REFERENCE GUIDE Output Specifications for Quality Infrastructure Practical guidance with a focus on PPPs and other long-term contracts September 2019 Foreword Infrastructure is an important driver of sustainable and (FMCBGM) in Fukuoka (June 8-9, 2019). The Communiqué2 inclusive economic growth and development globally. of the G20 FMCBGM stresses the importance of “maximizing To achieve this growth, the G20 has recognised that it is the positive impact of infrastructure to achieve sustainable essential to focus on quality infrastructure investment, growth and development while preserving the sustainability in addition to increasing the quantity of investment in of public finances, raising economic efficiency in view infrastructure. of life-cycle cost, integrating environmental and social considerations, including women’s economic empowerment, The G20 Leaders stressed the importance of quality building resilience against natural disasters and other risks, infrastructure investment to deliver high-quality infrastructure and strengthening infrastructure governance”. projects at the Hangzhou Summit in September 2016 , where it was defined as investment: “which aims to ensure The agreed G20 Principles of Quality Infrastructure economic efficiency in view of life-cycle cost, safety, Investment (endorsed in June 2019) are: resilience against natural disaster, job creation, capacity Principle 1: Maximizing the positive impact of building, and transfer of expertise and know-how on infrastructure to achieve sustainable growth and mutually agreed terms and conditions, while addressing development social and environmental impacts and aligning with Principle 2: Raising Economic Efficiency in View of Life- economic and development strategies”. Cycle Cost Quality infrastructure has been a G20 focus under the Principle 3: Integrating Environmental Considerations in Japanese Presidency in 2019, during which this reference Infrastructure Investments guide was developed. The aim of this reference guide is to help operationalise the dimensions of the quality Principle 4: Building Resilience against Natural Disasters infrastructure investment definition so that these are and Other Risks realised at the project level, through the consideration of Principle 5: Integrating Social Considerations in how quality infrastructure objectives are incorporated in the Infrastructure Investment output specifications of long-term infrastructure contracts. Principle 6: Strengthening Infrastructure Governance The guidance has been informed by examining how the These principles align very closely with the Hangzhou dimensions of quality infrastructure investment have been Summit definition, on which this reference guide is included at contract level in 14 project case studies from based, and encourage further development of this topic. a wide range of sectors and countries, and exploring the The reference guide is designed for use by government leading practices and lessons learned from these projects. practitioners and their partners, with an aim to help Agreement on the importance of quality infrastructure has practically integrate these principles in the delivery of quality recently been further strengthened by the endorsement of infrastructure which creates a virtuous circle of economic the Principles for Quality Infrastructure Investment1 at the G20 activities, integrates environmental considerations and Finance Ministers’ and Central Bank Governors’ Meeting enables social inclusion. “This guide seeks to help governments to operationalise the G20 Quality Infrastructure Investment Principles and improve long-term infrastructure outcomes over the project lifecycle and for all end users. Output specifications are a key element to ensure projects are delivered according to expectations while boosting innovation.” Marie Lam-Frendo Chief Executive Officer Global Infrastructure Hub “Combining the expertise and resources of the public and private sector to deliver infrastructure for the good of society is at the heart of future PPPs. This reference guide provides a baseline for leading practices across the globe and is a fantastic step forward in delivering this.” Paul Hammond Global Infrastructure Development and Economics Practice Leader Mott MacDonald 1 Now available at: https://www.mof.go.jp/english/international_policy/convention/g20/annex6_1.pdf 2 Available at: https://www.mof.go.jp/english/international_policy/convention/g20/communique.htm Output Specifications for Quality Infrastructure | 1 Contents Part A: Guidance 1. Introduction .......................................................................................................................................... 4 1.1 Structure of this Reference Guide ...................................................................................................................................................5 1.2 Acknowledgements............................................................................................................................................................................5 2. Development of this Reference Guide .................................................................................................. 6 2.1 Develop the project list ......................................................................................................................................................................6 2.2 Identify Quality Infrastructure focus area examples ....................................................................................................................7 2.3 Develop the project case studies .....................................................................................................................................................7 2.4 Host a consultative workshop .........................................................................................................................................................7 2.5 Create this Reference Guide .............................................................................................................................................................7 3. Quality Infrastructure definition ......................................................................................................... 10 4. Public-Private Partnership (PPP) project definition ........................................................................... 13 4.1 Reference Guide PPP definition .................................................................................................................................................... 13 4.2 Project responsibilities and PPP models .................................................................................................................................... 14 5. Output specifications ......................................................................................................................... 16 5.1 What is an output specification? .................................................................................................................................................. 16 5.2 Output specifications on PPP projects ........................................................................................................................................ 18 5.3 Structure and contents of an output specification ................................................................................................................... 18 5.4 A process to identify requirements and develop an output specification ............................................................................. 19 5.5 The relationship between the output specification, payment mechanism and performance monitoring ...................... 22 5.6 Qualities of a good output specification ..................................................................................................................................... 23 6. Lessons learned and observations ..................................................................................................... 26 6.1 Lessons learned on Quality Infrastructure focus areas ........................................................................................................... 27 7. Conclusion and areas for further development .................................................................................. 37 7.1 Areas for further development ...................................................................................................................................................... 38 8. Glossary .............................................................................................................................................. 40 Part B: Case Studies Built Environment Case Studies ...............................................................................................................48 Energy Case Study ....................................................................................................................................94 ICT Case Study ........................................................................................................................................102 Transportation Case Studies ..................................................................................................................108 Water and Waste Case Studies ..............................................................................................................144 2 | GLOBAL INFRASTRUCTURE HUB Part A: Guidance 1. Introduction