I talk about Personal Growth, Management, Infrastructure and More | 👇JOIN +2k readers 👇
The $1 Billion Lesson in Arrogance (that taxpayers paid for)
|
Let me tell you a bedtime story. It’s about a classic PPP project. ​ However, it’s a bedtime story for the nightmares. ​ It starts in Australia. Sunshine. Kangaroos. And a bunch of brilliant bureaucrats who thought they could outsmart the laws of project finance. ​ The name? Airport Link Tunnel in Brisbane. ​ You see, they had a vision. A tunnel linking Brisbane Airport with the city. As I said… A classic PPP. ​ Except it wasn't. ​ They forecasted 135,000 vehicles per day. ​ ​ They gave a 45-year concession. ​ ​ They put most of the risk on the private sector. Well… ​ The theory of risk transfer works perfectly… until the private sector runs straight into bankruptcy court. ​ By 2013, BrisConnections, the private consortium behind it, was dead. And the cherry on top? La guinda, as we say in Spanish? ​ Meanwhile, the government shrugged: ​ ​ Yes… Yes… Exactly. ​ We keep saying PPPs are about risk transfer. ​ This wasn’t a tunnel. ​ Moral of the story? ​ Sweet dreams, my friends. ​ By the way… Want more brutal truths about PPPs, minus the buzzwords?
​
​ PD 1: If you liked this email, don't keep it in secret and forward it to a friend. They will thank you enormously one day. PD 2: If somebody has sent you this email and you want to receive emails like this yourself, visit vicentevalencia.com PD 3: If you want unsubscribe, click the link below. ​ ​ |
Vicente Valencia
I talk about Personal Growth, Management, Infrastructure and More | 👇JOIN +2k readers 👇
Most PPP evaluations are designed by committees obsessed with checking boxes. Not with selecting the best partner. The result? Overcomplicated scoring matrices Subjective criteria disguised as science Endless “clarification” rounds A perfect environment for disputes… Sorry. A PPP evaluation is not an academic exercise. It’s a decision. And decisions must be fast, clear, defensible. So… how do you design the perfect evaluation? The 3-Step PPP Evaluation That Actually Works Step 1 — Choose only...
When you spend enough time in Europe, you usually end dealing with a bank. It’s as lovely as a tooth pain. The EU is the bureaucracy hell of the world. A place that tells you even how the cap of a bottle of coke must be… and of course, they did not think about any market testing or user case. What for? Well… Banks. You can’t live without them, but you hate them. Mastodonts with benefits. Shield by government. Too much money invested in lobbies… or finding imaginative solution to hide bribes...
Many people challenge my preferred RFP strategy for PPPs: “Pre-qualify strong consortia, set a minimum technical pass/fail, and award to the best NPV bidder? They’ll just bid low and renegotiate later!” I get it. That tactic has been abused in Latin America for years. But we need to ask: Why has +20% (often +50%, +100%, +200%) become almost inevitable there? Let’s look at the real causes: Why PPP prices skyrocket after award 1) Renegotiation is systemic. In transport PPPs, up to 78% of...