget needs to be
higher
- Others do not
understand the
complexities of traffic
forecasting

8. What normally happens
Traffic Expert Financial Expert
Develops T&R
model and
forecasts
Conducts financial
analysis using
T&R forecasts
What drives this disconnect?
× Different Incentives
× Lack of Subject Matter Knowledge of the other expert
× Lack of Communication
× Insufficient Budgets

9. Where we want to get to

10. What could happen:
Dhaka-Chittagong Expressway
• Largest PPP in Bangladesh
(US$3.5bn)
• One year feasibility
assessment
• Traffic advisor and financial
advisor worked in-sync
throughout the process
• High quality analysis
appreciated by the client
• On time and on budget
project delivery

11. What could happen:
Dhaka-Chittagong Expressway
Success Drivers
Constant Communication
Final Delta
Plan
Results
Framework and
Monitoring
Template
Additional Concept
Notes
Draft strategies
BDP2100
team
outputs
Investment
Plan team
outputs
Initial
findings
Report
Investment
Plan
Feb Oct
Outline of
Investment
Plan
Stakeholder
Feedback
Report
Initial Ranking
of projects and
identification
for Programs
Mar Apr May Jun Jul Aug Sep Nov Dec
Revisions to
Investment
Plan (if
necessary)
GED
Project
proposals

12. What could happen:
Dhaka-Chittagong Expressway
Success Drivers
Knowledge Sharing
• T&R advisor explained approach and interdependencies
• Financial advisor explained impact of T&R forecasts on viability analysis and
fiscal impact on government
• Constant sharing of progress updates, information gaps and expected
delivery timeframes
Similar Incentives
• Feasibility study separated from transaction advisory
• Fixed fee assignment – no success fees for financial advisor
Project Management
• Project plan required constant communication and exchange of information
• Strong overall project leadership

13. How to make this the norm
• At Project Inception, clarify roles and responsibilities
• Formalize ways to engage regularly (in-country missions,
scheduled check-ins, easy access to information)
• Take time to educate team-members on work required and
interdependencies between tasks
• Align incentives as much as possible
• Change mind-sets!
– Client and consultants

14. Banora Point Upgrade, New South Wales, Australia
Thank You