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AStrategyforConsultingEngineerstoAStrategyforConsultingEngineerstoDevelopInfrastructureProjectsbyusingDevelopInfrastructureProjectsbyusing

MasterPlanning,FundingInstitutionsandMasterPlanning,FundingInstitutionsand

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PublicPrivatePartnerships(PPPs)PublicPrivatePartnerships(PPPs)

JonathanCornishJonathanCornishKV3EngineersKV3Engineers

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ContentsContentsBackgroundBackground

ProjectDevelopmentPhasesProjectDevelopmentPhases

ResourcesRequiredResourcesRequired

IdentifyingProjectsIdentifyingProjects

FundingInstitutionsFundingInstitutions

PublicPrivatePartnerships(PPPs)PublicPrivatePartnerships(PPPs)

ConclusionConclusion

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BackgroundBackground

Africaso ortunitAfricaso ortunit

Infrastructureconstraint,14Infrastructureconstraint,14-- 50%valueofexportsare50%valueofexportsaretransportcostsversus8.6%forotherdevelopingtransportcostsversus8.6%forotherdevelopingcountriescountries

PossiblecausesPossiblecauses-- governance,institutionalcapacity,governance,institutionalcapacity,funding,overrelianceondonororganisations,etc.funding,overrelianceondonororganisations,etc.

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EconomictransformationEconomictransformationandaccountabilityandaccountability

EconomicGrowth5%EconomicGrowth5%

ncome mprove ncome mprove

Povertydownto51%fromPovertydownto51%from

58%58%

20democraciesversus3in20democraciesversus3inthe1980sthe1980s

GrowthinDevelopmentGrowthinDevelopmentFundingInstitutions(DFIs)FundingInstitutions(DFIs)DBSAandDBSAandAfDBAfDB

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Backgroundcont.Backgroundcont.Withagrowingdemandinresources,bettergovernanceWithagrowingdemandinresources,bettergovernanceandfundin bein available:andfundin bein available:

NosignificantprogresshasbeenmadeinregionalandinterNosignificantprogresshasbeenmadeinregionalandinterregionalcoregionalco--operationandinfrastructuredeliveryoperationandinfrastructuredelivery

Projectsgenerallyhavenotbeenplanned,investigated,scoped,Projectsgenerallyhavenotbeenplanned,investigated,scoped,prioritised,bankablestudiesundertaken,fundingsecuredorprioritised,bankablestudiesundertaken,fundingsecuredor

budgetedforbudgetedforTheresultisthatanumberofBankableprojectsdonotTheresultisthatanumberofBankableprojectsdonotgettotheprocurementphasewhichimpactsnegativelygettotheprocurementphasewhichimpactsnegativelyondownstreamconsultingengineers.ondownstreamconsultingengineers.

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OpportunityforConsultingEngineersOpportunityforConsultingEngineers

Mi ratin u thevaluechaintoincludePro ectMi ratin u thevaluechaintoincludePro ect

DevelopmentintotheirserviceofferingDevelopmentintotheirserviceofferingMarketdifferentiatorversuscommodityMarketdifferentiatorversuscommodity

LeadingrolethroughMasterPlanning,FundingLeadingrolethroughMasterPlanning,Funding

InstitutionsandPPPsInstitutionsandPPPs

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ProjectDevelopmentPhasesProjectDevelopmentPhasesPhase Title Description

1 EnablingEnvironment Legislation,regulatory,capacity

2 ProjectDefinition IDofoutputs,prioritisation,partners,planningandpre-feasibilitystudies

3 ProjectFeasibility Organisational,administration,financialmodelling,economicstudies,technical,engineeringandenvironmentalstudies

4 ProjectStructuring PPPoptions,projectfinance,legal,technicalandengineeringactivities

5 TransactionSupport Projectfinancing,legal,technicalandprocurement

6 Post-Support Monitoring,evaluation,refinancing

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ProjectDevelopmentSkillsProjectDevelopmentSkills

En ineerin ,business/financial,strate ic,lateralthinkin En ineerin ,business/financial,strate ic,lateralthinkin

andnetworkingandnetworkingProjectIntelligenceandknowledgeonDFIsandfundingProjectIntelligenceandknowledgeonDFIsandfundinginstitutionsinstitutions

TargetsectornetworkingTargetsectornetworkingRecommendationRecommendation ProjectDevelopmentChampionandProjectDevelopmentChampionandmatrixstructurematrixstructure

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IdentifyingProjectsIdentifyingProjects

Traditionall challen in andrisk to rivatesectorandTraditionall challen in andrisk to rivatesectorand

DFIsDFIsMoneygoeswheremoneyknows,knowwhattheMoneygoeswheremoneyknows,knowwhatthefunderswantandwhatriskstheyareconcernedaboutfunderswantandwhatriskstheyareconcernedabout

KeyRiskKeyRisk-- ProjectmustbepartofaMasterPlanProjectmustbepartofaMasterPlanMasterPlanDemonstratesMasterPlanDemonstrates-- Planning,investigation,Planning,investigation,prioritisation,scopingandevenbudgetinginsomeprioritisation,scopingandevenbudgetinginsomeinstances.instances.

