for quality public
services
Saudi E-Gov PPP Framework
February 2008
Suhail Al-Almaee
Director of Strategic Planning and Supporting Initiatives
Saudi eGovernment Program (Yesser)
[email protected]
1
Agenda
for quality public
services
E-Gov
&

E-GOV PPP FRAMEWORK WHY & HOW?

USING THE FRAMEWORK BUILDING THE
RELATIONSHIP
2
for quality public
services
E-Gov
&
E-GOV PPP FRAMEWORK
WHY & HOW?
3
PPP Definition
for quality public
services
E-Gov
&
PPP is a contractual agreement (partnership) whereby a private
partners performs part or all of government services or function.
Such a partnership are characterized by sharing of investment,
risk, responsibility and reward.
The essentials of PPP agreements are:
- Focus on the service to be provided, not the assets to
be employed.
- Shift of the risk and responsibility to a private provider.
PPP = investment + long-term provision of services
4
Rational
for quality public
services
To establish a framework that will help government to achieve
the best outcome of PPP, which is driven by increased
E-Gov
&
need of efficiency and quality of E-Gov services delivered.
Secondly, the need for cost saving, access to advanced
technologies and resources and minimizing the risk.
5
Framework Objectives
for quality public
services
Developing a comprehensive framework to govern the use
of public-private partnerships (PPP) for e-government in
the Kingdom of Saudi Arabia.
E-Gov
&
In compliance with the Council of Ministers resolution No.
110 dated 5/4/1425.
6
Challenges
for quality public
services
E-Gov
&
Globalization
Consumer /
Customer
Expectations
Government
Technology
Innovation
Limited Resources /
Skills
7
New Formula
Globalization
+
for quality public
services
Customers
+
Technology
E-Gov
&
-
Resources / Skills
=
Pressure …
… on governments to change
E-Government + PPP
=
Government
Innovation
8
Scope of Work Track
Yesser PPP Framework development Project
for quality public
services
Major Project Stages
E-Gov
&
Readiness
assessment
PPP Policy
framework
PPP
Manual
PPP
Templates
Gap analysis
9
Major Projects Components
for quality public
services
E-Gov
&
Readiness
assessment
•
•
•
Conducting needed interviews
Review relevant documents
Draft a PPP readiness assessment
10
Scope of Assessment
for quality public
services
E-Gov
&
A team of consultants collected information from a variety of
sources. This Readiness Assessment is based upon the team’s
access to:

Materials publicly available, including laws, regulations and
examples of standard contracts;

Interviews with selected Gov stakeholders, interviews for example
included (MoF, SEC, E Gov Program, EDI)

Interviews with selected private stakeholders, interviews
included international and national companies.

