Role description

Financial advisors play a primary role in the preparation and transactional stages of the project including assessing the potential value of a P3 delivery model. This involves determining the types of information and/or due diligence required for a thorough assessment of delivery options in way that compares similar values. They are expected to work closely with agency staff, as well as other external advisors, including legal and technical advisors.

They play a leading role in developing the P3 business case, conducting highly-structured qualitative and quantitative analyses, and assist the agency in selecting the best strategies and structures for financing, procuring, and implementing the P3 project. They provide outreach to potential private sector contractors and investors and identify financing for the project.

Financial advisors are expected to be responsive beyond the procurement stage, answering questions and performing additional analyses, as the project team requires.

Experience and qualifications

• Experience developing P3 business cases, including value-for-money assessments and financial models
• A good understanding of the commercial logic and market feasibility of the project to carry out risk analyses
• Knowledge of current developments in other P3 transactions, capital markets (e.g., interest rates, liquidity, debt / equity issuances), financing structures (e.g., corporate bond, mini-perms, tax-exempt financing, equity, private placements, amortizing bonds, bullet bonds, etc.,) and in the macroeconomic environment (e.g., inflation, commodity prices, labor market conditions, supply-chains, etc.)
• Commercial savvy to develop market-accepted deal structures and contracts that lead to robust long-term partnerships with the private sector

Activities

Business case development 

• Participating in weekly liaison meetings or conference calls with the agency and other advisors.
• Identifying, supporting, and describing a clear rationale for the project in quantitative and qualitative terms, including the public benefits of the development.
• Supporting the definition of the project scope.
• Consulting with key stakeholders, as required.
• Organizing and preparing a workshop to identify the potential range of project delivery options (e.g., Design-Build, Progressive Design-Bid, Pre-Development Agreement, P3 such as Design-Build-Finance-Operate-Maintain), to be included in the P3 business case.
• Developing robust evaluation criteria to assess competing delivery models.
• Preparing market sounding package and identify 20-25 participants from multiple streams of expertise to ensure an accurate sounding, including but not limited to construction firms, financial institutions, developers, and for‐profit and non‐profit operators, to determine the market’s interest, concerns, and risk factors regarding the project.
• Analyzing the results of the market sounding and refine models to establish preferred delivery option(s) for the project.
• Identifying and describing the preferred delivery model and provide rationale for why other delivery options were not selected as the preferred method.
• Organizing and conducting risk workshop(s), preparing a comprehensive risk register and well-quantified risk matrix –inclusive of Monte Carlo analysis, as well as risk mitigation strategies.
• Providing a range of financial advice on topics like discount rates, risk premiums, gearing of debt-to-equity ratios, financing structures (e.g., bank financing, corporate financing, bond financing, min-perm structures, tax-exempt financing, etc.), inflation rates, pricing for labor, commodities and energy, taxation (including advisory on Section 103 and Sections 141 through 150 of the Internal Revenue Code), etc.
• Developing a public sector comparator and shadow bid model for use in the value-for-money assessment of the project.
• Working with agency departments to verify project affordability and funding, and the timeline for how funds will be used by the project, including construction and operations and/or maintenance (O&M) over the concession period, and lifecycle costs. Where a funding gap is not fully eliminated through public funding, identifying solutions to address the funding gap.
• Creating clear and integrated strategies for financing, procurement, and implementation of the project, highlighting timing and decision requirements.
• Presenting near-final analyses and recommendations to the agencies’ leadership or governance body for review prior to finalizing P3 business case components.
• Finalizing P3 business case components and submitting them in draft to the agency for review.
• Assisting the agency in replying to any stakeholder questions related to their work and perform any additional required analyses as needed.
• Preparing and updating the value-for-money report.
• Advising on the lending market for P3 transactions and the commercial considerations for the proponents.
• Meeting with the relevant agency departments and external legal advisor(s) to gather information about the agencies’ procurement authority.
• Facilitating workshops to discuss project goals during procurement, the key features unique to the project, and strategies to maximize competition, transparency, and effective communication with potential private sector proponents, in coordination with external legal advisor.
• Drafting relevant procurement procedures, including a supporting procurement strategy and tactics with detailed task lists, in coordination with external legal advisor.
• Supporting the development of a realistic timetable for all procurement phases, identifying key milestones, in coordination relevant agency departments and external legal advisor.
• Producing materials and information to convey relevant project information to potential private sector proponents to support effective implementation of the procurement procedure

