High level discussions - First part
Palais des Nations, Geneva, 6 December 2012
At this meeting, a number of internationally-used PPP models and selected case studies of public buildings renovated through the PPP approach were presented by representatives of governments and the private sector, highlighting the advantages and some of the challenges faced in procuring these projects as a PPP. The case studies presented included: the UK Treasury, the Ministries of Defence of France and the UK, and the Ministry of Finance in the Netherlands. These case studies were selected on the basis of the similarities with key features of the Palais des Nations, in terms of size, use and architectural heritage.
At this meeting, the Team of Specialists on PPPs provided a number of preliminary recommendations to United Nations Office at Geneva (UNOG) and member States on the premise that the PPP model may be the more efficient way to renovate the Palais des Nations. The reasons for this position were as follows:
• Value for Money and Efficiency;
• Flexibility and likelihood of achieving core objectives of the Strategic Heritage Plan;
• Certainty of outcomes: the ability to ensure that the private partner provides a high quality product on time and within budget;
• Innovation in a most sustainable way possible; and
• A guaranteed high-level maintenance and upkeep of the building.
The Team of Specialists pointed out that not all PPPs led to such desirable outcomes, and that the objective going forward was to secure the highest value for money during the life cycle of the project, bearing in mind the critical importance of keeping the aesthetic appearance of the Palais des Nations intact. At the same time, ensuring that the contract was suitably flexible to ensure that technological changes can be easily incorporated into the outcomes specified in the contract. To ensure this desirable outcome, there was a need to emphasise, in particular, the following five aspects:
• Models: the model selected needed to provide flexibility, the ability to obtain external finance, and contractual compliance to guarantee performance;
• Financing: the main concern of member States was that the amount of money being earmarked for the refurbishment of the Palais des Nations was excessive and that there was a high probability that there would be cost overruns and delays, as evidenced in similar scale traditional procurement projects. PPP demonstrated that the refurbishment of the Palais des Nations can be done in a cost effective way with contractual commitments and in-built mechanisms that ensured that the project was delivered on time and within the budget;
• Procurement: the interactive tender process was recommended as this led to: lower bid cost; reduced bid time; higher quality outcomes, and the selection of the best possible partner;
• Implementation: it was essential that business continuity be maintained throughout the renovation process, and that the procurement process be structured to present the UNOG outcomes in terms of output specifications; and
• Alignment of interests: a key underlying critical success factor in most successful alternative finance projects over the last thirty years has been a balanced allocation of risk and reward and a resulting proper alignment of interests.
The Team of Specialists on PPPs reiterated UNECE readiness to continue providing independent neutral advice to UNOG and member States, and it was proposed that the comments that were made during the session and the issues identified that warranted further in-depth discussion be addressed at the session of the Team of Specialists on PPPs on 5 February 2013. The Team of Specialists on PPPs confirmed its willingness to undertake a comprehensive pre-feasibility study of using the PPP approach as an option to renovate the Palais des Nations. This study will be funded by the Toyo University of Japan.