Sample Terms of Reference (TORs) for PPP Advisors
When designing and developing a public-private partnership (PPP) project, a government agency may seek assistance from external advisors to complement its own team and supplement its resources and expertise. The range of potential advisers includes legal, financial and technical advisors and can be used to develop pre-feasibility and feasibility studies, as well as draft bidding documents and support the contracting agency in procuring and negotiating the project.
Where a government agency has little experience in managing and coordinating such advisors and/ or where it only wants to have to manage one main advisor, it may consider appointing a transaction advisor that will be a consortium of the various types of advisors, but with one lead advisor. This has the advantage that the government then only needs to deal with one entity rather than a number of entities and any differences of option and advice between the different advisors will be managed internally within the transaction advisor consortium. Potential disadvantages include the possibility that the advice of one advisor may be watered down or tempered to meet the interests of another advisor and/or that the overall fees may be higher.
The South African PPP Unit has developed a useful Module on Appointing Transaction Advisors (PDF). The UK Treasury has developed a note on How to Appoint and Manage Advisors to PFI Projects. See also the World Bank/PPIAF Toolkit on Hiring and Managing Advisors for Private Participation in Infrastructure (PDF).
A Terms of Reference (TORs) should be clearly drafted with the scope of work and the fee structure set out in detail. If fee payments are dependent on deliverables or stages being achieved, then these should be clearly defined and be capable of being easily evaluated.
Below are resources offering guidance on drafting TORs as well as sample TORs:
Checklist: Drafting TORs for Advisors
WHAT TYPE OF ADVISOR IS REQUIRED? There are a number of potential advisors that a Government may need to consider using on an infrastructure project. For instance, if the project is looking at legal and regulatory reform, then a legal, environmental and perhaps a tax advisor will be needed. On a project finance project such as a toll road or IPP project then legal, technical, financial, tax, environmental, insurance and perhaps economic advisors will be needed. Consideration will also need to be given as to whether to appoint a consortium of advisors covering all aspects of advice required or a transaction manager whose responsibility is to manage all of the different advisors. This may be appropriate where the Government agency does not have the capacity to manage the advisors properly or does not wish to devote the time to this. However, there are advantages to hiring each advisor directly to monitor the advisor and give instructions and receive advice from each particular advisor.
WHAT IS THE SCOPE OF WORK OF THE ADVISOR? See the checklists and sample TORs for the various sectors for potential tasks that may need to be covered. There is sometimes a temptation to describe the project background in detail while giving little detail to the actual scope of work and specific tasks to be completed by the consultants – while background description is important to set the scene, THE ACTUAL TASKS REQUIRED OF THE CONSULTANT NEED TO BE CLEARLY DEFINED.
DELIVERABLES - Set out deliverables, timetable for deliverables, format (whether electronic form) and method of delivery (my email or otherwise), what language, how many hard copies. Is advisor to draft documents [plus negotiation and redrafts]? What inputs from third parties are required before drafting/ redrafting takes place?
CONFLICTS ISSUES - Establish whether advisor precluded from advising other parties involved in project.
IDENTIFICATION OF TEAM - Specify who is on the team of advisor. Is a specified person to attend meetings with client? If there is to be a local advisor and an international advisor, what is to the interface? What is the reporting line? Does the client have a preferred list of local advisors or is it willing to let international advisor choose its preferred advisor? Is this possible within the procurement process for advisors? Is there a predefined input from senior person/ specified person? How are these specified persons to be tied into the bid?
FEE STRUCTURE AND BILLING - if this is a World Bank funded contract then the following issues should be dealt with automatically through the procurement process. For other contracts, the following issues will need to be specifically addressed:
What is the fee structure? Is it is lump sum/ hourly rate with cap on fees, if so, what does it cover? If there are local and international legal advisors, is the lump sum/ cap on fees covering both? what assumptions have been made in coming to the lump sum/ cap – are there possibilities for re-opening lump sum/ cap discussion?
Travel - Is travel to client country required – how many trips? Identity of person to attend? Is travel time of adviser charged at full rate? How are travel expenses to be dealt with? Are these to be unlimited/ reasonable/ business travel? To be arranged by client?
How are other costs to be charged? what about photocopies, printing costs, costs of faxing?
Billing – monthly, in arrears, charge for late payment etc.
Sample TORs: Clean Technology
Sample TORs: Power Projects
Sample TORs: Transport Projects
- TORs for Review and Redrafting of Model Toll Road Concession Agreement
- TORs for Proposal for Pilot PPP Project in Rail Sector and Draft Bid Documents
- TORs for Financial Advisor - International Airport Expansion Project
- TORs for Legal Advisor - International Airport Expansion Project
- TORs for Airports Sector Advisor
- TORs for Advisor - City By-Pass Feasibility Study
Sample Terms of Reference (ToR): Telecoms Projects
Sample TORs: Water and Sanitation Projects
Sample TORs: Legislative Drafting and/ or Review
Sample TORs: PPP/Implementation Unit
- PPP Unit - Sample Job Descriptions and Qualifications for Key Personnel
- TORs for PPP Consultancy to help develop a PPP unit
Sample TORs: Implementation of PPP Program
- TORs for Consultant to support development of a municipal PPP program (including developing guidance manual and terms of reference for transaction advisors)
Further Reading and Resources
- Role and Use of Advisers in Preparing and Implementing PPP Projects, European PPP Expertise Centre (EPEC), March 2014.
- A Study on the Use of Private Advisory Services in PPP Projects by Jung Kun Ho, December 2006 (Korean with table of contents in English).
- The Role and Importance of Independent Advisors in PPP Transactions by Jumoke Jagan and Isabel Marques de Sa, IP3’s Public-Private Partnership Information Series, August 2006