Risk Management in Transport PPP Projects
In the Islamic Countries
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authority is faced with the challenge to select a private sector partner. To this end, the choice of
a procurement strategy must be taken, aiming for the highest Value-for-Money.
The decision on the procurement strategy involves reflections on the side of the public authority
on whether to pre-select a shortlist of potential partners or apply pass/fail qualification criteria,
and whether the issue of the request for proposals takes place before or after a time of dialogue
with the private bidders.
The main procurement strategies are the following (APMG, 2016):
 Open tender (or one-stage tender process). This option entails no shortlisting, and the
request for qualifications is issued together with the request for proposals. As regards the
bidding and selection approach, only one bid is foreseen and one straight-forward decision
on awardee, with no dialogue after the tender is launched and no negotiations;
 Open tender with pass/fail pre-qualification (or two-stage open tender). The request
for qualifications is issued before the request for proposals, and there is no shortlisting.
Only one bid is foreseen and one straight-forward decision on awardee, with clarification
requests being possible after the tender is launched, but no negotiations after the bid
submission;
 Restricted procedure (shortlisting with one bid). The request for qualifications is
issued before the request for proposals, only to a shortlist of bidders. Only one bid is
foreseen and one straight-forward decision on awardee, with clarification requests being
possible after the tender is launched, but no negotiations after the bid submission;
 Negotiated process (short listing with negotiations). The request for qualifications is
issued before the request for proposals, only to a shortlist of bidders. Consecutive or
sequential bids are allowed used and negotiations take place;
 Dialogue or interaction process. The request for qualifications is issued before the
request for proposals, only to a shortlist of bidders. After the bids are submitted, a dialogue
or interactive sessions take place, and bids are consequently refined.
Choosing one procurement route, the public authority is faced with several trade-offs. For
instance, prequalification allows to limit the number of bidders and therefore these may be
inclined to present a competitive bid. In addition, the low number of bids limits the amount of
resources the public authority spends for bid evaluation. Conversely, however, shortlisted
bidders may engage in collusion. As regards the choice between multi-stage and single-stage
process, public authorities can identify an advantage in the former over the latter as regards
alignment to needs, final quality and innovation. Nevertheless, multi-stage processes can be
long, resource-consuming, and difficult to manage (The World Bank et al., 2017).
Unbalanced negotiation skills between the public and private parties in complex contracts
typical of PPP arrangements may create a bias in favor of the private party, with the public sector
eventually bearing more risks (and costs) than originally anticipated. As such, it is crucial that
the decision-making process leading to the choice of a procurement route takes into