Counterpoint: A new approach to resetting complex public private projects
What is a reset? Anyone working in the PFI/ PPP sector will now be very familiar with the term. It was first coined in the White Fraser report for the IPA in July 2023, recognising that for many PFI projects needed to be reviewed and adjusted, to a greater or lesser extent, if they were to achieve the value that they originally set out to achieve. The concept has gained momentum with the establishment of the AIIP, led by Lord Hutton (an organisation of which Curshaw is a founding advisor). Hutton himself has talked extensively about the need for resets specifically in the growing number of cases where an adversarial approach to contract resolution has led to spiralling legal costs and a significant drain on the public purse.
The ambition is fairly clear but in reality there is very little consensus as to what this actually means in practice. The difference in scope and design across the PFI landscape is significant so ‘reset’ can mean very different things. Many of these projects are 20, even 30 years in length so another challenge is ensuring that a reset has the long term impact you are looking for and that the project does not need further intervention later on down the road particularly in the run up to expiry when the parties should be in no doubt about business as usual service delivery and instead focused on handback.
In this whitepaper we will set out the Curshaw approach, Counterpoint, which addresses some of the key challenges with effective resets and how it can be used to create equitable outcomes for all the stakeholders involved in these complex and operationally critical projects.
Introducing Counterpoint
The fundamental principles behind the establishment of Counterpoint are the same as behind the creation of Curshaw itself. We want to deliver fair and equitable outcomes to complex projects and help stakeholders resolve challenges without having to resort to expensive, adversarial and ultimately ineffective means. We also believe that the goal should be long term resolution and not a quick fix. Resets need to be sustained, without the need for additional interventions. Beneath this north star there are four key tenets:
Joint endeavour
For a reset to work the different parties need to feel that they are pulling in the same direction. It is for this reason that we aim for every contract we sign to be a joint appointment - one in which we are responsible to all sides rather than just one. This sets the foundation for a program that is designed to deliver an equitable outcome for all parties.
Proportionality
Not every reset needs to be significant. Some might be just a small course correction in a couple of key areas whereas others might need something more far reaching. A standards-based and objective assessment must guide the need for any Reset.
Fixed fee
The land and expand mentality of many consultancies, paid on an insidious time and material basis, has meant there is sometimes a focus on finding more problems rather than fixing them. Our fixed fee model means you can be assured our focus remains on finding and implementing a self-sustainable fix.
Sustainability
The focus on sustainability, on ensuring that resets work in the long term and we can avoid additional interventions as much as possible, is also at the heart of what we do. We aim to deliver improvements that can be maintained all the way to expiry, enabling an efficient, effective and equitable handback.
The Counterpoint process:
There are four main stages of a Counterpoint engagement:
Joint appointment
One of the fundamental problems with most third party engagements in PFI projects is that they are appointed (and paid) by one party. This in itself makes equitable outcome almost impossible because their objective is to achieve the best possible outcome for the organisation they are employed by rather than the project itself. Curshaw’s Counterpoint service is engaged either by joint appointment or appointment by a single party with collateral warranty for the benefit of the other party. This embeds from the start a responsibility to the project itself and avoids bias.
Survey and review
Understanding the extent of the problem is critical in developing the plan to solve it. In many cases a full survey may not be needed - amongst other things it depends on the comprehensiveness of asset data, knowledge of condition and proven maintenance history. If this is in line with expectations a short sample survey may be all that’s needed. What is important in all cases however is that the review is conducted by independent third party surveyors. In addition to the physical survey we also review and where necessary reinterpret the services specification and the payment mechanism to understand how clear it is, as well as how well it aligns with the contractual provisions and whether there are any ambiguities in the drafting that require clarification.
In parallel, we use our Curshaw Standard, focussing on either Operational performance or expiry preparedness, dependent on the proximity to contract expiry, to identify:
Where interfaces between elements of the supply chain, and between the SPV and the Contracting Authority, can be improved; and
Where service delivery falls short of contractual requirements or industry standards.
Remedy/rectify and improve
Once we have understood the extent of the problem we are in a position to be able to start to fix it. Fundamental to this is ensuring that all parties share a common understanding of what good looks like, how it is to be measured, the timescales over which the agreed actions will be implemented, and the terms of reference. We work in the open with trackable plans that are visible to all stakeholders. Stakeholders are managed using a robust and mutually agreed governance process to ensure issues identified are fixed. Crucially this is guided and overseen by Curshaw as independent intermediary making sure the parties work together towards equitable outcomes.
Embed and sustain
The Curshaw approach is not just about fixing projects, it is about ensuring they stay fixed. Sustaining the improvement efficiently, without the retention of expensive advisors, and avoiding the alternative of doing nothing and falling back into ‘the old ways’, is critical.
By leveraging our bespoke platform, which interfaces with a Project’s Computer Aided Facilities Management (CAFM) system alongside deployment of new and revised Facilities Management processes, the required changes are supported by automated analysis and augmented insight into Project performance and compliance with contractual processes. The agreed improvement plan is also hard-wired in, enabling easy updating of progress against actions and reporting of this progress to stakeholders. Armed with the Platform’s capabilities, Asset Managers and MSPs can take the reins and Project Co Directors and Contracting Authorities will benefit from reporting and management information that provides assurance of performance.
A periodic third party audit and inspection of project performance can then take place every so often, ensuring independent assurance of either the fact that the improvement has been sustained and projects remain on track, or flagging the need for further course correction.
A new approach
Working at the intersection of public and private has distinct and unique challenges. Add to that the complexity of managing 20 or 30 year projects, in which expectations around the outcome can shift considerably and the fact that course-corrects are needed on PFI projects is hardly surprising. What is critical however is that these resets are conducted on the principle of equitable outcomes. All too often the approach is adversarial from the start with a focus on blame and restitution. The Counterpoint approach puts outcomes first with an understanding that the first duty of any intervention is to the citizen and the ability of the asset to deliver the service required by society. The second is to ensure that the outcome is as equitable as possible to all parties involved.