Procurement activities

• Meeting(s) with agency staff and external and technical and legal advisors to develop the procurement documentation (RFQ, RFP, P3 Contract, evaluation plans, etc.).
• Developing the financial evaluation criteria, training materials, and activities for evaluators and management of evaluation processes to establish a shortlist of proponents and the selection of a preferred proponent.
• Assisting with developing the financial and commercial aspects of the RFQ, RFP and project agreement and related sections, schedules, and appendices, including the payment mechanism, the conditions and financial consequences of contract termination, refinancing, change of ownership, accounting and tax obligations, insurance requirements, supervening events, and project-specific output specifications.
• Supporting with the coordination, preparation, and completion of RFQ and RFP and evaluation processes and frameworks, aligning with the agency’s procurement priorities and objectives.
• Providing input to the overall procurement structure to ensure that the procurement process follows P3 procurement best practices for fairness and reasonableness.
• Structuring, executing, and providing advice on financial and P3 financing aspects, including credit spread refreshes, financing structures, and changes to any macroeconomic variables including inflation, interest rates, supply-chain, and pricing for items such as labor, commodities, and energy.
• With the assistance of the agency staff and the external legal advisor, manage all procurement functions including completeness and compliance reviews with RFP and RFQ submission requirements.
• Being the lead contact for proponents during the procurement process, which includes supporting the internal agency legal department with managing enquiries and developing responses to enquiries throughout the procurement process.
• Based on market conditions, provide support to the technical and legal advisors with any modifications to the risk matrix.
• Managing all logistics of bidder conferences, site visits, and the commercially confidential meetings process with the private sector for the transaction.
• Providing support in the development of the final project agreement, as required.
• Drafting responses to financial-related requests for information from proponents.
• Assisting in the RFQ and RFP evaluation of financial components of bidder submissions and assessing the financial capabilities of proponents.
• Undertaking contract negotiations with the Preferred Proponent and finalizing all financial terms in the project agreement.
• Overseeing the financial close, including supporting final negotiations with lenders and supporting credit spread refreshes, if required.
• Providing financial support to the legal advisor during commercial and financial close.
• Leading the value-for-money refresh process and affordability analysis.
• Developing confidentiality processes and procedures to prevent conflicts of interest.
• Reviewing with the legal advisor the tax and accounting implications associated with the proposed transaction.

Post-Procurement Activities

• Supporting the legal advisor with contract management training for the agency.
• Assisting the agency with contract management, including negotiating change orders and reviewing associated financial impacts
• Reviewing and assessing refinancings, termination, change of ownership requests, and renegotiations.

Key Deliverables

A sound, comprehensive and robust P3 business case for review by the agency, which includes, but is not limited to:

• Needs assessment that describes the necessity of the project and any constraints being placed on its development.
• Summary of feasibility studies informed by inputs and analyses of the technical advisor and cost consultant.
• Market sounding report to assess interest in the project and identify any issues.
• Risk matrix, unlocked and flexible, including advice on the appropriate risk allocation and mitigation between the public and private sectors for the traditional and P3 procurement models under consideration.
• Value-for-money analysis comparing the recommended P3 model (e.g., DBF, DBFOM) to a public sector comparator under the traditional approach (e.g., Design-Bid-Build, Design-Build).
• Financial model, unlocked and flexible enough to conduct sensitivity analysis, accompanied by a description of modeling assumptions and methodologies, informed by inputs and analyses from the agency’s technical Advisor and cost consultant.
• Summary of project funding and affordability.
• Financing assumptions such as interest rates, inflation and financial instruments including tax-exempt financing.
• Procurement strategy and implementation plan, including strategic alignment, transaction structure, procurement process and project governance.

Role description

Technical advisors provide high-level oversight, technical input, strategy formulation, and overall guidance to the agency and other advisory team members during all phases of work leading up to the construction phase of the project.

They play a primary role in:

• Providing technical input into the P3 business case.
• Develop various project designs, which are essential to inform cost estimates.
• Contributing to work-back schedules based on design parameters and technical expertise.

In addition to the above, technical advisors may also support project management functions throughout the project lifecycle, as their expertise should be consulted at key milestones.

Notes:

• As P3 projects are fluid in nature, and no two projects are likely to have the same requirements, risk factors, or technical characteristics, agencies should tailor the technical advisory’s scope of services to reflect specific requirements of the project. The scope of technical work may be wider or narrower, depending the agency’s ability to take on roles such as project management, costing, permitting, etc.
• Given the volume of technical advisory work and specialization (with some asset classes), agencies may investigate splitting the technical work among two or more advisers.

