PUBLC PRIVATE PARTNERSHIPS CHANGE, LEADERSHIP AND MANAGEMENT APPROACH

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7 Νοε 2013 (πριν από 3 χρόνια και 7 μήνες)

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PUBLC PRIVATE PARTNERSHIPS


CHANGE,
LEADERSHIP AND MANAGEMENT APPROACH



1.

PURPOSE




To define a Public Private Partnerships (PPPs) in the South African
context
;



To explore the value of PPPs in achieving the following objectives:

o

optimizing and accelerating

service delivery in government.

o

transferring private entity skills to government officials and
thereby enhancing human resource and performance excellence
in government.

o

enhancing human resource development (HRD) within the

Broad
-
Based Black Economic Empo
werment (BBBEE)

framework
;



To explore from an HRD, leadership, change management and

organizational development perspective challenges in the
implementation of PPPs.









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2.

DEFINING A PUBLIC PRIVATE PARTNERSHIP

South African law defines a Public Private Partnership (PPP) as a contract
between a public sector institution for example, national, provincial or local
government or state owned enterprise in terms of which a private party
performs part of government’s s
ervice delivery or administrative functions and
assumes the associated financial, technical and operational risk in the design,
financing, building and operation of a project. In return, the private party
receives a fee from the public entity
or from tarif
fs generated from the project
according to pre
-
defined performance criteria.


Three types of PPPs are specifically defined:



A service contract is the simplest form of a PPP. Under a service
contract, a public entity contracts a private entity to perform a

specific
service, within defined specifications for a relatively short space of
time. Government retains ownership and control of all facilities, capital
assets and properties.



A concession is another type of PPP where in addition to providing a
specific
service within defined specifications, the concessionaire’s
responsibilities would normally include maintenance, rehabilitation and
upgrading of the facility concerned. He or she may also be required to
make a substantial capital investment into the projec
t.
I
n concession
schemes, government

may also

allow a private entity to use
government assets for commercial purposes.



The third type is the so
-
called Build
-
Operate
-
Transfer (BOT) Scheme.
In a BOT scheme, the private entity
does
not only provide a specifi
c
service within defined specifications, he or she also provides the
infrastructure, capital assets and other resources required to operate

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the project.
In
BOT schemes, the duration of the PPP is normally
longer to allow the private entity to derive good
returns on his or her
capital investment.

A PPP contractor is remunerated in one or more of the following ways:



Directly from the state budget;



From tariffs or other fees derived from the delivery of the service
rendered under the PPP
;



A combination of sta
te budget and service tariffs.

Although PPPs entrust

the delivery of certain government services and
administrative functions to a private entity, government remains accountable
for the efficient and cost effective delivery of such services. Therefore PPP
s
do not absolve government of
its responsibility to deliver

public services.

A PPP is not:



a simple outsourcing of functions where substantial financial, technical and
operational risk is retained by the institution
;



a donation by a
private party for a
public good;



the 'commercialization' of a public function by the creation of a state
-
owned
enterprise.









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3.

WHY DOES GOVERNMENT ENGAGE PPPS


The rapid increase in human population over the past two centuries coupled
with globalization, communication and
technological advancements, has
resulted in unprecedented demands on government institutions to provide
better services. Developing countries (including South Africa) are experiencing
more pressure from the

electorate
demanding improved infrastructure,
imp
roved service delivery and economic growth that would lead to job
creation and improved education and health.
Governments across the world
have
adopted innovative ways of meeting this demand for example,
outsourcing certain government functions.


Typicall
y, government outsources the delivery of government services or
functions utilizing a PPP contractual arrangement for one of the following
reasons:



Lack of the requisite skills and capacity to deliver the service. PPPs provide
a platform for the
transfer

o
f skills

from the private entity to the
government entity and may result in improved human resource excellence
in government.



Engaging private entities in the deliver of certain government services for
example non
-
core government services such as governmen
t fleet services,
allows government the space to focus on strategic core
-
government
business, thereby optimizing the staff, management and leadership
capacity of government to delivery strategic core
-
government services.



Where the PPP requires the private

entity to make capital investment in
the delivery of government services, not only does the PPP ameliorate

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limited government resources, it passes the risk associated with this
investment to the private party.



