Ineffective human resources management, including recruitment and retention, is a key cause of inefficiencies in the procurement of Public Private Partnerships (PPPs) in Australia.

While they have entered the mainstream as a procurement model in Australia, Public Private Partnerships (PPPs) – involving a contract between government and the private sector to deliver public services or infrastructure – remain controversial and subject to high levels of public scrutiny. They are also more complex than standard procurement models.

In 2008, Infrastructure Australia commissioned a review from auditors KPMG to address inefficiencies and unnecessarily high costs that had been identified by private sector participants in the procurements of PPPs. One of the key causes of inefficiencies uncovered in the resulting 2010 report was related to effective people management, specifically recruitment, retention and decision-making processes.

According to reports, co-author and senior infrastructure financier at KPMG David Asteraki, PPPs represent a unique challenge when it comes to the management of human resources for a number of reasons, including the following.

• PPPs integrate design, construction, finance, operation and maintenance, so the project manager needs to have a good knowledge of, and be able to coordinate, all of these.
• The project manager is supported by a project team of specialist staff and professional advisors, who he or she has to manage.
• The procuring authority’s costs are around AU$5-10 million and even more for bigger, more complex projects, and the procurement process takes at least 12-18 months.
• There are many different stakeholders involved, sometimes with conflicting interests, including senior government ministers and, at times, the Prime Minister.
• The monetary value of PPP projects is high, averaging more than AU$500 million, with the largest projects valued at more than AU$5 billion. As a result, small percentage changes in costs have a large impact.
• Bid costs can be high, typically reaching at least AU$5 million for each bidder, and possibly AU$30 million or more is at risk.

“As a result [of the above], there is a lot of pressure for the procurement process to run smoothly and for the procuring authority to maximise value for money,” explains Asteraki. “The calibre of the project director and his or her team can make a significant difference to the success of the project.”

Not only is there a general shortage of high-calibre project managers within the public sector, according to Asteraki, there is also a shortage of more junior people due to competition between authorities, while significant delays in project procurement can lead to the loss of experienced staff as they move to more active, less stop-start projects.

The report’s recommended strategies for overcoming these challenges, particularly protracted schedules and staff retention, are useful project management considerations in general and could be applied to most projects large or small, public, private or PPP. The recommendations included:

• Rationalising information requests.
• Obtaining commitment to the project from all key stakeholders at an early stage.
• Improving the sharing of skills and knowledge between project delivery personnel and procurement project teams, particularly in relation to lessons learned and best practice.
• Not recreating the wheel when it comes to documentation; using strong precedents where available.
• Attracting and retaining competent staff by paying salaries at commercial rates, providing a clear career path, and empowering project team members when it comes to decision-making.

Since the publication of the report and its recommendations, there have been some improvements in the Australian PPP market. These include limiting information and probity (transparency and information) requirements to what is strictly necessary, therefore reducing red tape and bureaucracy.

At the same time, the Australian PPP market has also benefitted from the recruitment of several highly competent PPP practitioners from the private sector since the publication of the report, although, Asteraki points out, “that has been partly due to contractions in the private sector”.

The Australian PPP market is not unique in identifying the challenge of recruiting, retaining and developing staff in successful project management – good people management is always integral to project success. Engineering Education Australia's Managing Teams and Stakeholders course addresses this vital aspect of project management, and is suitable for everyone from managers and team leaders to graduates and administrators. Find out more.