Arun Lakhani on Minimizing Risks in PPP
Big projects follow big challenges and big challenges follow big risks. Though, effective planning and proper implementation can reduce risk and can lead to the maximum ROI. According to Economist Kent Buse, the biggest risk in PPP is misalignment of partnership missions and objectives with government policies.
Mr Arun Lakhani, MD Vishwaraj Infrastructure Limited, one of the pioneers in India in the field of Public-Private-Partnerships, says most of the partners want quick results which just isn't fair in a PP model. There are n numbers of factors that need to be considered while working on such projects like environmental sustainability, execution & implementation and maintaining timelines; where government agendas usually focus on improving systemic issues and delivery mechanisms.
We discussed a few insights with Mr. Lakhani, gained from extensive work in PPP projects such as Nagpur 24x7 water supply and Warora- Chandrapur - Ballarpur Road Project. Let's take a look at his philosophy for sustaining and implementing PPP projects.
1) Pre-execution Stage -
a) Set clear and specific goals- One has to be very specific about the project they are going to execute. First of all, you have to identify whether PPP is appropriate for this project or not. There has to be mature understanding between partner's expectations and government priorities. As two separate entities are collaborating for a common goal it is important that trust is built right at the start and there is a mutual understanding of expectations, and transparent methods of accountability.
b) Identify right partners- There needs to be a process to set up the right alliance. Stakeholders need to ask questions such as does the partner have the capability to execute the plan? What values your partner can add? A due diligence process and selection criteria is imperative for the future success of the project.
c) Good governance- Create a board of management with equal participation of both the parties. Also, invite some experts as mentors that aren't directly involved with any party in the project. Clarify the roles and responsibilities of everyone for efficient execution. It will help in reducing duplication of work and identification of benefits, risks, costs and duties of each partner. Healthy communication always adds more points.
2) Execution Stage -
a) Standard Operating Procedures – Developing and executing standard operating procedures and processes for delivery is imperative for the smooth execution of any project.
Each department needs to be aware of working methodology, timelines and deliverables. Working in an efficient manner with open and reliable communication channel goes a long way in hassle free execution.. Proper hierarchy is important in all types of organization irrespective of the project size and domain. How could PPP project be an exception for that? Above all, do not forget to ensure the smooth access to information, whenever needed.
b) Monitoring and execution - Performance evaluation must be a continuous activity here. Internal and external performance analysis would be highly profitable and will lead to great results. Decision making is always a crucial part and maintaining balance of all stakeholders in this process is important. Nothing is like availability of experts on time. The secret of success lies within it.
3) Sustainability and Exit -
a) Sustainability - One must ensure the support from government agencies as well as corporates. Incorporate all levels of stakeholders in program implementation and delivery. Improve the easy access of delivery channels for best outputs.
b) Exit - Keeping the terms crystal clear from the day one is very important for maintaining healthy relationships. There must be simple and clear exit strategy for all the parties.
"Public private partnership projects aremuch more important than any normal profit making organization, though their work is going to affect public life and ultimately on the country's growth. It must handle with extra care." Arun Lakhani