To improve service delivery in a cost effect
ive manner.
The planning
process for the approval of a PPP requires an extensive investigation into
the economic effectiveness of various forms of service delivery. National
Treasury only approves the establishment of a PPP if it will result in more
cost
-
e
ffectiveness
in
the delivery of the relevant government service.


To date, the South African government has concluded a number of PPP
projects. A few of them worth mentioning is the world’s largest rail PPP,
which is the ZAR23 billion, Gautrain Rapid Rail

Link PPP for the design,
construction, operation and maintenance of a public rail transportation
system. There is also the 25 year long Head Office Accommodation PPP in
respect of the Department of Trade and Industry, having a unitary payment
of ZAR870 mi
llion.


Although South Africa boasts an elaborate PPP regulatory framework which is
capable of rolling out PPPs of this
caliber
, the roll out of PPPs has generally
been slow. On average, only 3 PPPs have been successfully concluded per
year since 2000. One

of the reasons for this slow roll out is the time it takes
to conclude a PPP successfully. This period generally ranges from 24 months
to 36 months from the pre
-
qualification stage to financial close.







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4.

THE REGULATORY AND INSTITUTIONAL
FRAMEWORK FOR
PPPS IN SOUTH AFRICA


4.1
The PPP Legislative Framework


The legislative and policy framework for PPPs in contained in:



The Republic of South Africa Constitution Act, 1996



The Public Finance Management Act 1 of 1999 and Regulations issued
in terms of that
Act



The Municipal Finance Management Act 56 of 2003 and Regulations
issued in terms of that Act



The Municipal Systems Act 32 of 2000



The Preferential Procurement Framework Act 5 of 2000



The Broad Based Black Economic Empowerment Act 53 of 2003



Treasury Re
gulation 16



The National Treasury Regulation Practice Note on PPP



The PPP standardization document


The relevant legislative and policy provisions are summarized in this section of
the paper.


The foundation of all public procurement
is contained
in section 217 of the
Constitution, which states that “when an organ of state in the national,
provincial or local sphere of government, or any other institution identified in
national legislation, contracts for goods or services, it must do so in
accordan
ce with a system which is fair, equitable, transparent, competitive
and cost
-
effective”.


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The most effective way in which an organ of state can comply with section
217 is through an open, public, transparent and competitive tender process in
which all
t
enderers

are treated fairly and equitably. As will be discussed

later
in this paper
, the PPP regulatory framework embraces the principles of
section 217.


As mentioned above, the relevant legislation governing PPPs at a national and
provincial level are se
ctions 31(1
) (
a
) (
iii), 51(1
) (
a
) (
iii) and 76(4
) (
c) of the
PFMA and Treasury Regulation 16.


Sections 31(1
) (
a
) (
iii) and 51(1
) (
a
) (
iii) apply to government departments
(national and provincial) and state owned entities respectively. Both sections
requi
re the relevant accounting authority of the relevant department or state
owned entity to have “an appropriate procurement and provisioning system
which is fair, equitable, transparent, competitive, and cost
-
effective”.


Section 76(4)(c) of the PFMA states
that “National Treasury may make
regulations … concerning the determination of a framework for an appropriate
procurement and provisioning system which is fair, equitable, transparent,
competitive and cost
-
effective”. National Treasury has in terms of this

provision, issued Treasury Regulation 16 which set out the procurement
framework in respect of PPPs. In addition to the constitutional principles of
public procurement
, Treasury Regulation 16 prescribes that all PPPs conform
to the requirement of affordab
ility, value for money and adequate risk
transfer from government to the private party.


Treasury Regulation 16 further prescribes the procedures to be followed by

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government when entering into a PPP. For instance, Treasury Regulation 16
requires governmen
t to acquire National Treasury approvals at each stage of
the procurement phase.
This process is discussed in more detail under 4.3 of
this paper.


T
he legislation governing PPPs on a municipal level are the MFMA, the MSA
and the Municipal PPP Regulations
. Whilst the MFMA deals will with
procurement of any goods and services, the
MSA

only becomes relevant when
such procurement is related to “municipal services” such as electricity, water
and sanitation. If the private sector is contracted to provide servic
es on behalf
of the municipality, as in the case of PPPs, both the MFMA and the MSA will
apply.


Section 168(1
) (
d) of the MFMA enables government to “make regulations or
guidelines applicable to municipalities and municipal entities, regarding a
framework

regulating the financial commitments of municipalities and
municipal entities in terms of public
-
private partnership agreements”, which
provision led to the enactment of Municipal PPP Regulations.


