g

Attracting PPP Investment

The role of the Technical Advisor

Making infrastructure deals more bankable

Burak Sencer

June 2015

g About Mott MacDonald

g Infrastructure Finance Services

PPP services we provide…

Public Sector Private Sector

• PPP programme generation • Sponsors Procurement Advisor

• Feasibility Study / Business Case • Lenders Technical Advisor

• PPP Procurement • Investors Due Diligence Advisor

• ‘Shadow’ LTA • Sponsors Risk Advisor

• Capacity building • Post FC Monitoring

• Independent Checker • Insurer’s Advisor

• Contract Manager • Operational Stage Monitoring

g

• The amount of risk exposure, or potential adverse impact

of an event, that an investor is willing to accept

• Where an investor cannot quantify the risk exposure, an

independent expert is often employed to advise on this

• Sponsor risk management techniques (treatments and

controls) are used to eliminate risks or maintain risks at

an acceptable level

Risk Appetite / Risk Tolerance

g

Risk Management Standard (AS/NZ 4360:2004)

Identification: What can go wrong?

Context: Assess strategic and

organisational context.

Analysis/Measurement:

Assess risk likelihood &

consequence. Review controls.

Assessment/Prioritisation:

Compare risks. Set risk

priorities.

Treatment Options: Reduce,

avoid, transfer or retain.

Assess risks and controls

Establish context

Identify risks

Treat risks

Evaluate risks

Analyse risks

Risk Management Cycle

g

1. Consortia competence and capacity

2. Technical risks (design and site conditions)

3. Methodology and programme

4. Facilities management and lifecycle risks

5. Cost / Pricing risks

6. Payment Mechanism risks

7. Contract risk allocation and magnitude

Key Private Finance Risk Areas

g Consortium Competence & Capacity

• Completeness of consortium team

• Management, organisational and contract structure

• Project Sponsor(s)

• Construction contractor(s)

• Design supply chain

• Principal subcontractors

• Asset / Facilities Maintenance Contractor(s)

• Soft Facilities Management services providers

• Facilities Management subcontractors

g Technical Risks

• Authority requirements

• Site risks

• Environmental risks

• Ground conditions

• Planning and authorisations

• Design solution

• Civil / structural solution

• Mechanical / electrical solution

• Environmental solution

g Facilities / Asset Management & Lifecycle

• Authority services requirements

• ‘Availability’ definition

• Failure events

• ‘Qualitative’ failures

• Response and rectification times

• Services Methodologies

• Resource plans

• Specification compliance

• Planned preventative maintenance proposals

g Payment Mechanism Risk

• Availability / utilisation payment

• Unavailability deductions

• Services payment

• Service failure deductions

• Caps on deductions

• Energy consumption (volume and/or tariff risk)

• Quality failure points

• Calibration of penalties

g Contract Technical Risks

• Variations procedure

• Changes in Law

• Delay, Relief & Compensation events

• Longstop Date

• Liquidated Damages

• Termination (Default and Compensation)

• Liability Caps

• Pass Through

g When should the TA get involved?

Pre-

Qualification

Tender

Period

Tender

Preparation

Evaluation

and

Preferred

Bidder

Negotiations

to Financial

Close

Construction

Operation Operation

g PPP Project/Pipeline Generation

• Government capacity building

• Knowledge transfer

• Dissemination of best practice

• Avoiding investment ‘show-stoppers’

• Filtering projects for PPP suitability

• Standardisation of documentation

• Develop PPP Business Cases

g

www.mottmac.com

Helping to make PPP deals bankable

Thank You

Burak Sencer

Mott MacDonald Turkey

Sun Plaza, Kat 13

Maslak Mah. Bilim Sk

Sisli-Maslak, Istanbul

Tel: +90 (0)212 366 5819

Mobile: +90 (0)549 350 5066

Email: burak.sencer@mottmac.com