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Hiring & Managing Advisors

Even governments with significant PPP experience do not have the in-house expertise and skill needed to develop PPP projects, and almost without exception they will hire advisors to support them in designing, structuring, and tendering each PPP transaction.  Experienced advisors bring international best practice and depth of skill.  These qualities enhance the project's credibility and increase investor confidence.

Hiring advisors

Governments usually hire lead transaction advisors after the general parameters of the project have been determined: that is, the government knows what the problem is that it is trying to solve.  Officials have thought about various delivery models and decided PPP is the best approach, and they have incorporated the project into a broader planning process so that it has broad-based support (note that some of this work itself may have required external advice).

The lead advisor will in turn hire sub-contractors, depending on the needs of the project. More often than not, this will include financial, legal, technical, environmental,and social advice (crucial if the project faces labor retrenchment or resettlement).  Communications and stakeholder engagement advisory services are increasingly important to understand and engage with all project stakeholders and ensure ongoing public support.

Working with advisors

Appointing advisors is typically followed by an official project kickoff where the full advisory team and government team meet at length to determine the work program in detail and the project governance structure.

The advisors go on to work closely with government through each stage of the transaction cycle: due diligence, project structuring, tender, award, and negotiation. Best practice is for advisors to be involved through financial closure of the project.  

Most advisors do not provide ongoing advice after this point, during construction and/or contract management. This is beginning to change, as it is recognized more and more that there are real challenges that lie in the implementation of the PPP.

Paying advisors

Advisors usually work on a combination of a retainer fee paid by the client and a success fee paid by the winning bidder. Pushing a large portion of the payment to a success fee ensures aligned incentives.

 

Learn More

    • 2010
    • Edward Farquharson, Clemencia Torres de Mästle, E.R. Yescombe, and Javier Encinas
    • PPIAF

    How to Engage with the Private Sector in Public-Private Partnerships in Emerging Markets

    This guide reviews the necessary steps to successfully engage and manage a public-private partnership (PPP) from the early stages. It presents a framework that highlights the requirements, options, and challenges that governments face when embarking into PPPs, and explains how to address them so that a sound PPP program can be implemented and the benefits for both public and private partners can fully materialize. This book draws on experiences from both mature and developing PPP markets across the world, and case studies illustrate the key messages throughout. It discusses the policies, processes, and institutions needed to select the right projects and then manage preparation for market and operation. It identifies the underlying...

    • 2014
    • European PPP Expertise Centre (EPEC), European Investment Bank (EIB)

    Role and Use of Advisers in Preparing and Implementing PPP Projects

    This publication aims to help public contracting authorities, especially less experienced ones, to understand what they can reasonably expect from their advisors and how they can obtain the best advice from them. The report starts by explaining the transaction advisors typically involved in public-private partnership (PPP) projects and the main tasks they usually perform within the project cycle. It then discusses the contractual options that are available to hire advisors before, finally, setting out a range of good practice aimed at fostering the commitment of hired advisers working alongside the Authority.

    • 2014
    • European Investment Bank (EIB)

    The EPEC PPP Guide

    The European PPP Expertise Centre (EPEC) has published several versions of its Guide to Guidance over the last few years. The Guide to Guidance is principally aimed at public procuring authorities considering the use of public-private partnership (PPP) arrangements. Given the positive feedback it has received, EPEC decided to turn the Guide to Guidance into a webtool rebranded as the EPEC PPP Guide. The aim of the EPEC PPP Guide is to give users easy access to regularly updated PPP guidance and allow them to interact with the EPEC team (e.g. propose new guidance, rate the EPEC PPP Guide).  

    • 2004
    • Government of South Africa

    PPP Manual: Module 6: Managing the PPP Agreement (South Africa)

    • 2001
    • PPIAF

    A Guide for Hiring and Managing Advisors for Private Participation in Infrastructure

    The guide lays out main interest issues for ministers and senior policy makers who are considering whether to hire advisors. It helps define the need for and the role of advisors at each stage of a Private Participation in Infrastructure (PPI) program.

For legal and regulatory resources go to PPPIRC

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