While the decision
-
making and institutional processes in

respect of Municipal
PPP Regulations differ from that of Treasury Regulation 16, the regulatory
requirements of affordability, value for money and adequate risk transfer are
consistent in both regulations.


In addition to the above regulatory framework w
hich deals specifically with
PPPs, the execution of PPPs must comply with sector specific legislation.
An
example of this is

correctional services PPPs in South Africa, which are also
regulated by the Correctional Services Act, 111 of 1998. This Act afford
s

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“step
-
in” powers to the Commissioner of Correctional Services in respect of
PPPs.


The South African PPP legal framework is further implemented using
Standardization
, which is used to guide both government and the relevant
private sector participant (the

“Private Party”) through the cycle of PPPs.
Standardization

as issued pursuant to the PFMA and Treasury Regulation 16.
It regulates PPPs on a national and provincial level whereas the Municipal
Service Delivery and PPP Guidelines, issued by the PPP Unit,
form the basis of
Standardization

at a municipal level.


Not only does
Standardization

prescribe how key issues should be dealt with
in a manner that achieves the regulatory requirements of affordability, value
for money and adequate risk transfer, it also sets out clear
-
cut contractual
terms of the relevant PPP Agreement, such as the Priva
te Party’s commitment
to socio
-
economic development and black economic empowerment.


4.2 National Treasury’s PPP Unit


While it is clear that South Africa has an elaborate PPP regulatory framework,
this would mean nothing without a supervisory body to ensu
re that all PPP
Agreements observe the relevant regulatory requirements. The PPP Unit
within National Treasury has been established
monitor the extent to which
PPP
s

comply with the PPP regulatory framework. The u
nit
also provides
technical assistance to go
vernment in establishing and managing PPPs
. It also
provide
s the necessary t
reasury a
pprovals at each stage of the PPP phase.



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5.

PPP PROCESSES
: THE ROLE OF
GOVERNMENT, THE PRIVATE SECTOR AND
CIVIL SOCIETY


As indicated earlier, although PPPs entrusts the del
ivery of certain
government services and administrative functions to a private entity,
government remains accountable for the efficient and cost effective delivery
of such services.
Civil society and investors also have a role to play in the PPP
process
.


The role of PPPs

stakeholders

emanates from the PPP legislative and policy
framework outline above. Essentially government has a critical role to play in
identifying the need for a PPP and building up a sound business case for the
PPP, designing the PPP,
procuring the private partner who will implement the
PPP, ensuring effective governance of the PPP, monitoring the delivery of
services and administrative functions delivered under the PPP and ensuring
accountability as well as the continued delivery of se
rvices at the end of the
PPP.



The role of different stakeholders in the design, implementation and
governance of PPPs is discussed below.








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4.3.1

Pre
-
PPP Feasibility Study

A feasibility study is a pre
-
condition for all PPPs because PPPs require
government cash or in
-
kind commitments. The purpose of the
feasibility study
is to:



conduct a needs analysis of the service or administrative function to be
delivered under the PPP
;



e
xplore different options for the delivery of such services or the
performance of such administrative functions
;



c
onduct project
due

diligence
;



c
onduct an economic and value assessment of the different modes of
delivery of the relevant service or the perfor
mance of the relevant
administrative function
;



d
evelop a procurement plan for the PPP
.


The
Role of G
overnment

The feasibility study is conducted by the user department (national, provincial
or local government department) under the guidance of the
National
Treasury’s PPP unit. Normally, the outsourcing entity will retain the services of
a transaction advisor with the requisite legal, financial, management and
relevant technical skills

and other competencies

to assist with the feasibility
study. The
outsourcing entity then submits the feasibility study for approval to
National Treasury.


National Treasury will approve the
feasibility study
if satisfied that there is a
compelling business case for the establishment of a PPP that demonstrates
the follo
wing potential benefits for government:



value for money;



appropriate risk transfer to the private entity;


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innovative, efficient and timeous service delivery;



access to private capital
;



i
mprove service delivery or efficient government administration.


The
Role of the Private Sector

Normally, the private sector has a limited role to play during the feasibility
study phase of the PPP.
If a transaction advisor is appointed to advice
government, he or she is likely to be sourced from the private sector.
Government may also consult relevant private sector stakeholders to establish
the feasibility of the project.


