Advisor P3 Capabilities

Role description

Financial advisors play a primary role in:

  • Assessing the potential value of a P3 delivery model, including conducting a thorough assessment of delivery options in way that compares similar values (e.g., risk analysis, value-for-Money Analysis, etc.)
  • Developing the P3 business case and providing follow-up advice and analysis once the business case is submitted.
  • Conducting qualitative and quantitative analyses to assist agencies in selecting the best strategies for financing the project.
  • Supporting procurement activities (e.g., preparation of bid documents, financial evaluation of bid submissions, negotiation with proponents, etc.)

Financial advisors are expected to work directly with agency staff, as well as other external advisors, including legal and technical advisors. They should remain involved during the transition of the project from financial close to construction (and in some instances operations/maintenance) to support the agency with contract administration, if needed.

Key activities and responsibilities

  • All stages of business case development, including:
    • Preparing and conducting marketing soundings to assess interest in the project and identify any issues.
    • Assessing procurement delivery options (e.g., design-build, design-build-finance, design-build-finance-maintain, pre-development agreements, etc.) and qualitative characteristics
    • Developing a value-for-money analysis, drawing comparisons from the public sector (e.g., design-build) vs. a shadow bid (e.g., P3, Design-Build-Finance-Maintain)
    • Facilitating and developing a risk workshop and risk matrix
    • Providing advice on the appropriate risk allocation and mitigation between the public and private sectors for the traditional and P3 procurement models under consideration
    • Developing financial models, unlocked and flexible enough to conduct sensitivity analysis, accompanied by a description of modeling assumptions and methodologies, informed by inputs and analyses from technical advisors
    • Completing an analysis of project funding and affordability
    • Developing a procurement strategy and implementation plan, including strategic alignment, transaction structure, procurement process, and project governance
  • 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.
  • Structuring the financial aspects of the P3 documentation, including RFQ, RFP, and project agreement (PA).
  • Evaluating and negotiating the financing aspects of P3 bids.
  • Overseeing the financial close, including supporting final negotiations with the Preferred Proponent and lenders and supporting credit spread refreshes, if required.

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:

  • General project management services through project development.
  • Developing various project designs, which are essential to inform cost estimates.
  • Preparing construction, operation, maintenance and lifecycle costs and assumptions.
  • Providing technical input into the P3 business case
  • Structuring the technical aspects of the procurement documentation.

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.

Key activities and responsibilities

  • Preparing bridging documents for the P3 projects, such as but not limited to:
    • A schematic or Class 3 level design.
    • A cost report (including cost estimates for construction, operations, maintenance, and lifecycle, if needed).
    • Developing Project-Specification Output Specification (PSOS) for the P3 contract.
    • Developing plans, project constraints, reference materials, and applicable quality requirements (of funding or other regulatory agencies).
  • Supporting the financial advisor in the development of the risk workshop and risk matrix, identifying project-specific risks, impacts, and mitigation strategies, and undertaking risk analysis for the P3 contract.
  • Structuring the technical aspects of the P3 documentation, including RFQ, RFP and PA.
  • Evaluating and negotiating the technical aspects of P3 bids.
  • Supporting design reviews.
  • Providing construction supervision.

Role description

Although agencies will likely have an internal procurement and/or legal department, the management of both 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 PA.

Key activities and responsibilities

  • Providing intelligence on the general legislative background (for a new P3 program)
  • Supporting solicitation documents (i.e., RFQ and RFP) and drafting the P3 contract, making use of standard forms where these exist, and the experience of P3 contracts in other countries.
  • Providing advice on other specialized legal aspects of the project such as site-related issues, supervening events, financing and tax (if not covered by the financial adviser) in the form of policy papers.
  • Negotiating with Proponents in a P3 setting.
  • Managing the formal legal procedures and documentation in a P3 setting.
  • Conducting due diligence during the financial close.
  • Supporting the adaptation of P3 contract.

text here