The panel was on “Public private procurement: striking the balance for effective engagement with private investment”
Amar spoke alongside Olga Revzina, Partner, Herbert Smith Freehills Pascal Mousset, Head of Procurement and contract advisory, Rijkswaterstaat and François Bergère Program Manager of the Public Private Infrastructure Advisory Facility of the World Bank.
The panel has a lively and engaged debate covering the broader PPP market, the Dutch market in particular, as well as the drivers for a successful project. Asked specifically about what made the Thames Tideway Tunnel a success Amar said:
“Thinking about the success of Thames Tideway Tunnel (TTT) ; and looking back at my experience in Treasury and of PFI/PPP projects I think you can almost boil down the essential ingredients of a successful project; and these in my view come down to three things: vision, capability and context.
To explain these further.
If you break down any infrastructure project there will be something that excites a profession. The sheer scare of the TTT – a 25 kilometre 7.2 diameter tunnel from west to east London grabbed the attention of engineers. Raising the £4.2 billion required to ensure that the project could be financed excited the investment bankers; accountants were enthused by the balance sheet issue and lawyers by trying to piece together a complex web of commercial and regulatory arrangements.
However the vision for a project needs to be exciting for its individual constituents but also bigger than that – it needs to something that binds all the people working on it together – and in the TTT’s case it was pretty straightforward – on average every year we were dumping up to 40 million tonnes of sewage in the River Thames. That and London being the great city it is doesn’t sit well together. In addition to this all parties were driven by a deep desire to provide value for customers. The outcome for the team was satisfying, affirming and connecting – in that bill impacts down from an estimated £80 per customer to a maximum of £25.
This sounds pretty obvious – but we have been taking about this for decades without real tangible improvement. Without this on private and public side the success of the project won’t be optimal. As well as the professional disciplines you need cross-disciplinary skills and the leadership. A highly skilled team without the right leadership and mindset won’t be entirely effective.
This plays out at two levels – at the macro/strategic level you need drivers that help insulate the project from political risk. In the case if TTT the prospect of the EU levying infraction fines for breach of urban water quality standards help keep HMG focussed. That prospect also helped monitise time in the minds of the public sector – something that you don’t generally see – and sits in pretty stalk contrast to the private sector – which again operating at its optimum efficiency will equate time with money.
Context on a more micro level is also of vital importance – so we need to think about the engineering of a project, and ensure that a model is developed which suits the engineering requirements of a project that in turn allows one to optimise the risks allocation between the private and public sectors. Not being sensitive to context does dilute value – either by risks being overpriced or priced on a basis that will come back to bite.