Experience and qualifications

In order to function effectively, technical advisors must have expertise in the following areas:

• Preparing bridging documents such as technical requirements, a schematic or Class 3 level design, a cost report (including cost estimates for construction, operations, maintenance, and lifecycle, if needed), plans, project constraints, reference materials, applicable quality requirements (of funding or other regulatory agencies), project-specific output specifications, and other contractual requirements
• Experience in project concept development, including site selection and feasibility studies
• Risk management expertise, including development of risk registers
• Financial evaluation, including cost estimating (capital, operations, maintenance, and lifecycle)
• Environmental planning experience, including approvals and monitoring
• Procurement and document preparation and control
• Analysing traffic, energy, or other usage studies
• Knowledge of regulatory compliance, licensing and permitting
• Planning, detailed design, and contract administration
• Operations and maintenance planning and monitoring
• Quality assurance and quality control experience
• Testing and commissioning

Activities and key deliverables

Pre-procurement activities

• Undertaking a risk assessment and analysis to develop the project charter, terms of reference, and design criteria/synopsis.
• Conducting all technical work required to update, refine and/ or complete conceptual designs, as well as develop business case inputs to support the success of the project.
• Developing a schematic level design or Class 3 level of design in for the project in accordance with Association for the Advancement of Cost Engineering (AACE) standards[1]
• Developing an integrated design and construction schedule.
• Supporting the financial advisor’s market sounding by assisting, where necessary, in the development of the market sounding questions, preparing required technical requirements, and addressing technical issues.
• Identifying key environmental, archaeological, and community impact risks, and potential mitigation measures at the concept definition level.
• Assisting the agency in identifying the type and level of any formal environmental reviews that would be required.
• Identifying social and environmental justice consultation requirements, if necessary.
• Supporting the financial advisor’s needs assessment and feasibility studies with relevant technical or planning details.
• Supporting the financial advisor’s risk workshop(s) with a professional opinion on identifying, allocating, and quantifying the impact of various risks (e.g., environmental, design development, site conditions).
• Assisting the financial advisor in developing a preliminary financial model aimed at assessing the main financial features of the project (e.g., costs, revenues, etc.).
• Assisting the agency with all relevant environmental assessment processes (e.g., NEPA, CEQA) through the entirety of the project.
• Supporting the agency with all relevant federal funding applications.
• Assisting the agency in replying to any stakeholder questions related to their work, and perform additional required analyses as needed.
• Conducting field investigations to inform design activities including a review of existing site conditions and associated documentation
• Conducting a value engineering workshop to identify design or construction efficiencies, if required.
• Preparing capital, operations, maintenance, and lifecycle cost estimates, as required.
• Providing leadership and support in developing and implementing strategies to secure third-party permits, including resolving potential utility conflicts and obtaining municipal approvals, including but not limited to associated development permits, in order to allow construction activities to proceed on schedule.
• Drafting the Project-Specific Output Specifications (PSOS), including, but not limited to, description of technical project requirements, design criteria, performance standards and output specifications, and quality control measures necessary to the design, construction, and operational responsibilities that may be assigned in a project agreement.
• Drafting handback requirements, including inspection and testing activities, to ensure “fit for purpose” condition at handback, and a list of assets to be transferred to other operating entities upon end of the concession period.
• Supporting the agency with property acquisition related activities, included providing input on a property acquisition strategy and associated risks and impacts to project delivery.

In addition:

• Projects involving a revenue and/or commercial development risk (e.g., toll road, managed lanes, transit-oriented developments, student housing, real estate, energy, airport concessions, etc.) may involve the development of traffic projections, land-use studies, and revenue projections. This focused work may be subcontracted to specialized firms.

Key Deliverables for pre-procurement phase

It is important to note that many of the Technical Advisor’s key deliverables are not solely defined by the requirements of developing a P3 business case and will typically be project-specific (i.e., a transportation project will likely have a different set of deliverables when compared to a social infrastructure project or an energy project).  Examples of Technical Advisor deliverables may include (but not be limited to):

• A schematic design (Class 3) and preliminary cost estimates (construction, operations, maintenance, lifecycle, as required) presented in elemental format and encompassing plans, elevations, sections, and palettes of materials to 30% design completion, which will facilitate the development of a +/- 15% cost estimate by the Independent Cost Consultant, if needed.
• Project needs assessment
• Engineering, technical or multi-disciplined studies
• Design briefs
• Conceptual designs
• Preliminary cost estimates
• Geotechnical investigation
• Topographic survey
• Roadway, land drainage and bridge designs (transportation specific)
• Data collection and review (e.g., record drawings, past reports, legal linework, aerial photos)
• Environmental screening and field studies to satisfy regulatory requirements (e.g., plant and wildlife inventories, fish habitat assessments, etc.)
• Remedial options report
• Regularly submitted reports (e.g., monthly, quarterly)
• A variety of reviews (e.g., cost, technical, design) for specific sites

Ultimately, the agency should ensure that it outlines all the key deliverables that it requires for assessing the feasibility of the project and developing procurement documents. In determining this list, the agency should reference previous and relevant procurement documents for similar projects or can consult with its internal engineers to ensure the list of required deliverables is complete.