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MasterPlanningMasterPlanning

DefinitionDefinition-- MasterPlanningisdefinedastheprincipalstrategicMasterPlanningisdefinedastheprincipalstrategic

instrumentguidingallfutureplanning,management,investment,instrumentguidingallfutureplanning,management,investment,developmentandimplementationdecisionsdevelopmentandimplementationdecisions

MasterplanningisablueprintoffutureprojectsrequiringfurtherMasterplanningisablueprintoffutureprojectsrequiringfurtherdevelopmentdevelopment

FundingforMasterPlanningisavailablefromvariousfundingFundingforMasterPlanningisavailablefromvariousfundingagenciesagencies

RecommendationRecommendation UseMasterPlanningtoidentifyasolidproject,UseMasterPlanningtoidentifyasolidproject,thathaspoliticalbacking,arevenuestreamandbankabilitythathaspoliticalbacking,arevenuestreamandbankabilitypotential.potential.

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FundingInstitutionsFundingInstitutions-- TypesTypesMultilateralAgenciesMultilateralAgencies FundingFundingcomesfrommulti le overnmentsandcomesfrommulti le overnmentsand

nonnon--governmentsourcesandisgovernmentsourcesandisdistributedtomanydifferentcountriesdistributedtomanydifferentcountries(WorldBank)(WorldBank)

BilateralAgenciesBilateralAgencies GovernmentGovernment

AgenciesinasinglecountrywhichAgenciesinasinglecountrywhich

provideaidtodevelopingcountriesprovideaidtodevelopingcountries(DevelopmentBanksandExport(DevelopmentBanksandExportCreditAgencies)CreditAgencies)

CommercialandInvestmentBanksCommercialandInvestmentBanksDrivenbycreditandROEDrivenbycreditandROE

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FundingInstitutionsFundingInstitutions RisksRisksProjectDevelopmentkeyrisks:ProjectDevelopmentkeyrisks:

PoliticalriskPoliticalrisk PossibleadversegovernmentactionPossibleadversegovernmentaction

egu a oryr s egu a oryr s a awsapp ya awsapp y

EnvironmentalriskEnvironmentalrisk PossibleadverseenvironmentalconsequencesPossibleadverseenvironmentalconsequences

ForeignExchangeriskForeignExchangerisk AreproceedsconvertibleandistherecurrencyavailableAreproceedsconvertibleandistherecurrencyavailable

CreditriskCreditrisk CantheprojectservicedebtCantheprojectservicedebt

SupplyriskSupplyrisk IfuncertainlongtermagreementsIfuncertainlongtermagreements

MarketriskMarketrisk OffOff--takeagreementsorgovernmentguaranteestakeagreementsorgovernmentguarantees

CompletionriskCompletionrisk TurnkeyprojectsTurnkeyprojects TechnologyriskTechnologyrisk ProvenbutcompetitiveProvenbutcompetitive

OperationsandMaintenanceriskOperationsandMaintenancerisk Longtermrisk,operatorsandfundingarekeyLongtermrisk,operatorsandfundingarekey

InfrastructureriskInfrastructurerisk Accesstoroads,rail,portsandpowergridsAccesstoroads,rail,portsandpowergrids

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FundingInstitutionsFundingInstitutions

FundsrarelyrequestedbyengineeringconsultantsFundsrarelyrequestedbyengineeringconsultants

AprojectthatformspartofaMasterPlan,satisfiesfundersriskAprojectthatformspartofaMasterPlan,satisfiesfundersriskrequirementsandismotivatedproperlyhasagoodchanceofbeingrequirementsandismotivatedproperlyhasagoodchanceofbeingfundedfunded

RecommendationRecommendation-- Selectafewfundersthatoperateinyoursector,Selectafewfundersthatoperateinyoursector,

aregeographicallycloseandposenolanguagebarriers.Networkingaregeographicallycloseandposenolanguagebarriers.Networkingandintelligencegatheringiskey.andintelligencegatheringiskey.

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PublicPrivatePartnerships(PPPs)PublicPrivatePartnerships(PPPs)

DefinitionDefinition-- Thisisdefinedasa5Thisisdefinedasa5--30yearpartnershipcontractbetween30yearpartnershipcontractbetween governmentan t epr vatesector nper orm ngan nst tut ona unct ongovernmentan t epr vatesector nper orm ngan nst tut ona unct on

wheresubstantialrisk,eitherfinancial,technicaloroperational,iswheresubstantialrisk,eitherfinancial,technicaloroperational,is

transferredtothepartythatcanbestmanageit.transferredtothepartythatcanbestmanageit.