The Role of Civil Society

Where civil society stands to benefit from or
to
be impacted upon by the
project, government has
an obligation to consu
lt with civil society to ensure
that civil society interests are accommodated in the design of the PPP. In that
case, civil society will have a participatory and an advocacy role to play in the
design of the PPP.


4.3.2

Procurement


The Role of Government

Once National T
reasury has approved the feasibility study, the outsourcing
entity may proceed to the procurement stage. During the stage, in
collaboration with the PPP unit, the outsourcing entity will:



design a fair, equitable, transparent and competitiv
e procurement process
in line with the Preferential Procurement Framework Act and other
relevant Supply Chain Management policies and legislation;


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p
repare a bid document together with the draft PPP agreement and
submit these to National Treasury for approv
al.

Once National Treasury approves the bid document and the draft PPP
agreement, the outsourcing entity will proceed to:



advertise the bid;



pre
-
qualify prospective bidders;



issue the request for proposals together with the draft PPP agreement;



r
eceive th
e bids;



e
valuate the bids against the potential benefits of the PPP to government
as articulated in the feasibility study;



s
elect the preferred bidder;



p
repare the value for money report and submit it to National Treasury for
approval.

Once Nati
onal Treas
ury has approved the value for m
oney report, the
outsourcing entity in collaboration with the transaction advisor if one was
appointed as well as the PPP unit will:



commence negotiations with the preferred bidder;



prepare a management plan or service level

agreement for the PPP and
submit the plan together with the PPP agreement to National Treasury for
approval. The management plan or service level agreement will articulate:

o

service specifications;

o

project inputs, outputs and performance measures;

o

the fee
structure and relative administrative processes;

o

PPP governance structure;

o

dispute resolution mechanisms;

o

penalties and other remedies applicable in the event of poor or
performance failure by the private entity.



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The Role of the Private Sector

Interested

private entities will participate in the pre
-
bid qualification process
;
submit

a bid to government

and participate in other bidding processes such
as presentations and negotiations with the outsourcing entity if the private
entity is the preferred bidder
.

Interested private entities may also begin
discussions with potential investors (either private banks or development
funding institutions).


Once National Treasury has approved the PPP agreement and the
management plan or service level agreement, the out
sourcing entity and the
private entity may proceed to sign these documents where after the
implementation of the PPP may commence.


The Role of Civil Society

Civil society rarely plays a role in this phase of the PPP.


4.3.2 Monitoring and Governance


The Role of Government

During the implementation of the PPP, the outsou
rcing entity is responsible
for
monitoring project implementation to ensure that the private entity is
implementing the PPP in accordance with the PPP agreement
and
management

plan or s
ervice level agreement. This is normally achieved
through regular project meetings with the private entity, receiving and
reviewing progress reports as well as securing the Auditor General to
undertake annual project audits in respect of multi
-
year PPPs.




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The Role of
the
Private S
ector


Once the PPP is signed, the appointed private entity is under an obligation to
deliver

the PPP in
-
line with the PPP specifications. This may include:



Sourcing the investment capital;



Planning the requisite infrastructure
development;



Subcontracting other private entities to deliver specific components of the PPP
;



Participating
in
the PPP governance structure;



Managing subcontractors;



Managing the PPP operations;



Submitting progress reports to the outsourcing entity.


The
Role of Civil Society

Civil society rarely plays a role in PPP governance. A civil society
representative may be co
-
opted in
to

the governance structure of the PPP to
ensure that civil society interests are not compromised during the
implementation process.

Civil society has a critical monitoring role to play as

they often do not have financial

interests in the PPP.












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6.

HUMAN RESOURCE

DEVELOPMENT
,
MANAGEMENT
, L
EADERSHIP
AND PPPS


6
.1
The Human Resource Development Strategy 2010
-
2030


In 2009,
government
reviewed the 2001 H
uman Resource Development
Framework
(HRD Framework). This process resulted in the approval of the
Human Resource Development Strategy South Africa (HRD
-
SA 2010
-
2030
)
.
This
HRD
-
SA

is intended to achieve the following developme
nt goals:



to urgently and substantively reduce the scourges of poverty and
unemployment in South Africa;



to promote justice and social cohesion through improved equity in the
provision and outcomes of education and skills development programmes;
and



to su
bstantively improve national economic growth and development
through improved competitiveness of the South African economy.