Procurement activities

• Finalizing the Project-Specific Output Specifications (PSOS), including, but not limited to, description of technical project requirements, design criteria, performance standards and output specifications and quality control measures necessary to the design, construction and operational responsibilities that may be assigned in a project agreement.
• Finalizing the handback requirements, including inspection and testing activities, to ensure “fit for purpose” condition at handback, and a list of assets to be transferred to other operating entities upon end of the concession period.
• Assisting in the development of procurement strategy.
• Preparing technical components of all required procurement documentation including the RFQ, RFP, project agreement, amendments, the scoring matrix, and evaluation criteria.
• Providing expert engineering support during procurement, including the evaluation phase, and assist the agency in responding to bid inquiries and requests for information, participating as a technical resource to the agency during information sessions and commercially confidential meetings.
• Participating in the review and evaluation of respondent technical submissions, and providing technical input as required to the selection of the preferred proponent, final negotiations with the preferred Proponent, and development of the final project agreement.

Key deliverables for procurement phase

• Technical evaluation criteria for all procurement documents
• Technical elements for all procurement documents, including, but not limited to:
  • Project schedule and construction cost updates
  • Drawings and specifications (i.e., architectural, civil, landscape, interior, furnishing structural, mechanical, electrical, etc.)
  • LEED specifications
  • PSOS
  • Handback requirements

Post-procurement activities

Based upon the internal resources of the agency, the technical advisor may have the lengthiest list of supportive activities for the agency in the post-procurement phase of the project.

Design Development

• Providing ongoing support to agency during the design phase by reviewing the private partner’s design submissions for compliance with contract requirements including the PSOS and project agreement, as well as applicable standards, policies, and regulations.
• Reviewing and reporting on design progress and submissions from the private partner, including any required “early works” and key milestones identified in the project agreement (e.g., at 30%, 60%, 90% and 100% completion).
• Reviewing design submissions for conformance to environmental and site plan approval conditions and commitments, and other third-party permits, approvals, and agreements.
• Preparing of design compliance report, with recommendation and opinion as to the degree of compliance achieved by the private partner.
• Review the private partner’s drawings and other design submissions to identify areas of potential conflict where constructability issues, delays, claims, or cost overruns may arise.

Construction

• Monitoring, reviewing and reporting on construction activities and progress to ensure key milestone dates are achieved, and compliance with the project agreement, PSOS, project schedule, Occupational Health and Safety regulations, and all other applicable statutory requirements, agreements, and approvals.
• In instances of non-conformance (including innovation), maintaining a list of such items for the agency, assessing the project level and other impacts of non-compliance, and advising the agency as to impact and associated risk, and recommending appropriate corrective actions.
• Developing and maintaining a risk management system and risk register to identify, assess, and provide mitigation strategies throughout the implementation phase of the project.
• Reviewing and providing feedback to the agency on the private partner’s quality assurance / quality control and commissioning plans, identifying any gaps or potential issues.
• Reviewing scope change submissions from the private partner, and advise the agency on schedule and budget implications, and oversee implementation of any approved scope changes to ensure continued compliance with contractual requirements.
• Conducting random site inspections and audits of construction progress to ensure schedule conformance and compliance with PA and PSOS requirements, including oversight of any manufacturing or material fabrication operations.
• Coordinating, evaluating, and reporting on all scope change proposals from the private partner, advising agency of schedule and budget implications, and maintain a change log.
• Reviewing and analyzing construction claims and provide recommendations for resolution of the claims. Develop and maintain claims register reflecting status of claim, cost implications, recommendation of mitigation measures, and ultimate resolution.
• As part of the commissioning work, developing in conjunction with the private partner the operations and maintenance manual, detailing all maintenance obligations, inspection and reporting requirements, applicable standards, materials, processes, and schedule of activities which will govern the private partner’s operations and maintenance responsibilities throughout the concession and warranty periods.
• Ensuring effective information management and document control, reviewing and reporting on status of records of final plan drawings and as-builts.

