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 👇
The more cases I review from my advisor’s position, the more amazed I’m about people repeating the same mistakes over and over. One of the most astonishing, under-focused risks in infrastructure PPPs is land availability and land cost escalation. Too often, governments assume or implicitly transfer the risk of land value increases to the private concessionaire. Please, don’t. I come from Spain and one of my first babies were the R5 and R3 radial roads, at the time ACS’s concessions. And...
Recently, I assisted with horror to a meeting where I was told that the respondents of an RFP had no limit of pages in their offers. They asked my opinion. My answer was graphic. If I was the bid manager and I had a gun, I would use it. No limits. OMG. The last shoes that you want to wear are those of the bid managers in the RFP. Imagine yourself with that burden. No limits. And the risk of these guys awarding a several billions dollars contract by the weight of the paper brought in the...
The worst thing that can happen to a man, woman or chair is becoming civilized.Because then spending time in an office meeting people they don’t like and doing things that they hate under halogen lights feels acceptable.And using a ThinkPad with Windows. And preparing a PowerPoint. And eating the daily lunch special.And being afraid to ask for a raise. And when you point it out to him (to her, to it, to them) he tells you that “it is what it is,” that “what can you do,” that “life is like...