The HRD strategy makes provision for a number of
measures

to be
implemented by relevant government and private stakeholders to ensur
e the
realization of the above goals. In addition, the strategy articulates priority
areas to ensure focus
ed

interventions. While the strategy is silent on the role
of PPPs in the achievement of the goals of the HRD strategy, we believe PPPs
have a critica
l role to play in that regard. We have summarized the relevant
strategic priorities below.




To ensure that all new entrants into the labour market have access to
employment
-
focused education and training opportunities. PPPs provide

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substantial capacity to

absorb new entrants into the labour market in the
form of internships of low ranking positions in the following areas:

ʘ

administration;

ʘ

finance;

ʘ

technical functions e.g. artisans
;

ʘ

professional functions e.g. engineers, architects, accountants etc.



To ensu
re that the balance of immigration and emigration reflects a net
positive inflow of people with priority skills required for economic growth
and development. PPPs provide the scope to import scarce and critical
skills to meet the economic and developmental

needs of the country.



To ensure that all adults in the labour market (unemployed and employed)
have access to education and training opportunities
(including ABET) t
hat
will enable them to acquire a minimum qualification at Level 4 of the NQF.
the implem
entation of the PPP may be used to improves access to adult
education for example training quotas may be included in a PPP
agreement to ensure that illiterate adults employed within the PPP receive
adult basic education funded out of funds generated throug
h the PPP.



To ensure progressive improvement in the external efficiency and
effectiveness of HE, FET and the occupational learning system
, a

private
entity implementing a PPP may be require
d

to establish a relationship with
FETs, SETAs and other public ce
ntres of training excellence that are
engaged in training on skills required for the delivery of the relevant
service to provide a platform for practical training.



To improve the technological and innovation capability and outcomes
within the public and p
rivate sectors to enhance South Africa’s
competitiveness in the global economy and to meet
South Africa’s

human
development priorities. PPPs provide a critical platform to meet the
strategic priorities articulated under this commitment namely:


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t
o increase
the number of skilled personnel in areas of science; engineering
and technology.




t
o improve South Africa’s performance in areas of teaching, research,
innovation and the commercial application of high
-
level science, engineering
and technology knowledge.

Such provisions, if included in PPP agreements could go a long way in
meeting the skills shortage, bridging the gap between training and the labour
market as well as achieving the objectives of the HRD
-
SA. Currently Treasury
Regulation 16 does not provide

a clear nexus between PPPs and HRD
-
SA. It is
necessary to review this Treasury Regulation to unpack the ‘skills transfer’
requirements in PPPs clearly linking this obligation on the part of the p
rivate
entity with the country’s

HRD requirements as well as

the objectives of the
HRD
-
SA.


6.2

Human Resource Implications


There are critical competencies

that are required to manage, implement,
monitor and evaluate PPPs. These skills include:



Leadership and management skills;



Change management skills;



Public admin
istration skills;



Business administrative skills;



Project management skills;



Business communication and writing skills;



Computer skills;



Legal skills especially in respect of administrative law, commercial law
and the law of contracts as well as dispute re
solution mechanisms;



Negotiation skills;


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Financial skills including project finance;



Technical skills required meet the objectives of respective PPPs e.g.
architecture; engineering, construction; economics, etc.



Performance m
anagement skills;



Monitoring
and e
valuation skills;


Most of these skills have been categorized as scarce and critical skills. The
bearers of these skills
have migrated to the
private sector

and very few
establish a long
-
term career in the public sector
. The skills are
scarcer
within
end
-
user departments particularly at provincial and local levels. Provincial and
local government equally requires these skills as the
y

have the primary
responsibility to plan and virtually the sole responsibility to effectively
implement the PPP.
There i
s also a need to revise retention strategies to
counter the public sector brain drain.


6.3

Change Management


Where very different stakeholders are required to partner to be successful,
there is considerable opportunity for lack of trust, confusion, conflict and
delay. For this reason PPPs can quickly run into the sand at an operational
level and become tied up in

contractual complexity and prescriptive rules of
engagement. An underlying cultural reason for this is the way people on both
sides of the partnership see the personal risks in the venture.


