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					4ps Guide to Appointing Advisors


        November 2006

local government’s project delivery specialist

     1       Setting up the Project Team

     2       The OJEU Rules

     3       OBC/Procurement

     4       Consortia, Frameworks

     Appendix 1          HM Treasury TaskForce Note 3 ‘How to Appoint and Manage

   Disclaimer And Copyright

  This Guide has been produced by 4ps to provide assistance to local authorities. This Guide
  has been published in good faith by 4ps and 4ps shall not incur any liability for any action or

omission arising out of any reliance being placed on the Guide by any local authority or
organisation or other person. Any local authority and organisation or other person in receipt of
this Guide should take their own legal, financial and other relevant professional advice when
considering what action (if any) to take in respect of any initiative, proposal or other involvement
with a public private partnership, or before placing any reliance on anything contained herein.

C Public Private Partnerships Programme 2006

1       Setting up the Project Team

Advisors are appointed to support the project team. It is therefore critical that the
Local Authority has in place a robust and fully resourced project team. The Local
Authority must first set up its own project team and then carry out a needs
assessment on the level and kind of external advice required. An appropriate budget
needs to be in place to pay for the advisors. The Local Authority must be a strong
client to ensure they lead the project and manage the advisors to ensure Value for
Money (VFM).

Advisors can bring a number of benefits to the project:

       Expert knowledge (legal, corporate finance, construction, technical, project
        management, insurance ….)
       Experience in having done similar projects
       Innovative thinking
       Support to critical thinking, evaluation, analysis, assessment, negotiation.
       Documentation/models from similar projects to help speed up procurement
        (Note 4ps and other standard documentation should always be used where
       Knowledge they can transfer as part of their appointment (This is important as
        future advisor costs can be less if the Local Authority in house staff have the
        expertise. Any documentation prepared by advisors should be available to the

Advisors should not be used by the project team to conduct work/tasks because the
project team is under resourced or pressurised on timescales. Advisors should be
tasked with work that is their expert field and that the Local Authority cannot do. The

project is owned and delivered by the project team its success and failure rests in
the long term with them and the Local Authority.

Set out below is a good example of a project team delivery structure:

                                       Council Approval Processes

                                                                                                                   Scrutiny         4ps

                                             Project Owner                       Strategic                        Strategic       Cabinet
              Stakeholder                                                         Boards                          Director       Member(s)

                                                                                                                 Strategic Project Board

                                          Project Director

                                                                                                                  Stakeholder    Service Area
                                                    Project                                                      Representativ   Representati
                                                    Manager                                                                           ve

  Internal            Internal           Internal              External           External            External
  Service            Financial            Legal               Technical           Financial            Legal
 Groups –                                                     Advisors -           Advisor            Advisor
 Planning,                                                     Surveyors
 Services                                                      Insurance
                                           Project Team

        Corporate                Risk Management                  Human                       Audit
       Procurement                    Officer                 Resources and
                                                              Public Relations

2         OJEU     (Official Journal of the European Union)

All public sector bodies (Local Government, Trusts, Government Departments and
Companies in the Utility sectors) are subject to a series of EU regulations (that are
part of UK law) that govern how it may purchase goods, services and works over a
specified value. Some services if part B are exempt from an OJEU (these include
legal services but good practice is to advertise!)

Where the estimated value of goods and services is expected to exceed the relevant
EU threshold, requirements have to be advertised in the daily supplement to the
Official Journal of the European Union (OJEU). The threshold varies from time to
time, and in relation to supplies, services or works and in relation to central
government, local government and utility services and has traditionally been amended
every two years on 1 January (see for tenders and rules).
The thresholds only apply to certain services (including advisory) that need to be
advertised and the current level January 2006 for Local Government PPP/PFI is
£144,371 for those services as well as all goods. The level for works is

Where the value of the services is below the EU level then an OJEU is not required
and advertisement can be by: Trade Journal Advert; Newspaper; Agent; Web Site,
Government sites ( etc

OJEU Regulations stipulate timescales that must be adhered to. These are intended
to ensure that suppliers are given a reasonable time to respond to adverts (37
days). This includes responding to the invitations to tender. There are different
types of tendering procedures that can be adopted (Restricted, Open, Negotiated,
Competitive Dialogue). However all companies who reply to an OJEU advert within
the stipulated time limits are assessed against the stipulated published evaluation
criteria. Firms are invited to submit a tender in accordance with the tender
documentation made available, in response to the OJEU.

