Engaging Stakeholders for Successful PPPs

Many Stakeholders – Ignore at your Peril

Public-Private Partnerships (PPPs) practitioners know firsthand that there are many stakeholders who are involved in projects who should be engaged with.??By definition, the word partnership indicates the involvement of different stakeholders who in addition to stakeholders are involved throughout the lifetime of a project.

In a PPP it is difficult and often confusing to define stakeholders.??They can include the formal partners in a PPP agreement, but also include project sponsors, team members, customers / users, experts and outside parties such as NGOs and civil society organizations which have different roles to play, are impacted in different ways, and which often have divergent expectations.??PPP project managers would be foolish to ignore the diverse group of stakeholders, as projects do not exist in a vacuum.??

Strategic Engagement

Stakeholders need to be involved strategically. A comprehensive and well executed stakeholder strategic management (engagement) plan is beneficial to all.??A well-designed stakeholder plan will increase project insights, set realistic expectations of stakeholders, it will define roles, increase productive engagement of interest groups who are well informed,??and reduce risk of conflict by keeping stakeholders focused on the same goals.??Conflict risk mitigation is a particularly important focus of stakeholder engagement because risk sharing - an underlying best practice in PPPs that needs to be addressed by the party most suited to mitigating risks as they emerge – is a fundamental best practice.

For “formal” PPP contractual project partners, i.e. the public and private sector project proponents and implementers, it is critical that they reach an understanding on who is responsible for mitigating the many aspects of stakeholder risks, i.e. political stakeholders should be managed by the public sector, while service delivery to user stakeholders should be managed by the private sector concessionaire.

Need for a Stakeholder Plan

Development of a stakeholder plan involves the identification and prioritization of stakeholders (not to be confused with project partners) and the documentation of their roles and their impact (influence). Once stakeholders are identified an effective and inclusive communication plan should be developed that is transparent, and increases clear messaging.??If stakeholder engagement breaks down, PPP projects can face serious challenges that can result in project delays, false messaging, escalating cost and litigation by disparate parties that feel that they were ignored and sidelined. A prime example of the impacts of cascading stakeholder management breakdown is the Purple Line project in Maryland, USA which has resulted in costly delays, discord between partners and stakeholders, and essentially the collapse of the PPP agreement and a costly and time-consuming recalibration of the project which is currently underway (see -??https://www.dhirubhai.net/pulse/purple-line-ppp-project-cautionary-tale-missed-david-baxter/).

Stakeholder Engagement is a Necessity

There is an increasing awareness that effective stakeholder engagement should not be seen just as a “voluntary activity,” but as a necessary best practice.??This is particularly true in the face of increasing climate impacts that are having direct catastrophic impacts on PPP project sponsors, implementers, and end users who are facing overlapping and increasingly common risks that are impacting their projects.??It is no longer possible to stove-pipe impacts any more.??A cascading effect of cumulative impacts is increasingly occurring that impact all stakeholders who are inseparable partners of project ecosystems.

New Approaches to Stakeholder Engagements

This growing awareness of interdependability is leading to the evolution of new pragmatic approaches to PPPs such as People-First-PPP which are focused on PPPs offering not just “Value for Money” but also “Value for People” and “Value for the Future.”??This approach calls for the planning and implementation of sustainable and resilient PPP project which address stakeholder (end user) needs; which address the Sustainable Development Goals (SDGs); and which are adaptive to the changing world that we live in (see -?https://www.dhirubhai.net/pulse/unece-ppp-center-excellence-releases-case-studies-people-david-baxter/?and?https://www.dhirubhai.net/pulse/unece-new-generation-people-first-ppps-sdgs-david-baxter/).

A more recent initiative that includes stakeholder engagement as a critical element of PPPs, is the Global Center in Adaptation’s (GCA) initiative to promote Climate Resilient PPPs.??During the week of September, the 12th, the Global Center on Adaptation (GCA) released its Climate-Resilient Infrastructure Officer Handbook.??This handbook is a knowledge module on Public-Private Partnerships for Climate-Resilient Infrastructure and was developed in partnership with the World Bank, the Asian Development Bank, the African Development Bank, the Dutch Ministry of Infrastructure and Water Management (Rijkswaterstaat), the European Bank of Reconstruction and Development, the Global Infrastructure Facility, the Inter-American Development Bank, the Islamic Development Bank,??PPIAF and UNOPS.?

The importance of stakeholder engagement is emphasized throughout the handbook.??During the handbook’s launch week, I was asked to be the moderator of presentions by practitioners during the PPP concurrent masterclass that was held during the launch (see -?https://www.dhirubhai.net/pulse/global-center-adaptation-launches-climate-resilient-david-baxter/?and?https://gca.org/reports/climate-resilient-infrastructure-officer-handbook/). Additionally. I was asked to participate in two webinar sessions where I addressed the need to “Engage Stakeholders in PPPs.”

Practical Stakeholder Engagement

In my presentation I referenced the new GCA handbook’s ongoing references to the importance of stakeholder engagement which is mentioned over 70 times in the new handbook.??Highlighted benefits of engaging stakeholder partnerships in climate resilient PPPs include:?

• the sharing of more detailed information and innovation between all parties
• improved support for the prioritization of resilience options
• increased understanding whether project deliver value for society
• identification and optimization of co-benefits, and
• improved risk mitigation by engaging a range of stakeholders to better understand inter-dependencies, commonalities and trade-offs of a project

The manual also stresses that?there is a fine balance between managing expectations of all parties when it comes to climate resilient PPP projects and that stakeholders have specific, cumulative and collaborative roles.??The table below highlights these roles –?

The manual also stresses the practical value of implementing stakeholder engagement during the project identification, project appraisal, tender and award, and contract management phases.?The manual also recommends that stakeholder engagement plans (SEPs) that cover?project identification, project appraisal, tender and award, and contract management are drafted and adopted.?Finally, Stakeholder Communication Plans that are strategic; which combat false rumors and unrealistic expectations; which bring information to the forefront and properly evaluate and transmit it all to all stakeholders; and which carefully coordinated and conducted with transparency will improve meaningful stakeholder communication.

Conclusion

Stakeholder engagement should not be seen as a “necessary evil” but as an essential best practice that contributes to PPP project risk mitigation, and which also encourages the sharing of information that can make projects more resilient and sustainable. Stakeholders are the first to be impacted by projects??- why would we ignore their valuable insights that can enhance project implementation?

At the ISRC we are focused more than ever on PPP delivery that engages stakeholders collaboratively and cumulatively, particularly after the recent spate of hurricanes in the Gulf Region that have pointed to the need to engage stakeholders in a more meaningful manner if impacted PPP projects are to salvaged.??There is strength in numbers – so find your stakeholder allies (and dissenters) to share concerns and ideas. Feel free to reach out to us at -?https://isrc-ppp.org/?should you have any questions.