International best practices for PPP.
11
Major Projects components con.
for quality public
services
E-Gov
&
PPP Policy
framework
•
•
•
Capture of international best practices
KSA drivers
Draft a PPP policy framework
12
Major Projects components con.
for quality public
services
E-Gov
&
PPP
Manual
•
•
•
•
•
Module definition
Input from PPP project and contract
management experts
Draft a PPP Manual
Draft a PPP Quick reference Manual
PPP lifecycle Card
13
Major Projects components con.
PPP
Templates
for quality public
services
E-Gov
&
•
Develop templates/tools
- Business Case
- Feasibility assessments
- Risk assessment
- RFI
- RFP
- Standard contract
- SLA
- Public consultation
14
Major Projects components con.
Gap analysis
Legal and
institutional
for quality public
services
E-Gov
&
•
•
Report to MCIT/Yesser identifying gaps and
recommendation on legal framework as they
impact PPP
Report to MCIT/Yesser/CITC identifying gaps
and recommendation on institutional framework
as they impact PPP
15
Next Steps
for quality public
services
E-Gov
&
Consultation
on PPP
• Public Consultation on the Framework
• Stakeholders workshop
• Revision of Policy, Manual, and Templates
• Communicate the Framework to stakeholders
16
Next Steps con.
for quality public
services
E-Gov
&
Case studies
& Manual
supplements
•
Develop and distribute additional
materials and case studies based on PPP
projects in KSA as part of regular updating
of PPP Manual.
(Ongoing role)
17
What's missing
•
A national communication strategy should be put in
place to ensure that local authority officials are aware
of the potential benefits of PPP and of the main issues
involved in implementing them. Also, the strategy
should have a similar part for the private sector.
for quality public
services
E-Gov
&
Communication Plan
•
Training Plan
Proper training for local authority staff is essential for
PPP success. For example:
- Project feasibility and business case
- Project management
- Contract conditions and negotiation
- Risk management
- Contract management
- Performance and SLA management
18
PPP vs. Traditional Procurement
PPP ≠ Traditional Procurement
for quality public
services
PPP
E-Gov
&
Traditional Procurement
Focus on services
Buying products / assets
Performance-based payment
Payment based on specifications
Long duration (3-20 years)
Bigger role (and risk)
for private sector
Shorter contracts for delivery
of assets
Private sector is contractor
delivering a product
19
Types of PPPs
Private Sector participation
for quality public
services
E-Gov
&
Service contracts
(Pub $, Prv Op of
discrete tasks)
Operation &
Maintenance
Design, Build,
Operate
Build, Operate,
Transfer
(“Outsourcing”)
(Pub $, Prv DBO)
(Prv $ and BOT)
Increasing risk transfer to private sector
20
Relationship & Trust = PPP
for quality public
services
R
Relationship
Management
Dominates
E-Gov
&
Business Value
C
R
C
R
Contractual
Management
Dominates
C
Complexity & Trust
C = Contractual Management
R = Relationship Management
} The Partnership
=
21
PPP for e-Government
PPP Models
for quality public
services
E-Gov
&
• Fee-based funding
• Shared cost savings
• Shared revenue
• Full service delivery
22
PPP for e-Government
PPP Model
for quality public
services
E-Gov
&
Advantages
Disadvantages
Fee-based funding
Encourages customercentric focus
Customers will not accept
new charges so agency
owning service will
Shared cost savings
Results in more efficient
Gov operations
Cost hard to measure;
requires BPR (not easy)
Shared revenue
No impact on existing ops;
may result in higher
compliance
May not produce
more efficient Gov
Full service delivery
Shifting services to new org.
encourages innovation
& efficiency
Loss of control /
authority
23
PPP Drivers / Benefits
Why are governments using PPP?
for quality public
services
• Faster, more efficient delivery of services / information
• Access to private sector expertise, skills, ICT and innovation
E-Gov
&
• Enabling an agency to focus on its core business
• Enhancing organizational learning / skills within public sector
• Increasing service levels or scope of e-services
• Shifting risk from agency to private sector
• Increased effectiveness of project management
• Reduce costs and increase revenues
24
PPP Drivers / Benefits
Who benefits from using PPP?
for quality public
services
E-Gov
&
To Government
To Private Sector
To Community
• Minimise capital
investment and risk
• Unique business
opportunities
• One-stop-shop
of public
services
• Faster
implementation
• Income from
government
transactions
• Views from
citizens and
customers
• Tap private sector
management and
market expertise
• Income from
commercial services
and advertisements
25
Current PPP Policies
Highlights
for quality public
services
E-Gov
&
• PPP are intended to become a best practice in e-government implementation in
KSA.
• Private sector participation in E-Gov based on principle of
“shared expected revenue”
• Feasibility study and public tender (if feasible) are required for
any proposed E-Gov PPP
• PPP rules apply when agencies contract private sector entity to
“fund and implement“ a project
26
Roles & Responsibilities
Sponsor Agencies:
Primary responsibility for their PPP projects
for quality public
services
MoF:
E-Gov
&
* Oversight of budgets, pricing and revenues
of all projects
* Manages National e-Government Fund
* Agencies must coordinate with MoF on
financing PPP
General Audit Bureau: Oversight powers that apply to PPP
Yesser:
Facilitator of e-government (and e-services) in KSA
27
Best Practices & Lessons Learned
for quality public
services
Global Best Practices
• Create a single, dedicated entity responsible for PPP
E-Gov
&
• Establish clear mechanisms, rules and review criteria
• Make PPP decision-making is streamlined, fair, open and
transparent, enabling faster “go / no-go” decisions
• Free PPP from overly bureaucratic approval processes
28
Best Practices & Lessons Learned
Global Lessons Learned
for quality public
services
• Coordination with multiple agencies complicates
(or obstruct) use of PPP
E-Gov
&
• Too much bureaucracy and too many approvals can create
major problems for sponsor agencies (and projects)
• Lack of clear process leaves sponsor agencies unsure
when to consult and creates inconsistencies in what
different agencies do (or don’t do)
29
Best Practices & Lessons Learned
Global Best Practices
Users
for quality public
services
E-Gov
&
Stakeholder buy-in is key to
PPP success
Service owners
Identify, understand and consult
your stakeholders
Employees
Consult early, consult often
Identity owners
Political officials
Affected staff
Financing institutions
Make stakeholders genuine
participants in PPP process
