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Mikko AJ Ramstedt Senior Project Adviser Financial Partnerships Unit

Political context and PPP risk management Training event on risk management in PPP projects 26 May 2008 Twinning Project CZ/2005/IB/FI/04. Mikko AJ Ramstedt Senior Project Adviser Financial Partnerships Unit. Introduction. Background Managing risk in a political context

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Mikko AJ Ramstedt Senior Project Adviser Financial Partnerships Unit

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  1. Political context and PPP risk managementTraining event on risk management in PPP projects26 May 2008 Twinning Project CZ/2005/IB/FI/04 Mikko AJ Ramstedt Senior Project Adviser Financial Partnerships Unit

  2. Introduction • Background • Managing risk in a political context • Dealing with unrealistic time pressure • Creating contingencies for public sector risk

  3. Background • QUESTION: • What risk are normally public sector risks?

  4. Background - Political Risks • Issues quite often ‘Show-Stoppers’ in nature • Difficult to anticipate and manage • Increase with the number of authorities involved

  5. Managing risk in political environment 1 • Consultative project development • Building clear benefits / outcomes case • Active management of controversial elements • Creating clearly defined and well understood legal parameters should be agreed before contract close • Risk register and management strategy should be agreed before contract close

  6. Managing risk in political environment 2 • Establishing clear sign off procedures • Senior level ownership of risks • Regular & structured liaison at political level • Agreed format & reporting cycles • Awareness of key risks • Continuous project steering arrangements • Proactive risk management

  7. Dealing with un-realistic time pressure 1 Quality Price Time

  8. Dealing with un-realistic time pressures 2 • 30 year contract – need to get it right! • Clear project timetable & critical path • Management role of Project Board / Steering Group

  9. Creating contingencies for public sector risk 1 • Risks = time & money • Planning to fail – optimism bias! • Shared timetable • Sensitivities - Identify critical path and cost drivers • Realism over costs

  10. Creating contingencies for public sector risk 2 Mitigation: • Take preventative action! • Don’t start procurement too early • Define & agree processes with public stakeholders • Prepare an affordability management strategy

  11. Summary • Public sector risks need to be clearly understood by all stakeholders • Risk register and management strategy must be signed off at steering group level • Relationship between Time, Quality & Price • Building contingencies is about being equipped to deal with the worst case

  12. Questions? Mikko AJ Ramstedt mikko.ramstedt@scotland.gsi.gov.uk 0131 244 4940

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