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Building Blocks of Effective Preparation

Essential elements for a structured and efficient preparation process.

Pre-FS Components

A Pre-FS consists of the following studies, components, and activities. Each has sub-sections and sub-activities. A complete Pre-FS has all provisions of the regulations relating to it in the form of these studies, components, and activities. All components included in the Pre-FS make the project (solicited) ready for evaluation by Bappenas.

Introduction

This section is an introduction to the entire Pre-FS in the preparation stage of the KPBU project. The Pre-FS is expected to have many sections and subsections. The sections or chapters are classified as ‘reviews’ of the KPBU project under consideration. Before the reviews begin, the GCA shall draft the introduction sections to introduce the background of the project and its features which set the context for the subsequent sections.

The introduction section includes the

  • (i) (i) Project background including overview of infrastructure and KPBU/PPP in the sector, the project concept & vision, conclusions and recommendations of the Pre-FS, need / intent / purpose of KPBU in the project, and objective of the Pre-FS, a section on
  • (ii) Project initiator including the GCA and the consultants/experts in project preparation
  • (iii) Legal and regulatory basis/ framework including the legal basis to prepare the Pre-FS and the substantive changes to Ministerial Regulation Number 7 of 2023, a section on the
  • (iv) Methodology including the process to conduct Pre-FS studies, primary and secondary data sources and limitations, if any
  • (v) Structure of the Pre-FS and
  • (vi) Key qualifications/disclaimer.

From this section, the evaluator/ reader shall become aware of the background to the KPBU project, with the required references to the previously prepared Preliminary Study (PS) and know what to expect as content in the Pre-FS.

Strategic Suitability

The Strategic Suitability Study chapter in the Pre-FS for a solicited KPBU should have confirmation of the conformity with and/or update to the strategic review conducted in the PS. The strategic study or review of the Pre-FS should provide information about the strategic context of the proposed KPBU. The review should make observations about the following in relation to the strategic review conducted previously in the PS

  • (i) The existence or absence of new regulations from those that have been used as references in the preparation of the strategic study in the PS
  • (ii) Validity of regulations used as references in the preparation of the strategic study in the PS
  • (iii) Development of regulatory reviews in accordance with the progress of the KPBU project and/or
  • (iv) Development of institutional reviews in accordance with the progress of the KPBU project.

Economic Review

An economic review is a review conducted by the GCA to identify projects that provide the best Value for Money (VFM) through an economic study. The review is carried out through a Social Cost Benefit Analysis (SCBA) and quantitative Value for Money (VFM) analysis. The review/assessment comprises estimation of the full costs and benefits (financial as well as non-financial) of the KPBU/PPP project to the society as a whole. This assessment helps the GCA determine whether the project is desirable or not from the viewpoint of the society as a whole.

Commercial Review

A commercial review is a review conducted by the GCA to prepare a project agreement structure under the PPP scheme. A complete commercial review contains two parts: (i) A technical preparation review and (ii) A commercial preparation review.

Financial Review

Management Review

In this chapter, the GCA shall have a goal to prepare a project monitoring and evaluation (M&E) mechanism for the KPBU agreement. To fulfil the goal, the GCA shall conduct the management review. The management review document shall be a reference guide for PPP Nodes to monitor and evaluate the KPBU project. The GCA’s management review shall also involve preparation of a draft of the management document for the KPBU agreement. The inclusions of this draft are mentioned in the following sub-sections.

SUPPORTING ACTIVITIES

A public consultation is the process of interaction with the public, including affected communities (both positive and negative impact) and other stakeholders, to enhance transparency, efficiency, accountability, and effectiveness of KPBU/PPP projects. It includes explanations and details about the infrastructure provision plan and obtain responses and/or inputs from affected communities and stakeholders. In the preparation stage of the KPBU project, the minister/head of institution/regional head/SOE directorate shall conduct the public consultation. The public consultation is thorough if carried out in three stages including implementation, post-implementation, and recording of the outcomes. All reviews recommended to be part of the Pre-FS should have been completed by the GCA before the GCA conducts the public consultation.

Public consultation is not to be mistaken as an exercise to convince the community for the planned KPBU project or as a checklist exercise in the preparation stage. In fact, conducting a systematic public consultation can influence the smooth preparation and functioning of the project in the long term.

CONCLUSION AND NEXT STEPS

Pre-FS Toolkit