The delivery of Public-Private=Partnership (PPP) projects involves creating a Project Company which will usually be in the form of a Special Purpose Vehicle (SPV) to develop and manage the project. The SPV will sign the different agreements for delivering the PPP project including those for the engineering, procurement, and construction as well as operation and maintenance scope of work. In addition, the SPV will sign the PPP agreement with the public partner or government authority.
Those agreements will allocate responsibilities, obligations, entitlements, and risks among the parties to the contract. Similar to any other type of capital construction project, the Project Company needs to ensure that all business processes needed to successfully achieve the PPP project objectives are managed, monitored, evaluated, and reported on. Those will include the business processes for managing the project’s scope, schedule, cost, revenue, quality, communications, documents, health, safety and environment, risk, procurement, contracts, and handover to operations. Achieving this requirement, the Project Company needs to have its own digital platform to manage, monitor, evaluate and report the performance of those business processes.
A Project Management Information System (PMIS) like PMWeb will enable the Project Company to launch a 100% web-enabled digital platform to facilitate collaboration needed to manage the business processes required for the PPP project contract management stage. For example, the PMIS will be used to manage all downstream and upstream contracts of the PPP project. The upstream contract will be the revenue or income contract with the public partner or government authority while the downstream contracts will be the contracts with the EPC contractor or Design-Build Contractor, O&M company, insurance contracts, and other types of cost contracts needed to execute the PPP project.
To ensure that the PPP project financial performance reporting will be aligned with the Project Company financial reporting requirements, great care should be given to the cost accounts or cost breakdown structure (CBS) needed to consolidate and aggregate the project’s cost and revenue data. The cost breakdown structure (CBS) should cater to all the PPP project stages before it is handed back to the public partner or government authority.
PMWeb cost account module allows creating up to 16 levels of cost account levels with 10 digits code per level thus enabling matching any financial reporting requirements. In addition, it will allow the Project Company to determine the level of financial control to be exerted on those contracts.
The next step is to capture the PPP project baseline budget including costs associated with downstream contracts and revenue for the upstream contract. Although PMWeb allows creating the project budget from the approved cost estimate, nevertheless, it is assumed that the final approved budget will be given to the project team. The budget will also include the project’s direct and indirect cost as well as allowances for project contingency, management reserve, targeted profit, and any other cost or revenue source that were not captured in the contracts. This will ensure having a zero-balanced budget.
PMWeb budget module allows using multi-currency for capturing the budgeted cost as well as revenue line items. In addition, it allows providing the projected spending and earning plans for each budget line item. The multi-currency option is a must requirement for healthcare and other types of PPP projects where the needed equipment needs to be procured from the international markets.
To ensure that funding is available for the approved project budget, the details of all funding sources including any funding adjustments and funding authorized for finance the project will be captured in PMWeb. This will enable allocating the number of funds authorized to finance each budget line item.
PMWeb commitment module will be used to capture all downstream contract agreements. Those could include the agreements for design, construction, major equipment procurement, maintenance and operation, insurances among others. The level of detail of those contracts needs at a minimum to be aligned with the cost breakdown structure (CBS) with the option to be more detailed if needed. Each contract agreement will include the adjustments for advance payment, retention, taxes among others. Similar to the budget module, PMWeb allows assigning the funding source that will be associated with financing each line item in the downstream contract. In addition, it allows defining the anticipated invoicing projection for each line item.
On the other hand, the PMWeb contract module will be used to capture the details of the upstream contract with the public partner or government authority. The level of detail of this agreement should be aligned with the PPP services performance requirement that will be defined by a list of Key Performance Indicators (KPI). PMWeb contract module will be used to capture the details of those items.
It is highly recommended to assign the relevant project schedule activity for each line item of the downstream and upstream contracts as this will enable having a better forecast and analysis of inflow and outflow cash. This is a must requirement for calculating the PPP project’s Net Present Value (NPV) and Internal Rate of Return (IRR). In addition, this will enable linking the percent complete of each downstream and upstream contract with the relevant project schedule activity physical percent complete. PMWeb enables importing the PPP project integrated project schedule which is usually created in Primavera P6. In addition, PMWeb allows importing the baseline schedule and all subsequent interim updates and revisions.