The perceived risks to career or reputation for a public servan
t ‘breaking the
rules’ usually far outweigh the benefit they may get from delivering a better
result. Contrast this to the private sector

where someone with an innovative
idea that could cut cost
s

or increase revenue is more likely to look

at the


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potential

reward and balance this with the risk of failure. This difference in
the perception and management of risk means that each group will pay
attention to different aspects of
the

PPP process.


The following change management considerations are important in P
PPs:



Alignment of objectives



ensuring that
each
PPP stakeholder
understand
s

the
objectives of the other and
that
they believe they can achieve their own
objectives without bringin
g them in to conflict with the other stakeholders;



Effectiveness of
communications



ensuring that
meetings and
communications
are
focused on the right issues

and provide accurate and
timeous information
;




Clarity of decision
-
making



the process of decision
-
making across the
partnership needs to be clear to all. The right

people should be involved at the
right time
;




Clarity of accountabilities


ensuring that
people understand who is
accountable for what
;



The ri
ght skills in the right place



ensuring that
all partners
deploy
people
with the
appropriate competencies
to
manage the partnership
;



Partnering behaviour of leaders



Openness, integrity, trust and commitment
by different stakeholders is important for the success of the PPP
.
PPP leaders
should be seen to be
acting for the good of

the whole partnership
;



Responsiv
e ways of working



all parties
should be
willing to adapt their
ways of working to resolve

interface issues and meet the needs of others
;



Continuity
-

Staff that negotiate the contract need to be retained as part of the
contract management team
;



Because

most PPPs are of medium to long
-
term duration, it should strike a strike
a balance between all future contingencies and the outcomes to be achieved
;



Cultural issues need

to play a role

in selecting a partner as well as other strategic
role players such as

the civil society representative
s.




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6.4

PPPS and Leadership


Effective leadership is important for successful PPPs.
The most challenging
aspect of PPPs is leading and managing change. The business public
environment is subject to fast
-
paced economic and social change. Both
government and the private sector
are

required to be adaptable and be
flexible to survive. Problem
s in leading change stem mainly from human
resource management. Leaders need to be aware of how change impacts on
different PPP stakeholders, particularly employees and respond appropriately.


The following leadership considerations are important for PPPs
:



Type of staff employed by PPP stakeholders
;



Institutional h
istory of the different stakeholders
;



The institutional c
ulture of the different stakeholders
;



Quality of the
partnership
relationships
;



Nature of the changes needed
;



Accepted norms within the
partnering institutions
;



Risk
-

decision making and change initiatives based on degree of risk
involved
;



Type of business


whether

creative business or supply driven?



How
important change is


is it
change for change’s sake?



Organisational culture


may b
e long embedded

and difficult to change
.



Nature of the task needing cooperation, direction and structure
.



7

PPPS AND BLACK ECONOMIC EMPOWERMENT


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There are key features of PPPs that make them inherently excellent for
achieving BEE objectives:



The long
-
term nature of PPPs provides an opportune instrument to
grow black equity and black management over time. Risk is clearly
identified in PPPs, clearly coasted and appropriately allocated, so black
participants know in advance what they are committi
ng to.



The formation of private consortia in the form of special purpose
vehicles (SPVs) for many PPPs facilitates long
-
term beneficial
partnerships between new black enterprises and experienced,
resourced companies
-

both as equity partners and in projec
t
management, and both at the private party SPV and subcontracting
levels.



Where government is the buyer of a service, and insofar as the service
is provided to the agreed standards, there is a steady revenue stream
to the private party, reducing risk to
new black enterprises.



Principal equity sponsors in a PPP are often also first
-
tier
Subcontractors, building incentives for optimal risk management.



PPPs provide significant subcontracting opportunities for black
enterprises, where early cash
-
flow benefi
ts can be derived as delivery
commences.



PPPs have far
-
reaching broad
-
based BEE potential: through the
subcontracting and procurement mechanisms they can involve a full
spectrum of large, medium and small enterprises, and bring tangible
local economic dev
elopment benefits to targeted groups of people.



Return on equity to the private party is competitive where risk is
properly assumed.


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There is an increasingly strong demand for black professionals as
transaction advisors to both institutions and private p
arties in PPPs.



PPPs develop skills.



PPPs create jobs.


