The consortium is a single point of interface for
Government, and the reduction of complexity of the contracting relationship
also brings an underlying tension. This natural tension between the parties,
largely brought about by different profit drivers, risk appetites, roles on the
project and timeline of involvement, is one which Governments can capitalize on
to ensure an optimal project outcome.
In a conventional PPP, where Government is the service
provider or operator, the dynamic session within the consortium is largely
played out between the Design and Construct contractor and the Maintenance or
Facilities Management (FM) contractor. One is driven to build the infrastructure
as expediently and as cheaply as possible, the other is driven to ensure that
the construction is robust, and investment in the plant and equipment is high
enough to ensure reduced maintenance and replacement over the contract term.
When the model introduces a Private Sector Operator or
Service Provider (instead of Government doing this role) into the mix, a whole
new dynamic within the consortium is created. The abovementioned dynamic is
expanded by the need for the facility to deliver the operational and service
output in the most efficient, business-compliant and profitable manner –
introducing a three-way level of balance for project success.
The further impact and consideration around the
consortium dynamic is time. The Maintenance/FM contractor and the Operator
(when the PPP includes this service provision), have the longest involvement in
the project and are exposed to the risk of performance over a 20-30 year
period. These are the key members of the consortium who are responsible for
delivering the bulk of the “partnership” component of the PPP, and are the most
focused on mitigating and minimizing risks and costs into the longer term.
From a Government’s perspective, the different value
drivers between the consortium members are not always visible and are often
contained within the in-house consortium discussions. They should be addressed
by Government as they can be used to ensure the best outcome of a project,
especially if a requirement is introduced for the Maintenance/FM and the
Operator to formally approve and sign-up to the design as part of the
procurement and contract close process.
The PPP model offers more than access to private market
finance - it embodies the ability to drive optimized project outcomes. It does
this by forcing a balance between the competing aspirations and drivers of the
key consortium members, thus leveraging the best that the private sector has to
offer in a contested and levelled manner. Ultimately, this enhances the
end-product, service delivery, maintenance and value for money to the taxpayer.