Managing changes to the downstream contracts is of great importance as those could have an impact on the anticipated Net Present Value (NPV) and Internal Rate of Return (IRR) of the PPP project. Usually, there will be three stages of a downstream contract change. The first stage is having a potential change that could be raised by one of the entities who have a downstream contract. The potential change will be reviewed by the Project Company team assigned to manage the PPP contracts. In case it is approved, a directive change order will be generated. Rejected potential changes will be labeled as claims that will be addressed under the dispute resolution process.
A directive change order could be issued directly by the Project Company or generated from a potential change. The directive change order will involve contract adjustment amount and time extension duration requested by the issuer and the adjusted amount and duration agreed with the Project Company. Nevertheless, before a directive change order is approved, a budget adjustment or transfer request needs to be raised, reviewed, and approved to ensure the availability of funds for the directive change order.
For changes that do not entitle the Project Company to additional compensation from the public partner or government authority, funds for those changes need to be allocated by transferring funds from the project contingency, management reserve, or any other cost center allocated to the downstream contract.
For changes that entitle the Project Company to additional compensation from the public partner or government authority, PMWeb budget request will be used for making this addition or omission depending on the change order scope of work.
To ensure alignment of approved directive change orders and their associated budget requests, the PMWeb change request or change event module will be used to capture the budget request details and the directive change order or orders that are associated with the budget request. This will ensure that all changes to the downstream contracts are aligned with changes to the baseline budget.
For changes in the upstream contract agreement, the PMWeb contract change order module will be used to capture the details of those changes. Those will include cost and schedule time extension changes. PMWeb also allows linking the downstream change orders and budget requests with the contract change order transaction.
PMWeb will be also used to capture all invoices for interim progress certificates issued on each downstream contract. PMWeb allows adjusting awarded contracts with an approved change order to enable issuing invoices against them. The percent complete for each line item can be added manually or automatically applied from the imported updated project schedule.
For other actual expenses incurred by the Project Company that are not related to a specific downstream contract, PMWeb miscellaneous invoices module will be used to capture those expenses which are also known as non-commitment expenses or actual cost. Similar to all other cost or revenue-related business processes, the cost account or cost breakdown structure (CBS) associated with the reported expense needs to be added as well as the financial period of when this expense was encountered.
Expenses associated with the Project Company’s own team members or resources associated with managing the PPP project will be captured using the PMWeb timesheet module. PMWeb allows defining different pay types for each resource category to allow charging the correct rate for regular, weekend, holiday, and other types of working hours’ categories. Similar to miscellaneous invoices, those expenses are labeled as non-commitment expenses or actual costs.
For the upstream contract, the PMWeb requisition module will be used to issue the contract income invoices to the public partner or government authority. Similar to the downstream contracts, all approved changes to the upstream contracts can be automatically added to enable the Project Company to invoice against those changes.
The actual payments made against approved interim progress invoices for downstream contracts as well as approved miscellaneous invoices will be captured in the PMWeb Actual Payments module. On the other hand, all actual payments received against the approved interim requisitions for the upstream contract will be captured in the PMWeb Actual Received module.
For all transactions associated with the above business processes, PMWeb allows attaching all supportive documents to each transaction. Those could include drawings, specifications, invoices, shipping documents, insurance policies, guarantees, factory tests, delivery notes, pictures among others. In addition, links to other PMWeb transactions, whether those for contract management processes or other types of business processes can be also added.
It is highly recommended that all supportive documents, regardless of their type or source, get uploaded and stored on the PMWeb document management repository. PMWeb allows creating folders and subfolders to match the physical filing structure used to store hard copies of those documents.
Access permission rights can be set to each folder or subfolder to restrict access to those folders and actions that can be done for documents stored in each folder or subfolder. In addition, subscriptions can be added to those folders and subfolders to issue automatic online and/or email notifications when new documents or versions of existing documents are uploaded, downloaded, or deleted. Of course, PMWeb allows searching for those documents include the content of searchable content.
Since the submission, review, and approval of the different contract business processes needs to be done in a transparent, accountable, and auditable format, PMWeb allows assigning workflow for each business process. The workflow will map the submit, review and approve tasks, role or roles assigned to each task, task duration, task type, actions available for the task, what will happen if a document is returned for incorporating comments, and resubmission after incorporating comments among others. In addition, PMWeb allows the setting condition to the workflow tasks to enforce the approval authority levels set by the Project Company.
