A new GI Hub guidance note on output specifications for PPP projects

At the G20 Leaders’ Summit in Hangzhou in September 2016, the importance of quality infrastructure investment was stressed in the final Communiqué, and the topic has now been highlighted as a key priority for the G20 under the 2019 Japanese Presidency.

According to the G20 Leaders, quality infrastructure investment should aim to ensure economic efficiency in view of lifecycle cost, safety, resilience against natural disaster, job creation, capacity building, and transfer of expertise and know-how, while addressing social and environmental impacts and aligning with economic and development strategies.

In other words, the provision of quality infrastructure is crucial to building better, safer, more resilient and more efficient societies. But how do we ensure that governments are providing ‘quality infrastructure’?

There’s a considerable existing body of knowledge on how to draft input specifications for projects that are procured as traditional ‘public works’. However, the GI Hub believes that there is less understanding on how to properly draft output specifications to achieve quality infrastructure projects using the public-private partnership (PPP) procurement model. 

Output specifications for PPP projects are specifications which describe the performance requirements that the infrastructure asset must meet, but do not define how they must be met.

By using this approach, governments can take advantage of the expertise and innovation skills of the private sector, while simultaneously ensuring that the infrastructure asset fully meets the needs of the public.

In November 2018, the GI Hub engaged a global team of experts from the Mott MacDonald consulting firm to help develop a Guidance Note designed to assist governments in developing output specifications for quality infrastructure PPP projects.

This work is closely aligned with the G20 discussions on Quality Infrastructure Investment, and seeks to further operationalise the principles discussed at the Hangzhou Summit.

Mott MacDonald has produced an initial report that outlines techniques currently used in highly-developed markets for incorporating quality output specifications into PPP transactions, providing some real-world, practical experiences.

The initial report highlights that output specifications should be defined early in the project lifecycle and should be supported by clear and well-managed reporting and monitoring standards throughout the project lifecycle.

After assessing a long list of PPP projects, the next phase in the preparation of the Guidance Note will closely examine the output specifications of between 12 to 15 reference PPP projects, which will represent various asset classes and geographic locations. The methodology will include document review, interviews with the relevant project stakeholders and, where applicable, site inspections and visits.

The final Guidance Note will assist users to assess and incorporate the dimensions of quality infrastructure in a PPP project, such as sustainability and longevity of an asset, ability of the asset to withstand disaster, ability of the asset to respond to external changes, and health and safety considerations, amongst others.

The final version of this tool will be freely available on the GI Hub website in the first half of 2019.