7.5 Modified Model: Inclusion of Strategies for Enhancement
7.5.2 Procurement preparation
The adverse impacts of sub-deliverables as RFP, MCA, and P&E team on system dynamics behavior relating to procurement preparation have been highlighted using the balancing feedback loops B4, B5, B6, B7, and B8 in preliminary model. Besides
Feasibility Study
Environment &
social (E&S) feasibility
Environmental impact assessment
(EIA)
Acceptable impacts practice (E&S benefits missing) Use advanced
tools
Rating tools (LEED/BREEAM)
Need of pre-assessment Include
climate change consideration
Strategic environmental
assessment
Modified EIA
+
+
- -
- +
+
+
+
+
+
R1a R1c R1b
Social Impact assessment
(SIA)
Stakeholder’s opposition
Need of better communication Building information
modeling Improved communication
Need of better partnering
Partnering with ULBs
& NGOs
Special Purpose Company Stakeholdersmanagement’
Enhanced SIA
+
- -
+ + +
-
+ +
+ + +
+
R2a
R2b
R2c PPP due
diligence study
Value for money (VfM)
analysis Whole life- cycle costing (WLC) Absence of
E&S externalities
& cost
Use environmental
label material
Life cycle analysis (LCA)
approach Green
accounting (include E&S
cost &
benefits)
Outdated risk model
Include climate change parameters
Improved WLC for VfM Auditing
Independent auditor
+ + -
-
+
+ +
- -
+
-
+
+ +
+
Procurement Preparation +
R3a
R3b R3c
R3d
confirming the occurrence of these sustainability issues, the respondents have suggested various strategies for enhancing these sub-deliverables in order to promote sustainability.
The lack of skill and knowledge about sustainability by the procurement and evaluation (P&E) team could be improved by organizing various sustainability awareness programs for the P&E team. One of the programs will be to include sustainability educational program as part of the training for P&E team members before the procurement preparation.
Another program would be establishment of ‘National PPP training program’ through ‘on the job training’ to teach the practical knowledge of sustainability to P&E team by the PPP unit. The addition of these two programs have been highlighted by the positive/reinforce feedback loops R4a and R4b in Figure 7.4. Furthermore, the experts have suggested appointment of external advisor with knowledge and experience of sustainability for monitoring the performance of ‘National PPP training program’. The assistance of external advisor for optimizing the performance of training program would help in improving the system dynamics behavior of procurement preparation and this has been highlighted using the positive/reinforced feedback loop R4c in Figure 7.4.
The other sub-deliverable relating to procurement preparation on RFP document has been criticized for lack of incentives and inadequate bidding criteria. Respondents have suggested various strategies to overcome these sustainability issues. One of the strategies has been to establish an incentive structure through a market mechanism that would help in promoting private sector to discover solution for E&S issues. Another strategy has been to provide incentives or subsidies to the private sector for optimizing WLC of project through promotion of usage of renewable energy sources and biological materials. Third strategy has been to introduce incentives for adaption and mitigation of climate change impact on the project. The final strategy has been related with establishment of law regarding compensation and liability for those persons who have been adversely affected by pollution and who are creating pollution, respectively. Inclusion of these four strategies would give private sector additional incentives for innovative solutions and the impact of these has been represented by the positive/reinforced feedback loops R5a, R5b, R5c, and R5d.
Inadequate bid evaluation criterion is another sustainability issue that needs to be improved through inclusion of three strategies by introducing new procurement policies. The first strategy suggested by respondents has been to adopt green procurement policy to invite those bids which use innovative technologies to reduce pollution and climate change
mitigation. Another strategy has been to include E&S criteria besides technical and financial criteria in bid evaluation. This strategy will help to comply with the requirement of ‘Equator Principles’ and help in assessment of E&S impact on the project. The third strategy suggested by respondents has been to include bidding criterion that assess promotion of lean construction approach for minimizing construction waste. The impact of these strategies on the system dynamics behavior has been highlighted using positive reinforced feedback loops R6a, R6b, and R6c.
The MCA, another sub-deliverable of procurement preparation, has been criticized for not being flexible to account for unforeseen risks and setting high user charges for infrastructure services. Respondents have suggested three strategies for the issue relating to high user charges. The first strategy has been to include a comprehensive communication program to educate the public users about the necessity of improved infrastructure service resulting in time and cost savings. The second strategy has been to enhance current viability gap funding (VGF) up to 60% (which is currently 40%) of total project cost so that the user’s charges could be minimized. The third strategy has been to implement an institutional differentiate mechanism that could enable adjustment of user charges according to time, location and uses. The effects of these strategies on system dynamics model has been shown using the positive reinforced feedback loopsR7a, R7b, and R7c. With respect to the issue of inflexible contractual provision of MCA for future unforeseen risks mitigation, three strategies have been suggested by the respondents. The first strategy has been to adopt a flexible support mechanism to devise mitigation measures for future unexpected climate change risks and unexpected site risks due to hazardous materials discovered during project execution. The support mechanism could be in the form of insurance program. The second strategy suggested by the respondents relates to inclusion of a renegotiation mechanism in MCA to address various socio-political or economical changes that could not be handled through the current MCA. Lastly, creation of a robust financing mechanism with more government support has been the third strategy suggested by them. The inclusion of these three strategies has been shown using the positive reinforced feedback loops R8a, R8b, and R8c in Figure 7.4.
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Figure 7.4: Modified system dynamics model to enhance the procurement preparation
Feasibility Study Procurement Preparation
+
documentsBid Request for
proposal (RFP) Inadequate
bid evaluation (BE) criteria New
procurement policy
Lean construction
criteria Include
E&S criteria
Green criteria
Modified BE criteria
+ + - -
+
+ +
+ + +
Lack of incentives to promote sustainability Promotion of
incentives Incentives
to reduce pollution Incentives
for climate change adaption
Market mechanism Own
solutions on E&S problems Incentives to optimize WLC
Incentives to use renewable sources &
biological materials
Additional incentives to
promote sustainability Establish law
for
sustainability Law on
liability &
compensation
- + -
+
+
+ +
+
+
+ +
+
+
+
R6a R6b
R6c
R5a R5c R5b
R5d
Model concession
agreement (MCA)
Rigid MCA for future risk allocation
Robust model
Government support systems
Socio-political
& economical risk
Renegotiation mechanism Climate change/
unexpected site risk
Provision of flexible clause
Flexible support mechanism
Enhance MCA
New insurance scheme +
- -
+
+
-
+
+ -
+
+
+
+ +
R8a
R8b
R8c Complaints on
higher user charges
Minimize complaints
on user charges Additional
mechanism
Different rates (time,
location, uses) Support mechanisms
Viability gap funding (VGF)
Enhanced current
VGF Communication
mechanism
Comprehensive communication programme
Improved communication
with users -
-
-
+
+
- +
+
+ +
+
+
+
R7a
R7b
R7c
Procurement &
evaluation (P&E) team
Lack of skill & knowledge of sustainability in P&E team
Sustainability awareness programmes National
PPP training programme
Sustainability educational programme On job
training programme
Trained P&E team (sustainability
knowledge)
Appoint external advisor
Sustainability knowledge advisor
+
-
-
+ +
+ +
+
+
+ R4a
R4b
R4c
Bidding +