PPP project life cycle performance management policy issued

Source: China Financial News

PPP performance management policy puts forward clear requirements for the performance management of government and social capital cooperation projects. Its promulgation provides institutional guarantee for improving the quality and efficiency of PPP projects and safeguarding the legitimate rights and interests of partners, which is of milestone significance.

On March 31, the document that the PPP market is looking forward to was released. The government and social capital cooperation project performance management operational guidelines (hereinafter referred to as PPP performance management policy) finally came out.

Previously, the opinions of the CPC Central Committee and the State Council on the comprehensive implementation of budget performance management mentioned that the PPP performance management policy should be improved in all aspects, the whole process and the full coverage. The relevant person in charge of the performance management department of the budget department of the Ministry of Finance said: the PPP performance management policy puts forward clear requirements for the performance management of government and social capital cooperation projects, and its promulgation provides a system guarantee for improving the quality and efficiency of PPP projects and safeguarding the legitimate rights and interests of partners, which is of milestone significance.

Highlight 1: promoting the quality and efficiency of PPP projects

PPP performance management policy is divided into six chapters and twenty-seven sections. It standardizes the whole life cycle performance management of PPP projects, defines the main participants, content requirements, working procedures and other elements, and unifies the index system and system standards of performance evaluation management of implementing agencies, project companies and social capital. At the same time, it comprehensively combed the work contents and procedures of each link in the whole process of performance management, and promoted the quality and efficiency of PPP projects.

The improvement of quality and efficiency of PPP projects will help local governments to further promote the high-quality development of PPP mode, standardize the whole life cycle performance management of government social capital cooperation projects, improve the quality and efficiency of public service supply, protect the legitimate rights and interests of all parties, and contribute to the performance management of the whole finance and the long-term development of public services.

Jin haizeng, deputy director of Hebei provincial finance department, believes that with a large number of PPP projects entering the operation period, PPP performance management policy can better guide local governments to further implement the principle of PPP pay for efficiency, improve the performance management mechanism of project life cycle, and ensure the standardized operation and implementation of projects. It is conducive to make good use of the baton of performance evaluation, promote social capital to continuously strengthen project management and innovation, improve the efficiency of investment and construction operation, and promote the quality and efficiency of public service supply.

Wang Daiyu, deputy director of the Finance Department of Guangxi Zhuang Autonomous Region, said that the PPP performance management policy provides clear policy guidance for local governments to implement the whole life cycle performance management of PPP projects, which is in line with the current requirements for comprehensive implementation of budget performance management, and is an important measure to improve the PPP management system and promote the standardized development of PPP. Guangxi will actively practice project performance management, strengthen the guidance of spending money must ask for efficiency, use limited financial resources on the edge, improve the efficiency of using financial funds, and provide high-quality public goods and services for the people.

Liu Zhenlong, director of the local finance department of Shanxi provincial finance department, told reporters that in 2019, Shanxi Province took the lead in issuing PPP performance management policy documents, and Shanxi PPP Promotion Association cooperated with the preparation of performance evaluation operation manual, which provided industry reference for performance evaluation of the whole province. The introduction of PPP performance management policy will further promote the standardization of PPP project performance management, improve the quality and efficiency of public service supply, protect the legitimate rights and interests of all parties, and escort the stability and development of PPP.

Zhang Lei, head of the PPP management center of Shandong provincial finance department, believes that the PPP performance management policy provides a system for promoting the high-quality and sustainable development of PPP under the new situation. Shandong will focus on the performance management guidelines and relevant documents, and strive to promote the scientific standards, standardized procedures, reasonable methods, objective evaluation, fair proof, and reliable results of PPP project performance management, continuously improve the quality and efficiency of public service supply, effectively safeguard the legitimate rights and interests of all parties in cooperation, and ensure the stable development of PPP mode in Shandong.

Yang Jie, director of Yunnan PPP center, believes that the PPP performance management policy is conducive to improving the accuracy and efficiency of financial funds, playing a more active role in fiscal policy, fully reflecting the original intention of paying for efficiency and sharing risks of PPP, promoting the standardized and high-quality operation of PPP projects, and continuously improving the quality and efficiency of public service supply.

Cao Fuguo, President of PPP Governance Research Institute of Central University of Finance and economics, summarized the background and significance of the introduction of PPP performance management policy. He said that the comprehensive implementation of budget performance management and the reform of social capital cooperation model promoted by the government and in the field of public services are both milestone reforms in the modernization of the national governance system and governance capacity. One of the typical characteristics of the latter is pay for efficiency, so it is the pioneer and experimental field of the former. The release of PPP project performance management policy will further effectively combine these two major reforms, which is of far-reaching significance to further promote China's comprehensive and high-quality development and legal progress.

