A guidebook on public-private partnership in infrastructure

D. INSTITUTIONAL DUE DILIGENCE 
Institutional 
due 
diligence is an important aspect of project development. This 
process determines the institutional aspects of a PPP project and how much 
capacity the government has to handle the project. The main elements in institutional 
due diligence include: 
• The conditions and requirements as required under the legal and 
regulatory frameworks and how the proposed project can meet these 
conditions and requirements. 
• Identifying the relevant government policies and assessing the likely 
implications of such policies for the proposed project. 
• As provided in various guidelines, laws and rules, which other government 
agencies and stakeholders need to be involved in the process and what 
roles they will be required to play in project development and approval. 
• Assessing the in-house capacity of the implementing agency and other 
relevant government agencies in undertaking various tasks related to 
project development and implementation. 

---

24 
A Guidebook on Public-Private Partnership in Infrastructure
 
 

• Specifying the role of the transaction advisor. 

The implementing agency can undertake an assessment of these aspects and 
determine how they may be reflected in project design and planning tasks. 
E. ESTABLISHMENT OF A PROJECT MANAGEMENT STRUCTURE 
A PPP project is usually more complex than similar projects in the public 
sector. It also requires contract management not just for the construction period but 
for the whole tenure of the contract, which can last many years. Public agencies and 
the concerned private parties may need to address many critical issues during the 
whole period of project development and procurement, and at any time during the 
entire contract or concession period. These issues may include determining the 
output/outcome specifications, structuring a viable project, preparing whole lifecycle 
costing and realistic payment mechanisms, structuring a bankable deal and crafting 
the broad terms of contract that are fair to all parties. 
It is important to have a project management structure in place from the 
beginning.
10
The management structure is entrusted with the responsibility of 
implementing the project and addressing all the above-mentioned critical issues. For 
a large project, a project management structure could involve:
• A Project Steering Committee 
• A Project Team headed by a Project Director/Manager 
• Project sub-teams (as necessary) 
The Project Steering Committee provides overall direction and general 
guidance and has the ultimate accountability in respect of a project. The Steering 
Committee should consist of key decision makers/senior managers (at the level of 
permanent secretaries, director generals/chief executives of agencies) from the 
concerned ministries and departments, and from the implementing agency.
The Project Team consists of a Project Director/Manager and in-house staff 
supported by specialist external advisors on technical, financial and legal aspects, as 
considered necessary. A stable and dedicated project team is vital for structuring 
and implementing a successful project. While the composition of the team may 
change to meet the specific expertise needs during any phase of the project cycle, 
the core staff members of the team should be retained throughout the project 
development, assessment and implementation stages.
The Project Director/Manager is responsible for the delivery of the project and 
for the management of the project team and sub-teams. The Director/Manager 
should have the qualifications required for handling the project and should act on a 
full-time basis due to the key role of his position. The specialist expertise required 
within the team will vary from project to project depending on its nature. Subject to 
availability, they may be drawn partly from within the government and partly from the 
external consultants. 
10.
Discussion in this section draws from National Treasury, PPP Unit, South Africa, “Public Private Partnership 
Manual” (undated), accessed from http://www.ppp.gov.za/Documents/ Manual/ Main%20Intro+Contents.pdf; 
and other sources. 

---

A Guidebook on Public-Private Partnership in Infrastructure 
25 
 
The main responsibilities of the project team may include the following: 
• Overseeing project development activities (undertaken in-house and by 
the transaction advisor); 
• Overseeing project development budget and expenditure; 
• Serving as an information exchange platform with other government 
departments and agencies and the public when required; 
• Approval of the deliverables of the transaction advisor; and 
• Reviewing and 
endorsement of the documentation for submission to the 
government and approving authorities.
Formation of project sub-teams may be considered to deal with specific 
issues such as financing, contract agreement development and negotiation, public 
consultation and social marketing, resettlement and rehabilitation and verification of 
engineering drawings and designs, etc. 
Competencies of the Project Team 
The public officials involved in the PPP project teams need to have 
competencies to structure and evaluate a project considering its financial, legal and 
technical aspects. The five broad areas of expertise that they need to have are 
project planning, financial matters, legal, technical, and project management.
Generally, not all types of expertise needed in these five areas may be 
available within the implementing agency. The transaction advisor of course 
complements the necessary expertise. But the project team should have a general 
level of expertise in all such areas in order to be able to oversee, guide and endorse 
the work of the transaction advisor. 
If the project team has to remain responsible for the post-implementation 
management activities as well, it also needs to have project management expertise 
in the following areas: 
• Contract 
management; 
• Monitoring the quality of service and contractor compliance; 
• Performance monitoring; and 
• Partnership 
relationship management 
Elaborations on these points are provided in Chapter 6.