Operations and Maintenance

• At the discretion of the agency, providing ongoing project management and support for all or a portion of the operations and maintenance period.[2]
• Acting as the primary source of engineering advice to the agency’s project team.
• Providing support related to internal and external communication with the public, stakeholders, agencies, and intergovernmental partners.
• Developing and implementing an initiative-taking approach to facilitate effective and timely issues management and dispute resolution.
• Supporting the agency’s project management activities, including budget and scheduling monitoring, organizational structure, and developing other processes and procedures to support the delivery of the project.

[1] 18R-97: Cost Estimate Classification System – AACE

[2] Jurisdictional scan identified instances where the Technical Advisor was retained for a period of one (1) year from the start of the O&M phase.

Role description

Although agencies will likely have an internal legal department, the management of the legal work for a P3 is typically beyond its capacity and experience. Legal considerations associated with P3s are more specialized than those coupled with traditional procurement models.

Legal advisory services will be expected to work collaboratively with the entire project team including the internal legal department and other departments, as well as other external advisors. Their role is to provide legal expertise and strategic advice required for the development and execution of the RFQ, RFP, and project agreement.

Activities

Pre-procurement activities

• Supporting the development and articulation of agency outcomes and goals for the project and the procurement.
• Assist in conducting a preliminary assessment of the strategic and legal issues related to the feasibility of the project as a P3, and the procurement approach, strategy, key milestones, and timelines to support identified project and procurement goals.
• Establishing a legal framework supporting the procurement strategy based on the agency’s existing procurement authorities, as well as county, state, and federal laws and regulations.
• Ensuring the procurement process fits within the agency’s contractual and procurement policies, including any relevant local, county, state or federal regulations, statutes, and policies.
• Identifying any legal, regulatory, and administrative risks, and supporting development of a risk matrix and allocation between the agency and private sector.
• Provide legal analysis and opinions concerning the agency’s statutory authority regarding P3 procurement methodology and solicitation/contract options.
• Assist in conducting a preliminary assessment of legal issues related to the feasibility of the project as a P3, as well as project timeline.
• Supporting the development of and reviewing solicitation documents (e.g., RFQ and RFP), including drafting of scopes of work, minimum qualifications, evaluation criteria, assisting internal staff in review of submissions, and interacting with the internal legal department on correspondences with private sector proponents, as required.
• Supporting the internal legal department with managing enquiries and developing responses to enquiries throughout the procurement process.
• Assist in developing policy papers relating to commercial procurement terms (e.g., supervening events, liquidated damages, management of utilities, etc.)
• Supporting the internal legal department with revisions to the RFP and project agreement.
• Providing strategic advisory on other specialized legal aspects of the projects including:
  • site-related issues (e.g., land acquisition / right-of-way, permitting, licenses, approvals, utilities, etc.,) if not covered by the technical advisor.
  • Taxation, including tax-exempt financing (this includes experience dealing with Section 103 and Sections 141 through 150 of the Internal Revenue Code), if not covered by the financial advisor.

Procurement Activities

• Reviewing RFQ, RFP and project agreement submissions to ensure procedural compliance, and support evaluation of bids.
• Leading the drafting the project agreement / P3 Contract, consistent with the agency’s project goals and contractual requirements, while making use of any market-accepted commercial procurement terms and/or forms (where these exist).
• Obtaining input from the project team, including from the financial and technical advisors, and leveraging experience of relevant P3 projects and/or contracts in other jurisdictions.
• Supporting the agency and the financial and technical advisors with developing and managing the electronic data room (the medium of formal exchange with the bidding teams, the repository that houses all the relevant project documents, the RFP and project agreement, and the means to allow for the submission of enquiries and posting of responses).
• Attending commercially confidential meetings, and preparing responses to bidder questions and addenda, as required.
• Leading development of the negotiation framework for the final project agreement.
• Negotiating with private sector proponents.
• Overseeing the formal legal procedures and documentation.
• Conducting due diligence during commercial and financial close, as well as supporting the adaption of the final project agreement.

Post-procurement / contract administration activities

• Supporting the development of a contract management system and contract operations manual.
• Assisting the financial and technical advisors in the development of institutional training program that creates a broader organizational awareness of proper contract administration practices. This includes (but may not be limited to):
  • Key aspects of the P3 project such as value-for-money, risk transfer, application of the payment mechanism, key performance indicators, changes and variations, and interpretation of the project agreement—notably regarding the scope of private partner’s and the agency’s post-construction responsibilities.
  • Periodic refresher trainings throughout the contract period.
• Advising on any variations to the project agreement or disputes that arise during the term of the contract, as required.
• Participate in and attend meetings, as necessary.