Zhang Shufeng, vice chairman of PPP Research Committee of China Finance Association and executive director of Huaxia Xingfu foundation Co., Ltd., said: pay according to performance is the key link of improving the quality and efficiency of public service supply of PPP projects, and even the soul of PPP mode. CJ [2020] No.13 document for the first time comprehensively regulates and guides this key link, which is conducive to stabilizing social capital investment expectation and stimulating innovation vitality in PPP field. Taking the development PPP project of industrial new town we are engaged in as an example, under the guidance of the principle of pay for efficiency, we have explored and innovated the whole life cycle performance mechanism of comprehensive development, long-term operation, incremental payment and performance payment, which has effectively promoted the high-quality development of many regions. The investment management of the Ministry of finance has been further strengthened.

Highlight 2: regarding social capital as an equal subject, the government pays according to performance

The second highlight of PPP performance management policy is that social capital is regarded as an equal subject and the government pays according to performance.

Ji Xinhua, deputy director of the financial department of Shanghai Municipal Bureau of finance, believes that the PPP model always emphasizes pay for performance, which is an important means for financial funds to enhance efficiency. The PPP performance management policy further clarifies the performance management requirements of the PPP project in the whole life cycle, including goal setting, monitoring and evaluation, and pay for performance, refines the evaluation process, standardizes the index system, and consolidates the management foundation Based on this, it will be conducive to give full play to the advantages of PPP mode.

In addition to local governments, participants in the PPP market have said that the PPP performance management policy has realized the essence of PPP incentive compatibility and pay for performance.

Zhao Shikun, managing director of Beijing Zhongze Rongxin Management Consulting Co., Ltd. Through PPP performance management, we can truly realize the link between output and performance, and pay for efficiency, so as to promote the quality and efficiency of public services.

According to Zhang Liao, chairman of Jibang Consulting Co., Ltd., PPP project performance management must take PPP contract terms as the carrier, and take the agreed performance indicators as the basis, timely assess the effectiveness and pay (collect) fees, so as to realize the pertinence and lightweight of PPP supervision.

Zhou Lanping, partner of Beijing Zhonglun (Shanghai) law firm, said frankly: as the core content of PPP project, performance appraisal has always been the focus of all parties involved in the project, and it is also the difficulty in practice. PPP performance management policy is conducive to the overall specification of PPP projects, and can avoid disputes caused by the lack of implementation rules in practice.

Yang Baokun, chairman of Yunnan Yunling Engineering Cost Consulting Co., Ltd., believes that the PPP performance management policy covers all parties involved in PPP and is applicable to all types of PPP projects. This is an important document for the Ministry of finance to build a law + policy + operation guidance + contract four in one PPP system, improve the bottom governance of PPP, open up the last kilometer of PPP through the establishment of a standard system, realize the essence of PPP incentive compatibility and pay for efficiency, and improve the operation effectiveness and sustainable development goals of PPP projects.

Deng Bing, executive director and Secretary General of PPP research center of Peking University, told us that PPP is a long-term mode of political and social cooperation. One of its core concepts is real operation, and the important guarantee of operation is full life cycle performance management. The PPP performance management policy issued by the Ministry of finance will strengthen the confidence of social capital in operation and standardize the performance management of PPP service institutions Standards are conducive to the healthy development of PPP in China.

Ding Huamei, deputy director of PPP asset trading and management platform and President of Tianjin financial assets exchange, said that the PPP performance management policy not only provides a standard for the continuous and effective operation of PPP projects, but also lays a solid foundation for the refinancing of PPP projects and the deepening of the refinancing market. At the same time, the framework design of performance evaluation indicators after the project enters the operation period provides continuity, unity and more concrete and multi-dimensional evaluation indicators for the subsequent realization of PPP asset trading, the project operation benefits after the transaction, and PPP assets entering the standardized asset trading market through securitization.

When talking about how PPP performance management policies restrict and protect the rights and interests of PPP project participants, Zhao Guohua, director of Consulting Department of PPP research center of Shanghai Jiaotong University, believes that PPP performance management policy strengthens the organizational guarantee and two-way assessment constraints of government agencies, social capital and other participants in PPP project performance management, and improves the quality, efficiency, fairness and transparency of project operation Lightness. The guideline has injected a strong stimulant into the scientific and standardized management of PPP industry. Xu Dongsheng, head of water environment investment center of Beikong water group, also believes that the release of PPP performance management policy will further improve the performance management and service output level of PPP projects in the whole life cycle, which is conducive to the long-term development of PPP.

