and Tendering

2

Project Stakeholders and Objectives

The stakeholder analysis undertaken at a project’s planning stage (that is, stage 1 of 4) should not be confused with the market sounding that is conducted during the structuring and tendering phase (stage 3) (table 2.1). Figure 1.2 in chapter 1 presents all four stages. This chapter focuses on the planning stage. A proper market sounding cannot be done at the planning stage because the level of uncertainty surrounding the project structure at this stage and a general lack of data and definitions may put off potential investors (APMG International 2018).

Early in the planning stage, planners map key stakeholders and identify their objectives and—also important—their restrictions. Before drafting a conceptual project structure, planners would do well to have interviewed and gained a clear sense of the objectives and restrictions of key stakeholders. Understanding these variables will help planners build coalitions to support the project, adapt its design to address stakeholders’ priorities as much as possible, and assign responsibility for project functions and risks. Table 2.2 provides an example of this exercise.

TABLE 2.1 Elements of stakeholder analysis: Stage 1: Planning vs. Stage 3: Structuring and Tendering

STAGE 1: PLANNING

• Adequacy and correctness of the financial assumptions used in the feasibility assessments (for example, projected escalation in construction costs) • Acceptability of the proposed risk structure at its current level of development • Acceptability of the proposed financial structure at its current level of development • Capacity of potential private sector bidders to form strong consortia to bid for the project • Capability of bidders to deal with any significant technical challenges in the project • Proposed project timelines • Expected level of activity in the contracting and finance markets and the impacts that this may have on competition in the tender process and the pricing of bids • Acceptability to the market of the proposed tender strategy • Acceptability of any unusual aspects of the detailed risk allocation, such as the allocation of unique risks or the use of any novel risk-sharing mechanisms • Acceptability of any unusual aspects of the detailed financial structure, such as the form, timing, and conditions of any proposed government support and any new or unusual features of the proposed revenue mechanism (for government-pays projects, the payment mechanism) • Proposed project timeline and schedule • Current market conditions and optimal timing of the tender process (including the time required to prepare bids) to ensure a strong field of high-quality proposals

STAGE 3: STRUCTURING AND TENDERING