Introduction
In a world that is increasingly under pressure from climate change, political instability, economic stress, and increased scrutiny of the value that Public-Private Partnerships (PPPs) offer to governments, it is becoming more important that PPP projects are well thought out, have a defensible rationale, and are sustainable and resilient. It is my firm belief if projects follow the following best practices that are introduced in this paper, that PPPs will be valid tools for international development, especially if they embrace People First PPPs.[1]
A New Approach to PPPs
We are moving away from just building infrastructure projects towards projects that address the 17 Sustainable Development Goals (SDGs). If sustainability and resilience best practices are embraced there is no reason why projects cannot regenerate themselves overtime, thereby creating an environment where the public sector can permanently narrow the infrastructure gap through meaningful long-term partnerships with the private sector.
“The time is ripe to explore innovative ways to implement Public Private Partnerships (PPPs) through a synthesis of sustainable and resilient best practices that progressively improve delivery over time and outperform project proponent's original expectations. It is important to design and build infrastructure PPP projects that keep on delivering.”
It is important that both resilience and sustainability are embraced in relationship to full PPP project life-cycles and are seen as an innovative mitigation mechanism (best practice) that should be included in all project planning and design-build terms of reference. This would protect both parties and make PPP projects more bankable. It will also lower project financing costs, especially in terms of project insurance. Additionally, it could allow projects to be considered and built that under normal circumstances might not be built because of excessive risk perceptions or cost.
Extending Project’s Shelf lives
We do not have to deliver inert (frozen in time) projects that are focused on a limited shelf life. It is counterproductive to focus on projects that have a designed finite shelf life (expiry date), when we can focus on innovative PPP projects that are truly regenerative and proactively self-sustaining.[2]
The lethargic responses of public authorities to climate change, inclement weather, political challenges, and funding shortfalls indicates that political leaders do not have proactive comprehensive mindsets that favor resilient and sustainable PPPs. We, as PPP practitioners, need to promote resilient planning for PPPs that foster resilient recovery, resilient communities, and resilient infrastructure that can survive future events. These actions need to be forward looking – not backward looking and we need to be SMART.
Resilience Considerations
There are important resilience considerations:
Capacity to withstand "known" disruptions, such as hurricanes and floods. Capacity includes not only the ability to absorb such disruptions but also a margin of additional ability to cope with disruptions larger than anticipated. Capacity also includes both physical and functional redundancy so that the infrastructure will have alternative ways to survive.
Flexibility: Resilient infrastructures also must be flexible – which means, more specifically, that the infrastructure system should be able to reorganize itself
Tolerance: Resilient infrastructures also are "tolerant" of disruptions – tolerant in the sense that the infrastructure will not immediately lose all of its capability following a disruption, but will degrade gradually
Cohesiveness: The resilience of infrastructure also depends on how well the nodes of the infrastructure relate to one another.
If these considerations are embraced as best practices and the financial plan, resulting PPP projects would be better placed to survive long interruptions that could bankrupt concessionaires and save governments unnecessary delays - that they could ill afford - to national development strategies.[3]
In an article written on how to build resilient and sustainable infrastructure the following sustainability guidance was recommended that is critically important for PPP project planning and implementation and which should be included in the TOR of PPP contracts:
developing a clear understanding of baseline conditions and infrastructure needs under current conditions (also identifying the economic benefits).
bringing an integrated regional approach to planning, design, and implementation, starting with a dialogue on priorities and interdependencies coupled with a desktop vulnerability screening exercise.
developing a prioritized list of risk mitigation priorities shaped by the magnitude of consequences, the timeframe of anticipated impact, and the reversibility of maladaptive investments.
identifying infrastructure planning and design improvements that address current pain points (e.g., nuisance flooding); withstand extreme weather and recurring events (e.g., developing design guidelines reflecting updated floodplain mapping and projected sea levels); incorporate “blue-green” infrastructure methods that make the most of the natural landscape, especially for water management; and update communications platforms and operations practices to reflect the likelihood of more frequent extreme events and changes to standard practices.
defining project goals upfront and measuring (monitoring) the associated outcomes of infrastructure investments so that strategies can be updated/improved over time to meet the needs of each community and local economy.[4]
S.M.A.R.T. Planning
It expedient that we amplify planning efforts and consider S.M.A.R.T tactics that can bolster infrastructure resilience for PPP projects. These tactics should be:
Sustainable - Building sustainable infrastructure that acknowledges a science-based approach to decision making regarding climate change.
Maintainable - Acknowledging that deferred maintenance and decision making only delays the inevitable.
Accountable – Political leaders and public sector officials need to accept that their decisions make them accountable for the consequences of their good or poor decisions.
Resilient - The 4Rs of resilience need to become common practice, irrespective of the cost.