In addition, with a large number of PPP projects entering the implementation stage, especially many projects have entered the payment cycle, PPP performance management policy provides support for the normal performance of the contract between the government and social capital. Jin Yongxiang, general manager of Dayue Consulting Co., Ltd., believes that the PPP performance management policy plays a role of escort for PPP, avoiding the phenomenon of PPP as an economic policy falling into a tailspin and unfinished. At the same time, it also transmits the policy signal of the government to continue to promote PPP, which is conducive to strengthening the confidence of local governments in promoting PPP and the confidence of all parties concerned to participate in PPP, so as to achieve the goal of six stability under the influence of the epidemic The standard has extremely important practical significance.

The PPP performance management policy also stipulates that the project implementation agency should disclose the performance evaluation results in time, rectify their own problems found in time, and bring the performance evaluation results into the scope of their work assessment. Liu Fei, partner of jintiancheng law firm, believes that bringing the implementing agency into the scope of PPP project performance evaluation will greatly enhance the government's reputation in the implementation of PPP projects, and urge the implementing agencies to actively manage and strictly supervise PPP projects.

Highlight 3: milestone of long term innovation mechanism

The PPP performance management policy released this time can be regarded as the milestone of establishing long-term innovation mechanism in PPP market, especially highlighting the reward and punishment mechanism and dispute resolution mechanism. Of course, in the implementation process, considering that there are many types of PPP projects and the cooperation period is long, Xie Jianhui, general manager of Investment Department of China Construction Group, suggests that the performance index system should be refined by type and specialty, and the adjustment mechanism during the cooperation period should be explored.

PPP is an indispensable participant in the economic and social recovery in the post epidemic era. Wang Zecai, director of the government performance research center of the Chinese Academy of financial Sciences, believes that the PPP performance management policy will further stimulate or expand the enthusiasm of the government and social capital cooperation in the implementation of the new infrastructure plan, appropriately increase the fiscal deficit ratio, and issue special treasury bonds More active and targeted policies can also effectively hedge or reduce the public risks of the participants in PPP projects. PPP performance management policy strengthens the feasibility of improving the implementation rate of government and social capital cooperation projects through regular performance evaluation and accountability, and will effectively release the potential effectiveness of social capital actively participating in the supply of infrastructure, public goods and public services.

Xiao Guangrui, President of Beijing Mingshu Data Technology Co., Ltd., believes that PPP performance management policy provides clear guidance for many ambiguous operations in practice, and emphasizes the role of PPP comprehensive information platform in organizational security. In view of the long-term and multi role characteristics of PPP performance management, performance management software and other information tools can play a greater role in improving the management efficiency and promoting the supervision of all parties, and can optimize the industry performance index system through practice accumulation.

Industry experts interpret how PPP performance management policies can boost the development of long-term innovation mechanism from the perspective of finance. Zheng Davi, deputy director of PPP center of Shanghai Pudong Development Bank Co., Ltd., suggests: firstly, when selecting projects, we should pay attention to social capital to ensure that they have the ability of construction and operation performance of relevant projects as stipulated in PPP contracts; secondly, in the evaluation of projects before financing, financial sensitivity analysis should be conducted according to the impact of different performance evaluation results on fees, and the income and debt repayment of the project should be analyzed Thirdly, in the post financing management, we should use big data platforms such as PPP comprehensive information platform to track the results of performance appraisal and pay for efficiency to ensure the security of project financing.

Chen Jiawei, credit management department of the head office of Agricultural Bank of China, believes that with the continuous implementation of PPP projects, a large number of PPP projects in the construction and operation period are facing performance appraisal. The PPP performance management policy has carried out scientific and professional specifications in key areas such as how to establish project performance objectives and performance index system, and how to carry out project performance evaluation, which is the performance management of all parties involved in PPP projects The important guidance document of PPP project has an important role in promoting the development of PPP projects.

The relevant person in charge of the performance management department of Bank of China said that in the performance management of PPP projects, the Bank of China implemented policies according to different regions and industries. We should adhere to the bottom line of compliance and commercial sustainability in terms of project and customer access, comprehensively consider the progress and use of project construction in process management, adhere to prudent risk assessment, strengthen penetrating review, and pay attention to the whole life cycle management of the project.

It is worth mentioning that the performance objectives and performance indicators management of PPP projects in Chapter II of PPP performance management policy states that the performance objectives should conform to the regional economic, social and industrial development planning, adapt to the local fiscal revenue and expenditure situation, be result oriented, reflect the public services that the project should provide, and embody the concept of environmental social corporate governance (ESG) ESG, namely environmental, social and corporate governance. Relevant experts expect that ESG index is consistent with PPP mode, which provides more possibilities for the future development of PPP mode in China.