Deal Facilitator

The Deal Facilitator helps to reach agreements.

Once a decision is made to go forward, a procurement process takes place, designers, constructors, operators, financers and others are selected, and project delivery agreements need to be put in place.  Procurement on many infrastructure projects can be a very complex, expensive and time consuming process. Time is definitely money and for a $1 billion project, a delay in starting work might increase the costs by as much as $1 million a week. A neutral “deal facilitator” of either an individual or a firm, could be very useful in improving the efficiency and duration of the process. The deal facilitator would be approved by all the parties to act in his or her capacity with limited authority to manage and facilitate the process of expediting the procurement and reaching agreement(s).

A neutral deal facilitator can also be better positioned to sort through common interests and objectives of both the public and private sectors, without any particular bias or stake in the eventual outcome. On many complex infrastructure projects each party is often represented by its own extensive set of advisors and advocates, who pursue and seek to maximize their party’s relative interests and positions. Proposal development and transaction costs are often in the tens of millions of dollars for large projects. The public sector’s consultants and advisors involved in the procurement in addition need to evaluate various alternative technical proposals, which need to be compared among each of the bidders.  A deal facilitator could offer benefits to the process by fostering a more collaborative process that achieves the project goals set through the deliberative stakeholder process discussed above.

Mediation concepts of neutrality, identification of interests, joint problem solving and confidentiality can help with the collaborative deal making process and thus reduce transaction costs.  The neutral’s scope could include some or all project phases including:  financing; development; design and construction; and operations.  The benefit of using a neutral is especially present with P3s that involve a long term relationship and shared responsibilities, risks and rewards between the public and private sectors.

One primary goal at the formation of the contractual relationships is to insure the project agreements contain well thought out and mutually agreed to collaborative dispute resolution procedures.  The deal facilitator can lead a discussions concerning the alternative approaches to dispute resolution.  All participants showed buy in and agree to this critical provision in their ongoing relationships. In additional he or she can help structure the program and draft the contract provisions.

The industry’s best practices in alternative delivery projects include some multiple steps of negotiations as the first level effort to resolve the disputes. Imposing time limits for negotiations (typically 15 to 30 days) and providing various levels of escalation (project managers, seniors executives, and then CEO’s) provides two pressure points that work well together.  The time deadlines require the individuals at that level to meet and conclude the negotiation effort in a limited time.  The escalation pressure means that if the individuals are not successful, their bosses will be ask to fix the problem. Beyond the stepped negotiations there is a menu of options described below that should be included.