Technically Viable - The adoption of viable technology and innovation that promotes resilient infrastructure needs to become a priority for all decision makers.[5]
The 4 R’s of Resilience
The National U.S. Chamber Foundation identified four aspects (4Rs) of resilience that should form the foundation of incorporating resilience into PPP projects. They include -
Robustness, or the ability to withstand external demands;
Redundancy, or the extent of alternate options or substitutions for system processes;
Resourcefulness, or the capacity to mobilize resources rapidly in an emergency; and
Rapidity, or the speed at which operations can be restored to pre-incident levels.[6]
We would be remiss to ignore the 4Rs.
Future Proofing
In addition to being SMART and including the 4Rs into planning, it is important that project proponents also consider “future proofing” of PPP Projects. Future-proofing is described as the process of anticipating the future and developing methods to mitigate its impacts.
Future-proofing of infrastructure PPP projects adds a layer of resilience to projects that will ensure their sustainability and longevity. Future-proofing –
leans towards resilience planning strategies that accommodate future events
ensures that infrastructure facilities do not become prematurely obsolete
ties building infrastructure resilience to strategies that mitigate future adverse weather events.
adds value to infrastructure in the sense that investors are more likely to invest in infrastructure that has built-in buffers that increase the project’s resilience and financial sustainability of their investment.
considers long-term life-cycle mitigations for large infrastructure PPPs.[7]
Moving Past a Project Turn-Key Mindset
PPP Vision goals should focus on embracing best practices that are pragmatic and focus on projects phases beyond the typical procured turnkey infrastructure project phases that are only focused on the Design, Build, and Finance (DBF) components of projects. Ending project stewardship at the turnkey stage, creates a host of problems that undermine efforts to extend infrastructure project shelf lives. This turnkey disconnect between the initial objectives of sustainable infrastructure project proponents and long term project shelf life can be avoided. If a mechanism is introduced that bridges the post turnkey stage it is more likely that resilient projects are going to be built sustainably. DBF covers only the first three to five years of the project. It is during the next 20 to 30 years of the project where sustainability often goes awry and which should be the focus of proponents of sustainability.
This is where sustainable stewardship through best management practices can cohesively connect DBF with the Operations and Maintenance elements of a full set of life-cycle practices that ensure extended project life times and enhanced sustainability.
Promotion of Innovative Technologies
A cornerstone of resilient and sustainable PPPs is choosing innovative technologies that are affordable, practical and appropriate. Determining an innovative technology threshold should be a pre-requisite. Selecting appropriate infrastructure and processes that put People First principles as well as balancing goals of technological innovation with cost (affordability) and sustainability (practicality) are critical. The use of innovative technology should dually bridge the financial and technological innovation gap in PPP projects. Although use of the latest state of the art technology is attractive to PPP visionaries, it is important that a lesser technology that addresses critical fundamental issues first, might be the best approach to innovations that can support sustainability and resilience.[8]
Conclusion - Regenerative PPPs
We need to embrace what I would call a “Regenerative PPPs” (R+PPPs) strategy. This includes models and best practices that incorporate resilience and sustainability best practices, resilient architecture, resilient design and construction, resilient financing, resilient operations and maintenance through an innovative approach that focuses on delivering long-lasting PPPs that proactively renew their stated purpose beyond a contract’s lifetime. The previous sections all provide insights that can contribute to this strategy.
However, unless the principles of sustainability and resilience are built into formal guidelines and directives for the public sector, it is unlikely that they will be willingly applied due to perceptions of additional cost. The question we have to ask ourselves as practitioners, is whether we can afford to avoid reasonable mitigation costs that will promote sustainable and resilient PPPs. We can ignore threats to PPPs and vainly hope that the worst will never happen. However, the odds are against us.
In the light of the terrible natural events that have recently happened in the Bahamas for example, PPP proponents need to ask whether they are willing to put proposed PPP projects at risk, just to cut costs. We should be thinking about the probability of an event in ever increasing PPP life-cycles and the catastrophic costs to both public and private sector projects, should a project be obliterated.
It seems an easy choice!
Author: David Baxter (https://www.linkedin.com/in/david-baxter-33531b15/)
Article originally posted on Linkedin on 14 October 2019.
[1] https://www.linkedin.com/pulse/unece-new-generation-people-first-ppps-sdgs-david-baxter/ [2] http://blogs.worldbank.org/ppps/regenerative-ppps-rppp-designing-ppps-keep-delivering [3] The Principles of Infrastructure Resilience - https://www.domesticpreparedness.com/resilience/the-principles-of-infrastructure-resilience/ [4] How to Build a Resilient and Sustainable Infrastructure - https://www.icf.com/blog/resilience/building-sustainable-infrastructure [5] https://www.linkedin.com/pulse/using-smart-approaches-protect-aid-disaster-recovery-ppps-baxter/ [6] National Chamber Foundation – 2011 - https://www.uschamberfoundation.org/sites/default/files/article/foundation/PPPs%20and%20Infrastructure%20-%20NCF.pdf [7] https://www.linkedin.com/pulse/future-proofing-resilient-ppps-david-baxter/ [8] https://amp.thenational.ae/business/technology/resilient-not-smart-cities-are-most-important-for-emerging-markets-1.911095