The cost data captured in the different contract management business processes detailed above will be automatically captured and stored in the PMWeb cost ledger. This cost data will then become available to be reported on using the PMWeb cost worksheet module where there no limits to the number of cost worksheet layouts that can be created using the PMWeb define cost worksheet module. Those cost worksheets allow their reader to drill down to the business process transaction that was used to capture the displayed data.
Many of the Project Company stakeholders might not need to access PMWeb to have insight into the PPP project financial information. They might need output forms, reports, and/or dashboards that display the needed information in the format required by them as well as enable them to formally communicate those forms by printing them and get them wet-signed or saved as a PDF file format so it can be digitally signed.
For the business process detailed above, PMWeb comes ready with the output form or forms for each transaction. For example, the form shown below details the output form for the transaction associated with the interim progress invoice for a downstream contract. Of course, the Project Company can create their own output forms to match their own reporting and branding requirements.
In addition, PMWeb comes ready with the reports that provide a register or log of the different transactions for each business process. Some of those reports might combine the data from different interrelated business processes to provide better insight.
For example, the PMWeb sample contracts log report is used to list all downstream contracts showing the details of each contract as well as all change orders, pending and approved interim progress invoices issued to date, and actual amounts of payment made against the approved progress invoices. The report can be also designed to allow the report reader to drill down to each specific transaction listed in the report. Of course, the Project Company can produce their own formatted and branded reports to display the needed information in the required format.
A consolidated financial report can be created to summarize the cost data of all contract business processes in the required format. For example, the report can be designed to consolidate cost data by the cost breakdown structure (CBS) levels. For each level, the report will show the original budget, budget adjustments, revised commitments, awarded downstream contracts, approved change orders, revised contract value, pending changed orders, potential change orders, projected downstream contract value, interim invoices to date, non-contract invoices and cost, total actual cost and actual amount paid.
Other financial reports can be also created incorporating the earned value management (EVM) method to monitor, evaluate and report the project’s financial performance status. The report could include the financial performance trend for the past periods. Again, all those reports can be designed in any desired form or format to report the project’s financial performance as needed by the Project Company stakeholders.
Reports can be also created to report on the review and approval workflow tasks assigned to each business process. The report will display delayed, due, and yet to be due workflow tasks with the assigned role or individual to the task. This will ensure the management of the Project Company that all business processes needed to manage the PPP project including those for contract management are done in a timely manner and without delay.
The contract management data can be combined with data from other project management business processes to provide executives at the Project Company with a real-time single version of the truth performance status of the PPP project. Those could include the data from the project management business processes for scope, schedule, communication, quality, health, safety and environment, risk, procurement, sustainable development, zero-emission actions, issues among others.
The project progress report reader can drill down to get more details on any reported performance metric whether it was for contract management or any other business process. This is doable at the data sources for all other business processes will be ably captured in the PMWeb platform similar to the contract management business processes. For example, when selecting the key performance indicator (KPI) for Lost Time Injury Frequency Rate (LTIFR), the HSE performance dashboard will be displayed.
The HSE performance dashboard reader can even drill down further to have more details on the safety incidents and accidents that occurred on the project’s construction site. Not only every safety precaution effort should be done to prevent accidents, but projects with accidents will have an impact on the insurance renewal fee as well as safety incidents might entail applying penalties by the public partner or government authority on the Project Company for failing to maintain safe construction site.
If the reader of the safety incidents analysis by body report wants even to have specific details on the safety incident that caused the reported lost-time injury, the reader can drill down to the safety incidents register where he/she can drill down further to the specific safety incident transaction were the details of the accident were captured. Usually, pictures were taken of the accident incident, police report, hospital admission report, and other supportive documents will be attached to the incident will be available to be viewed by the reader.
The same approach detailed for the safety incident is also applicable to all other business processes managed in PMWeb including those for requests for information, non-compliance reports, work inspection requests, daily reports, technical submittals, risks, issues, permits to work, meeting minutes, safety violations, site work instructions, complaints raised by the public partner or government authority among many others.
