Working Towards a Leaner and Improved PPP Procurement Process National PPP Summit 3 June 2014
David Asteraki - KPMG - Working Towards a Leaner and Improved PPP Procurement Process
Jan 29, 2015
David Asteraki delivered the presentation at 2014 National PPP Summit.
The National PPP Summit is the leading annual event for industry stakeholders to gather and discuss the issues across the national and global PPP markets. The 2014 agenda reviewed current and emerging financing models as well as showcasing best practice strategies for the procurement process, risk transfer and whole-of-life project management.
For more information about the event, please visit: http://www.informa.com.au/PPPSummit14
The National PPP Summit is the leading annual event for industry stakeholders to gather and discuss the issues across the national and global PPP markets. The 2014 agenda reviewed current and emerging financing models as well as showcasing best practice strategies for the procurement process, risk transfer and whole-of-life project management.
For more information about the event, please visit: http://www.informa.com.au/PPPSummit14
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Transcript
Working Towards a
Leaner and Improved
PPP Procurement
Process
National PPP Summit
3 June 2014
1© 2014 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights
reserved.
KPMG and the KPMG logo are registered trademarks of KPMG International.
Disclaimer
The information contained herein is of a general nature and is not intended to address the
circumstances of any particular individual or entity. Although we endeavour to provide accurate
and timely information, there can be no guarantee that such information is accurate as of the
date it is received or that it will continue to be accurate in the future. No one should act on such
information without appropriate professional advice after a thorough examination of the particular
situation.
The views and opinions expressed herein are those of the presenter and do not necessarily
represent the views and opinions of KPMG, an Australian partnership, part of the KPMG
International network.
2© 2014 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights
reserved.
KPMG and the KPMG logo are registered trademarks of KPMG International.
History of the Australian PPP market
0
2
4
6
8
10
12
14
16
18
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
9,000
1987 1990 1993 1996 1999 2002 2005 2008 2011
No. of
Pro
jects
Capital V
alu
e (
$m
)
Capital Value (lhs) No. of Projects (rhs)Source: KPMG, drawing on a variety of external sources
137 projects with a total capital
value of $57.7 billion
3© 2014 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights
reserved.
KPMG and the KPMG logo are registered trademarks of KPMG International.
Victoria & NSW have led the way
VIC - 45
NSW - 43
QLD - 13
WA - 11
CWLTH8
SA7
NT4
TAS3
ACT3
Location of PPP
Projects
1987- 2013
Source: KPMG, drawing
on a variety of external
sources
4© 2014 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights
reserved.
KPMG and the KPMG logo are registered trademarks of KPMG International.
Transport has been the main sector
Transport
Health
Water
Sport/Entertainment
Justice
Defence
Education
Student accommodationHousing
ICT
Waste
Other
Source: KPMG, drawing
on a variety of external
sources
Sector by capital
value
Sector by number
1987 - 2013
5© 2014 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights
reserved.
KPMG and the KPMG logo are registered trademarks of KPMG International.
High capital values by international standards
0
5
10
15
20
25
30
35
$0 - 50 $50 - 100 $100 -200
$200 -500
$500 -1,000
$1,000 -2,000
$2,000 -5,000
$5,000+
No.
Capital Value, $ million, Dec 2013 prices,1987 - 2013
Average project capital value is
$534 million, Dec 2013 prices
6© 2014 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights
reserved.
KPMG and the KPMG logo are registered trademarks of KPMG International.
What are the problems?
7© 2014 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights
reserved.
KPMG and the KPMG logo are registered trademarks of KPMG International.
What are the problems?
Project pipeline
• Size is an issue
• Variable commitment to PPPs
• Inconsistent application of Procurement Options Analysis
to potential PPP projects
• Too much politics
8© 2014 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights
reserved.
KPMG and the KPMG logo are registered trademarks of KPMG International.
What are the problems?
High bid costs
• Reasons
• Project’s complexity and value
• Lengthy procurement
• Multiple bid stages
Project value Losing bidder Winning bidder
$250 million $2 – 3 million $2.5 -5.0 million
$1 billion $5 – 6 million $7 – 9 million
$2 – 5 billion $20 – 40 million
9© 2014 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights
reserved.
KPMG and the KPMG logo are registered trademarks of KPMG International.
Procurement timetables vary, but compare well
13 – 20 months
16 – 18 months
Typical time0 12 24 36 48 60
Canada
Australia
However, risk of extended timetable is significant
10© 2014 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights
reserved.
KPMG and the KPMG logo are registered trademarks of KPMG International.
What are the problems?
High bid costs
• Excessive information requirements
• Non-standardised documentation
• “Excessive” focus on design and innovation
• Requirement for financing certainty
11© 2014 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights
reserved.
KPMG and the KPMG logo are registered trademarks of KPMG International.
What are the problems?
Bid costs at risk
• Number of bidders
• Partial reimbursement of bid costs
12© 2014 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights
reserved.
KPMG and the KPMG logo are registered trademarks of KPMG International.
A call to action
• Greater certainty in infrastructure funding
• More consistent use of PPPs
• Strengthen independent prioritisation of projects
• Avoid multiple bid stages
• Rationalise information required at bid stage
• Accept uncommitted finance at bid stage
• Partial reimbursement of bid costs
Thank you
David AsterakiDirector
Infrastructure & Projects Group
KPMG Corporate Finance
T: (+61)(0)2 9295 3858
© 2014 KPMG, an Australian partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
The KPMG name, logo and “cutting through complexity” are registered trademarks or trademarks of KPMG International.
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