Other departments
Other organizations
30
New Stakeholder Formula
Transparency
for quality public
services
E-Gov
&
Buy-in
Willingness to …push, mandate, create incentives
PPP success
31
Readiness Checklist
for quality public
services
E-Gov
&
32
for quality public
services
E-Gov
&
Coffee Break
33
for quality public
services
E-Gov
&
USING THE FRAMEWORK
BUILDING THE RELATIONSHIP
34
PPP Lifecycle
for quality public
services
E-Gov
&
35
for quality public
services
E-Gov
&
36
Phase I: PPP Inception
for quality public
services
E-Gov
&
Develop a business case
=
Feasibility Study
+
Risk Assessment
… comparing costs of PPP vs. traditional procurement
37
Phase I: PPP Analysis
Due Diligence
Project Design
for quality public
services
E-Gov
&
 Examine new risks created
by private sector delivering
services
 Be service-oriented
from start
 Evaluate business
opportunity and market to
attract viable bidders
 PPP must enable private
sector to earn a profit
 Continuing use of market
research
 Clear, detailed
description of services
being delivered
38
Phase II : PPP Procurement
for quality public
services
E-Gov
&
Make RFP outcomes-based
Business case ensures feasibility and identifies
procurement strategy
Pre-RFP consultants with private sector
39
PPP Selection
for quality public
services
E-Gov
&
Clear selection criteria
Bidder’s capacity to execute a project
Minimum thresholds eliminate bids that
underestimate costs
40
Phase III :PPP Contract Management
Well-designed contracts
for quality public
services
+
Active contract management
E-Gov
&
=
PPP success
+
Relationship management
Service Level Agreements
• Well-defined deliverables
• Performance benchmarks
Contract transparency
• Documentation method
41
Phase IV : PPP Project Management
Project Execution
for quality public
services
E-Gov
&
Flexibility
No trust
No Users
No PPP
Communications
Political and Admin Support
Dispute resolution
42
Phase IV : PPP Project Management
Performance & Knowledge Management
for quality public
services
E-Gov
&
Central knowledge management
Sponsor knowledge management
Project-level monitoring
High performance
standards
Clear performance
measurements
43
Phase IV : PPP Project Management
for quality public
services
E-Gov
&
Relationship Management
PPP
=
=
Partner
Long-term partnership
Long-term investment
≠
Contractor
Margins count
44
Phase IV :PPP Auditing & Oversight
for quality public
services
E-Gov
&
Auditing for regulatory and financial compliance
Independent external auditors
Quarterly review by PPP governing body
45
PPP Closure
#1 Issue: Continuity (and transition) of service delivery
for quality public
services
E-Gov
&
Options at end of
PPP contract period:
Extend PPP with same partner
Agency takes over service delivery
Award PPP to new partner
Collect and publish PPP lessons learned
46
Priority Agenda
PPP Governance:
for quality public
services
E-Gov
&
PPP Analysis:
• Central PPP coordinator
• Coordination process
• Conflicts of interest
• Business case requirements
• Feasibility study requirements
• Risk assessment requirements
PPP Selection:
• Selection criteria
Management:
• Stakeholder consultations
• Contract management
47
Central PPP Authority
Establish central PPP Unit with responsibility for:
for quality public
services
• Maintaining, as needed, specific regulations and standardized methods
for PPP procurement procedures, model contracts and documentation.
E-Gov
&
• Proposing new PPP policies with regard to financial issues for PPP.
• Publishing guidelines to resolve any obstacles (e.g., in tax, service
pricing, use of “special purpose companies” and joint ventures) to use
of PPP.
• Facilitating the setting of priority of PPP projects across government;
and encouraging use of PPP as standard option in e-government.
48
Conflicts of Interest
Standard rule against conflicts of interest:
for quality public
services
• Any person or entity that has a potential conflict of interest in
E-Gov
&
performing their official duties during the PPP lifecycle – for
example due to their financial interests or personal relationships –
must report this to appropriate authorities prior to the exercise of
that person or entity’s duty.
• In general, persons or entities with a potential conflict of interest
with respect to a PPP project shall remove themselves
from the decision-making process for that PPP.
49
Use of Business Cases
Business plan (and tender docs) should clearly describe:
for quality public
services
• Services being delivered
• Business, technical and procurement options
• Strategic alignment with the business plan of sponsor agency
E-Gov
&
• Operational impact on sponsor agency and delivery of public services
• Stakeholders and their business requirements
• Pricing / revenue sharing for services
• Resources needed from government partner (including human resources)
• Feasibility, risk assessment and risk management
• Implementation strategy / timetable
• Contract management processes and tools
50
Risk Assessment
Areas of risk to consider:
for quality public
services
E-Gov
&
• Reduced demand for service or failure to realize projected
increases Revenue and cash flows
• Operational risks (e.g., failures in deployment or degraded service
quality)
• Infrastructure costs
• Political / Regulatory risks
• Technology (e.g., failure of existing ICT or inappropriate ICT choice)
• Financial strength of private sector partner(s)
• Inflation / foreign exchange fluctuations
• New risks are introduced because private partners will
deliver services
51
PPP Selection
PPP selection criteria might include:
for quality public
services
• Value-for-money (feasibility)
• Appropriateness of PPP for objectives and needs of E-Gov project
E-Gov
&
• Cost
• Ability to effectively implement and manage a project
• Viability of revenue sources and forecasts
• Availability of skills needed
• Time to implement
• Financial and legal risks in partnering with private sector
52
PPP Contracts
Areas addressed in a standard PPP contract:
for quality public
services
• Project objectives, quantitative outcomes, performance indicators
• Payment mechanism (based on availability, demand and quality)
• Sharing of additional yields and excessive profit
E-Gov
&
• Consequences of contract breach by either party
• Restriction of concessionaire's responsibility
• Risk sharing
• Change Mechanism
• Agency’s right to withdraw from project at its discretion with
fair compensation to private partner
• What happens with assets after PPP contract ends
• Settlement of disputes and conflicts
53
Relationship Risk
Relationship risks that exist when external resources are chosen
for quality public
services
E-Gov
&
over internal resources. These risks include

