Robert van Hoof
DHV investment consultant
+31 33 468 3023
robert.vanhoof@dhv.com
8 - Roads and Regional Development
Method box for stakeholder involvement in investment projects
The Method Box puts technical road design and planning in a context of processes and strategies needed to get to implementation. It’s a collection of instruments which can be used in various stages of a complex investment project, pre-feasibility (stakeholder analysis and market scan), feasibility, tendering and contractual. Therefore, one can selectively pick the instruments needed in a specific stage of a specific project.
The method box shows that the combined development of infrastructure and urban expansion is an iterative process which consists of four main parts:
- the process of getting to decision documents as a basis for support and agreement;
- the process of getting to support and agreement;
- technical and financial activities as a basis for technical and financial documentation;
- the process of getting to technical and financial documents as a basis for decision making;
It starts with the recognition of a problem (urban development versus infrastructure). The main idea is not to jump to a technical infrastructure solution right away, but to perform a stakeholder analysis to experience the problems and ideas of other parties involved. With the support of others and may be together with some of these others, a technical outline can be made as well as rough financial calculations. This is basically the start of your Business Case! Technical and financial documents are a result of this process and are a first concept..... not to implement right away but to be the basis for an public intention agreement and a private market scan and/or market consultation. The outcome of the market scan / market consultation may be a motive to adjust the technical design, the Business Case and also helps to develop a contracting strategy. This contracting strategy (decision document!) finally leads to a tendering procedure and one of the many types of Public Private Partnership: this is the ultimate proof of both public and private commitment! The method box shows how to get from a problem to a PPP, circling around the various stages.
The method box was presented at the annual conference for Partners for Roads - Window 8 and the presentation can be found here
Problem
Every solution starts with a clear description of the problem. As the method box focuses on combined infrastructure and urban expansion issues, it’s very important to not just describe the infrastructural problem, but to take the broader view of the challenge for a larger area, including the factors leading to urban expansion (commercial and residential real estate development) and infrastructural needs. This broad view is important as it is the basis for the further steps in the method box.
Support
The next step after the problem definition is to find support. A stakeholder analysis is a good tool for that. It will help you to find out who the main stakeholders are, how they feel about the problem (they may share your view, but also may look at things completely different!) and which resources they have and are willing to put in to get to a solution. A stakeholder analysis is also a good tool to pre-select your public allies!
Technical solutions and financial calculations
Once you have selected your most important allies, it’s time to get to the substance of the solution: the first technical design of the infrastructure needed. In some cases this designing process may be carried out together with the urban development design. As you get further into the process, the designing gets more and more accurate and definite.
Financial calculations are not just cost-calculations. As our scope is not just the infrastructure, calculations may also include revenues, for example real estate revenues. This is the start of your business case! Calculations in the first stage are pretty rough. They get more and more precise once, after having gone through a few “loopings”, you get further into the method box process. The business case is a good tool to get to a public-public financial deal (who will financially contribute to what?) as well as a public-private financial agreement.
Technical design and outline of costs/revenues
The outcome of your technical design process and financial calculations of course need to be written down in the appropriate technical documentation. Most infrastructure developers are already quite familiar with this.
Concept
The concept is a decision document as a basis for a public intention agreement and also for getting a private view (market scan and market consultation). The concept usually is not a fully elaborated document, but more of a direction to a solution. There’s enough content for a public-public intention contract and there are enough question left for a market scan and/or market consultation.
Public intention and private view
After the more technical steps to come to a design and a concept-document, it’s time to get one step further in the decision quadrant of the method box. It is time for the most important public players (usually the Road Administration and the involved municipality) to formalize their mutual intentions in a public contract. This is basically an agreement about a shared problem identification and about the process how to get to the implementation of the solution to the problem. Usually there are still many questions left, for example about the private contracting strategy and/or the financial/technical feasibility. In this stage the market may be consulted to get the private view on these issues/questions.
Plan
The previous document in this quadrant of the method box was the concept as the basis for a public intention contract and private market scan/consultation. The steps as described in the public intention contract and the private market scan / market consultation may have led to new views, which led to new technical and financial exercises, finally drawn up in the plan. The plan is the basis for a public agreement in which te public partners commit themselves to the combined infrastructure and urban development program.
Public Agreement
The public agreement is a clear public commitment (of usually the Road Administration and the involved municipality). about the project scope, the common goals, tasks per party, competences of each party, results, responsibilities of each party, organization, financial issues, market approach and land acquisition
Contracting Strategy
The contracting strategy is the way to get to the final PPP. Infrastructure project usually are subject to EU-tendering procedures, urban expansion (real estate development) doesn’t necessarily have to be. The contracting strategy depends on the type of PPP to be established. It is possible to combine infrastructure and real estate development in one PPP-contract, using the competitive dialogue to get there. Also it is possible to split the contracting of the real estate development and infrastructure development (double strategy); in this case the public agreement is even more important as this is the agreement where the connection between infrastructure and urban development is made.
Public Private Partnership
This is the final implementation contract between the public contracting authority and the private sector. Especially as both real estate and infrastructure development is involved, many types of PPP are possible. The main PPP’s are:
- traditional: real estate and infrastructure development are separately contracted;
- joint venture: both the Road Administration and the involved municipality participate in the contract;
- private ownership: owners of land develop the real estate; the infrastructure is tendered;
- concession: real estate and infrastructure developments are combined in one PPP-contract, making the private sector responsible for the interfaces between these two components.