ThePPPprojectprocesstypicallyfollowsthefollowingcycle:ThePPPprojectprocesstypicallyfollowsthefollowingcycle: InceptionInception GovernmentregisterstheprojectwithNationalTreasurysPPPunitGovernmentregisterstheprojectwithNationalTreasurysPPPunit

FeasibilityStudyFeasibilityStudy GovernmentappointsprivatesectoradvisorstodoafeasibilitystudyonGovernmentappointsprivatesectoradvisorstodoafeasibilitystudyonthemostappropriatemechanismforprocuringtheprojectthemostappropriatemechanismforprocuringtheproject

ProcurementProcurement IfthefeasibilitystudyshowsthataPPPisaviableoption,governmentinvitesIfthefeasibilitystudyshowsthataPPPisaviableoption,governmentinvitesthemarkettosubmitbidsfortheinfrastructureprojectthemarkettosubmitbidsfortheinfrastructureproject

ImplementationImplementation TheprojectisimplementedonceasuitablebidderhasbeenchosenandaTheprojectisimplementedonceasuitablebidderhasbeenchosenandaPPPagreementsigned.PPPagreementsigned.

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PPPsPPPs

Initiativeis rowin Initiativeis rowin SouthAfrica,SouthAfrica,Mozambi ue,Mozambi ue,

Uganda,Kenya,ZambiaandNigeriaUganda,Kenya,ZambiaandNigeriaCanbedoneinmultiplesectorsCanbedoneinmultiplesectors-- hospitals,governmenthospitals,governmentbuildings,gameparkconcessions,railsystems,buildings,gameparkconcessions,railsystems,municipalbulkinfrastructureandfleetmanagementmunicipalbulkinfrastructureandfleetmanagement

RobustframeworktodeliverlargeprojectsRobustframeworktodeliverlargeprojects

PPPsarecomplex,expensiveandtimeconsumingtoPPPsarecomplex,expensiveandtimeconsumingtogettofinancialclosure,thusnotaneasywayout!!gettofinancialclosure,thusnotaneasywayout!!

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PPPsPPPs

Traditionall mana ementconsultantsandauditin firmsTraditionall mana ementconsultantsandauditin firms

haveoccupiedthisspacehaveoccupiedthisspaceHighfeesandchallengingworkcanbefoundinthisHighfeesandchallengingworkcanbefoundinthissectorsector

ThereareopportunitiesforconsultingengineerstoskillThereareopportunitiesforconsultingengineerstoskillthemselvesandtakealeadingroleasTAs(TransactionthemselvesandtakealeadingroleasTAs(Transaction/TechnicalAdvisors)/TechnicalAdvisors)

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ConclusionConclusionInfrastructuredeliveryisslowandgovernmentsgenerallydon'thavetheInfrastructuredeliveryisslowandgovernmentsgenerallydon'thavetheskillsorcapacitytogetprojectstobankablelevelwhichimpactsnegativelyskillsorcapacitytogetprojectstobankablelevelwhichimpactsnegatively

onour n us ryonour n us ry

ConsultingengineersarewellpositionedtotakealeadingroleintheprojectConsultingengineersarewellpositionedtotakealeadingroleintheprojectdevelopmentsectorwithvariousvalueaddingstrategiesthatweretoucheddevelopmentsectorwithvariousvalueaddingstrategiesthatweretouchedon:on:

DevelopingskillstooperateintheProjectDevelopmentsectorDevelopingskillstooperateintheProjectDevelopmentsector

HowtoidentifylowriskprojectsusingmasterplanningHowtoidentifylowriskprojectsusingmasterplanning

UnderstandingfundersandwhatisimportanttothemUnderstandingfundersandwhatisimportanttothem

PPPframeworksasapossibledeliveryvehiclePPPframeworksasapossibledeliveryvehicle

WiththeskillsthatConsultingEngineershave,moreprojectswillbeWiththeskillsthatConsultingEngineershave,moreprojectswillbeidentified,prioritised,bankablestudiesundertakenandfundingsecuredidentified,prioritised,bankablestudiesundertakenandfundingsecured

whichwillaccelerateAfricasdevelopment.whichwillaccelerateAfricasdevelopment.

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ThankyouThankyou

JonathanCornish,JonathanCornish,B.TechB.Tech.Eng(.Eng(IndInd),MBL),MBL

TechnicalDirectorInternationalTechnicalDirectorInternational

KV3Engineers,SouthAfricaKV3Engineers,SouthAfrica

jcornish@kv3.co.zajcornish@kv3.co.za

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