Expectations on service delivery

Vendor responsiveness to the need for improvements

Vendor failure to deliver on time

Impact on staff—job satisfaction, morale, workload
54
Why Fails
for quality public
services
E-Gov
&
-Short term focus
-Failure to understand the project motivations
-Poor communication
-Failure to recognize risk
-Failure to identify risk until contract signed
-Inadequate or none existence of SLA (service level agreement)
-Reward contract at low price approach
-No performance measures
55
After Signing the Contract
-The people who come to know us in the sales cycle go away once the
for quality public
services
contract is signed.
-How can vendors be flexible during negotiation and not in delivery?
E-Gov
&
-I expected detail processes for implementation then I got (How do
you want to do this?)
-Insufficient effort during the discovery phase, it will come out in the
delivery phase.
-Do the vendor have a track record with others.
-There was no transition plan, I want to see tools that would facilitate
the transition.
56
Pre-contract
-Defined the need:
for quality public
services
E-Gov
&
. Focus on results: Not procedures or processes
. Be accurate: Do not guess what is to be expected
. Be comprehensive: Cover all issues and express all expectation
. Be detailed: Cover all desired outcome
. Be specific: Illustrate in the needed outcome
. Be measurable: include performance requirements
-Develop the means and methods to meet the needs:
. Sitting the expectations for both parties
. Know the:
- What
- When
- Where
- How
of the contract.
57
Make it Successful
for quality public
services
E-Gov
&
Always think
Win-Win
58
Thanks
for quality public
services
E-Gov
&
for quality public
services
59