Where an OJEU advert is not required firms are invited to submit a tender in
accordance with the tender documentation made available, in response to the

The OJEU notices are now published in electronic format and access to this is by
several sources such as, the TED website which can be access via the following

3          OBC (Outline Business Case)/Procurement

Prior to developing an EoI (Expression of Interest) or OBC it is important to appoint
advisors. Technical, Financial and Legal advisors should be appointed. It is important
that your technical advisors have input into any PFI EoI to a Government Department
to ensure you cost the credit level correctly (any mistake here can be costly!) and
your financial advisors check Treasury VFM assumptions and models.

Advisors may be appointed just for the EoI or OBC with a re tender for the
procurement stage. This can be good practice to:
           assess how well advisors work and
           to bring competition back in when appointing for the procurement stages.

OJEU advertisement may not be needed as the fees for the EoI or OBC may be
well below OJEU advertisement rules.

Appointing advisors for the procurement phase of a PFI/PPP will usually involve an
OJEU advertisement if fees are expected to be above EU requirements for the OJEU.

As well as placing the OJEU reputable firms should be contacted and notified of the
up and coming OJEU to ensure firms bid. It is likely that Legal, Financial, Technical
and possibly Insurance, Project Management and Design consultants will need to be

When appointing advisors it is important to ensure:

    1. There is competition in the appointment
    2. An advert is placed (OJEU or not)
    3. Tender documentation is provided to prospective bidders with evaluation criteria
    4. Tenders are evaluated by the Authority client team and interviews are held with
       short listed bidders
    5. A suitability experienced firm is appointed with the capacity to do the work
    6. The scope of the advisors work needs to be set out in detail by the Authority
       and agreed otherwise fees may escalate significantly

7. The cv’s of those individuals whom will be doing the work are reviewed
8. Suitably experienced and senior people will be acting as advisors
9. The Authority is notified when advisor staff change (leavers, change in staff)
    and the Authority has the right to accept or reject changes. The Authority
    should not also have advisors doubling up staff with trainees, unless agreed at
    reduced rates
10. Fees are broken down into charge out rates per hour, per day, per grade of
11. Appointing the cheapest bid is not always advisable (watch out for ‘low
    balling’) quality, experience, vfm and professionalism are more important
12. Take up references (check what did firms quote for other work v actual fees
13. The scope of work tendered is fully priced with any caveats clearly detailed
14. Fees should be capped or fixed at ALL stages (open ended fees will cost
    you dearly!)
15. Signed Letters of Engagement should be in place before the advisors start work
    (use the Authority engagement terms)
16. Advisors should provide bills monthly with a detailed breakdown of costs, the
    Authority should scrutinise all costs
17. Have a robust change control system where any changes to the scope of work
    originally agreed are costed and agreed in advance
18. Clients should meet semi annually with the advisors most senior staff
    (Directors/ Partners) to review performance
19. Set a realistic programme for the deliverables with some flexibility to
    accommodate any delays in the procurement delivery programme.
20.Poorly performing advisors should be removed and new advisors appointed.

4         Consortia, Frameworks etc

Should I appoint Consortia?

    Costs may be pooled and discounted
    Firms know each other and work together?

    Difficult for firms to form a consortia and maybe work together
    Individual appointment contracts

Should I use a Framework?

    Advisors can be appointed for longer 3 (Option to extend) to 5 years, this is
      more attractive to them
    Costs may be lower due to perceived volume of work and timescale
    You don’t have to procure new advisors every project saving cost and time
    We would recommend more than one firm from a Legal, Financial, Technical
      background they then bid again for each piece of work against each other
      under the Framework
    Already available and done by others e.g. ‘Building Schools for the Future’ has
      listed approved firms

    Lack of competition in appointing advisors for different stages of work may not
      be VFM
    A ‘comfy’ position is perceived by the advisor over time

Appendix 1

HM Treasury Task Force Note 3 ‘How to Appoint and Manage Advisors’


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