P31: Planning key to public-private infra

Depending on how well a public-private partnership (P3 or PPP) has been prepared before launch will determine whether said project will succeed or fail, the World Economic Forum, in collaboration with The Boston Consulting Group (BCG), has found.

Poor planning and preparation have “not only prevented many projects from launching, but have also led to many problems later on,” said Philipp Gerbert, a senior partner at BCG and one of the report’s contributors. “High-quality project preparation in turn gives a project a high chance of prospering throughout its lifecycle.”

Insufficient project management and leadership, biased demand forecasts, delayed approvals, land acquisition, insufficient stakeholder engagement, and unbalanced risk allocation are some of the preparation issues authors identified in the report “Strategic Infrastructure: Steps to Prepare and Accelerate Public-Private Partnerships”.

The report goes beyond this finding, providing a set of guidelines to ensure participants take the necessary preparatory steps before project launch. It cites case studies of past P3s – both failures and successes – and takes a close look at four best practice areas: managing a rigorous project preparation process, conducting a bankable feasibility study, balancing risk allocation and regulation, and creating an enabling environment.

Factors that help ensure success, according to the report, include political leadership buy-in, project preparation funding, demand forecasting, environmental and social safeguards, public sector capacity, and anti-corruption measures.

While effective planning and preparation will require additional resources – time and money – failing to prepare will probably prove more costly. “Underpreparation is going to cause delays, cost overruns, or renegotiations further down the line,” said Jan Justus, a BCG principal. “Particularly in developing countries, one of the key levers is building capacity among public officials, as well as on an institutional level in order to equip those agencies with the diverse skills required to launch P3s smoothly,” he added.

Although the report addresses issues specific to P3 preparation, many of the success factors it identifies also apply to projects procured under traditional delivery and financing models, BCG said in a statement.