8

CHALLENGES IN THE IMPLEMENTATION OF
PPPS


The current PPP framework does not provide for a knowledge management
framework within PPPs. In the absence of such a framework, there is no
systematic

way

of collecting, documenting and sharing information on
lessons learnt from implementing PPPs. Anecdotal evidence point to a variety
of challenges in the implementation of PPPs. These are outlined below:



Lack of a systematic planning in the identifica
tion of PPPs. In most
cases, the decision to explore the feasibility of establishing a PPP lies
with the outsourcing entity. In practice, this process tends to be
sporadic and is rarely linked to government planning processes. The
Planning Commission in th
e office of the Presidency could play a critical
role in this regard.



There are a variety of stakeholders in PPPs with varying interests. PPP
stakeholders do not only bring varying interests into the PPP process
,

t
hey also bring into the disparate barga
ining power, competences and
resources. The PPP process
does
not, contain mechanisms for
balancing these disparities. Such disparities may negatively impact on
the planned outcomes for the PPP.



There are often vaguely defined communication processes. Th
is
particularly impact
s

on the stakeholders with least resources and the

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least bargaining power e.g. civil society. There is a need to provide
additional support to different stakeholders to enhance their
participation in PPP processes. Such support may ra
nge from capacity
building, improving communication mechanisms, facilitating access to
funding for BBEEE entities through the provision of government
guarantees, etc.



There are substantial change management dynamics in the
implementation of PPPs, particu
larly because they involve a variety of
stakeholders. A change management process should be factored into
the design of PPPs to address change management dynamics inherent
in PPP projects.



There is a need to enhance government accountability in respect
of
PPPs. Incorporating PPP governance into government’s monitoring and
evaluation framework offers a solution in that regard.



Putting in place a knowledge management framework to ensure that
lessons learnt from implementing PPPs is documented, shared an
d
inform future PPP processes.



There is a need to link PPP process to other government policy
interventions such as BBEEE charters and the HRD
-
SA to maximize the
potential development impact of PPPs.



Limited competencies within government exacerbat
ed by the constant
brain drain from government to the private sector further hamper the
effectiveness of PPPs. This negatively impacts government leadership
and management capacity to effectively implement PPPs. There is a
need a need to conduct a skills a
udit to ascertain the availability of
requisite competencies of different stakeholders to effectively
implement PPP projects and to design and implement appropriate
capacity building interventions.


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6.

RECOMMENDATIONS



Introduce systematic PPP planning through the National Planning Commission
to ensure that PPPs form part of government’s long
-
term planning agenda.



Introduce mechanisms for balancing resource and skills disparities among
different PPP stakeholders, for ex
ample by provid
ing

additional support to
different stakeholders to enhance their participation in PPP processes. Such
support may range from capacity building, improving communication
mechanisms, facilitating access to funding for BBEEE entities through th
e
provision of government guarantees, etc.



A change management process should be factored into the design of PPPs to
address change management dynamics inherent in PPP projects.



Incorporate PPPs into government’s M&E framework to enhance government
accoun
tability in respect of PPPs.



Put

in place a knowledge management framework to ensure that lessons
learnt from implementing PPPs is documented, shared and inform future PPP
processes.



L
ink PPP process
es

to other government policy interventions such as B
BEEE
charters and the HRD
-
SA to maximize the potential development impact of
PPPs.



Conduct a skills audit to establish the requisite competencies and skills
required for the effective implementation of PPPs.



Develop capacity
at national, provincial and
municipal level by:

o

sharing expertise and experiences with other governments and
government departments
;

o

implementing appropriate skills development interventions in line with
the skills audit;

o

establishing PPP Facilitation Units in national and regional
development finance institutions (DFIs); and


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o

developing good transaction skills (legal, financial, negotiation and
industry specific skills) in the relevant government institutions
:



Ensure
that
PPP agreement
s

clearly articulate how PPP
s

will result in skil
ls
transfer and articulate specific skills transfer outcomes, performance
measure
s

and penalties applicable in the event of failure to attain the set
skills transfer objectives.



Root out
corruption
by i
mplementing mechanisms to guarantee transparency
at a
ll stages in the tendering process

for example civil society participation in
bidding processes.



Form partnerships with
experienced
private
operators
with proven track
records.



Include criteria for
partnership
s

with and subcontracting of
local firms
in
bid

document
s

to ensure that PPPs support the achievement of BEE outcomes.