Module 02: Strategic Planning

2.2 What are the key steps?

Strategic planning entails a process of medium-term planning based on sound information and stakeholder participation. It may be merged with or a component of Poverty Reduction Strategy Papers and Medium Term Expenditure Frameworks if these are already developed. If these are not already in place, however, a strategic planning process should precede any activities aimed at formulating a PPP.
A simplified strategic planning process can be conducted within the municipality by:

Summary of Actions
A. Identify the problem
B. Analyse stakeholders
C. Build consensus
D. Define objectives
E. Analyse the context
F. Analyse the providers
G. Explore delivery options
H. Selecting a way forward
I. Coordinate servive
J. Consider implications

Strategic planning for PPPs means developing a comprehensive approach to the development of solutions. It is an essential step in the preparation for PPPs since it will ensure that municipalities know:

◊ what the objectives are;

◊ how the PPP fits within their overall goals and if a PPP is actually the best solution;

◊ how the PPP relates to other municipal functions; and

◊ how the PPP contributes to poverty reduction.

A. Identifying the problem

The first step, identifying the service problems to be solved, can be divided into two assessments – one quantitative, the other qualitative.

A quantitative assessment of the scope of existing service delivery

The municipality needs to carry out an assessment that will answer the following questions:

– What services are received in which locations?
– What are the reliability, quality and quantity of service in each location?
– How much does it cost to supply the service?
– Why has the government failed to deliver better services? What are the political, financial, technical and staffing constraints, for example?

A qualitative assessment of service delivery in relation to livelihoods

The municipality must also carry out a participatory poverty assessment that will provides answers to the following:

1. What access do the poor have to services?
2. What are the primary (physical, financial, social) constraints to better access?
3. How does access vary? For women? For children? For other vulnerable groups?
4. How much do the poor pay for services? What does this represent as a proportion of household income?
5. What are the seasonal variations in supply? In demand?
6. What are the implications of poor services? For example, in terms of queuing times, the additional burden on women, as a constraint on access to education and so forth.

B. Identifying stakeholders

A good strategic planning process takes into account all stakeholders at its earliest stages. The stakeholder identification process is described in detail in Tool 9. At the strategic panning stage it is important to identify all possible parties affected by the partnership and to look at their inclusion into the strategic plan.
The following presents a possible, but not necessarily exhaustive, list of potential stakeholders:

– Consumers and users
– Community-based organisations
– Other representatives/leaders of the poor
– Non-government organisations
– Unions
– Chambers of commerce and other business groups
– Municipal staff
– Local politicians and decision-makers
– Private sector representatives
– Interested parties at higher levels of government

C. Building consensus

A significant consensus-building exercise needs to be undertaken among the various sectors and stakeholders in order to create understanding about the PPP process, develop local capacities and sustain long-term partnership efforts.

Consensus means “overwhelming agreement”. It is important that consensus be the product of efforts made in good faith to meet the interests of all stakeholders. The key indicator of whether or not a consensus has been reached is that (after every effort has been made to meet any outstanding interests) everyone agrees they can live with the final proposal. Thus, consensus requires that someone frame a proposal after listening carefully to the interests of all parties. Interests are not the same as positions or demands, as demands and positions are what people say they must have; interests are, rather, the underlying needs or reasons why people take the positions they do.

Building consensus among and between partners demands considerable investment in time and effort – it is sometimes a painful, but necessary process. Translating partnership objectives into grassroots realities is a challenging participatory exercise requiring patience, flexibility, trust and understanding.

The scale of the PPP will affect its outcomes. The larger the scale (in investment and target group) the more difficult it will be to reach consensus among all stakeholders.
Effective decisions reached through consensus involve the following characteristics:

• Total participation – they actively involve a broad range of stakeholders as partners in planning and implementing the project.
• All partners are responsible – they ensure that each partner has the opportunity to, and responsibility for, making meaningful contributions.
• Partners educate each other – such decisions allow stakeholders to spend time discussing the history of the issue, their perceptions and concerns and ideas for solutions.
• People are kept informed – successes are documented, publicised and celebrated through an ongoing recognition programme and communication campaign.
• A common definition of the problem is used – facilitators make sure that partners discuss and agree on a constructive definition of the problem.
• Multiple options are identified – in reaching such decisions, facilitators provide a medium for stakeholders to seek a range of options to satisfy their respective concerns and they avoid pushing single positions.
• Decisions are made by mutual agreement – managers facilitate the process so that the partners modify options or seek alternatives until everyone agrees that the best decision has been reached.
• Partners are responsible for implementation – facilitators ensure that the group identifies ways to implement solutions.
• Facilitators ensure that partners identify and manage conflicts early in the process.

More detail on how to build a consensus could be found in various literature, including, the MIT-Harvard Public Disputes Program Consensus Building Handbook.

D. Defining objectives

An objective is a specific and measurable result that a project aims to achieve. In this third step, defining objectives, the municipality needs to look at the following issues:

1. What are the objectives of all stakeholders that will be involved in/affected by the PPP should it go ahead?
2. Which services do households, particularly poor households, prioritise? (In this context, the vehicle of service delivery – such as a PPP – should not be presumed).
3. What levels of service can stakeholders, particularly the poor, actually afford to pay for?

E. Analysing the context

Context analysis requires information on the key factors that influence service delivery and hence form the context. The types of information, how it can be collected, its use and so on are listed in Tool 4. Constraints and opportunities are another two major components of context analysis. In regard to these, there is a need for the municipality to address to the following questions:

1. What are the constraints on effective service delivery? (For example, the physical, environmental, social, political, organisational and legal constraints) [see Tools 4 and 5]; and
2. What are the opportunities offered by the context? (For example, developing local stakeholder capacity, promoting national/international stakeholder partnerships and support, technical know-how exchange, enabling aspects and so on) [see Tools 9 and 21].

F. Analysing the role of existing service providers

Understanding existing service provision also involves an analysis of the stakeholders involved in providing services. For this the municipality will have to:

1. identify key service providers and their roles (who is involved, in what service and delivering to whom?);
2. analyse whether or not these providers are delivering effective services (what level of service is provided, what are community perceptions and so on?);
3. ask what the potential roles are for these stakeholders in future service provision?; and
4. identify the factors that will determine the effective engagement of existing service providers.

G. Exploring delivery options

Investigation of options for service delivery in the future involves the municipality researching two key issues.

1. First, it must ask what the various options for improving service delivery are? Tool 11 describes the PPP options. However, there are also non-PPP alternatives, such as state ownership, corporatisation or divestiture (privatisation), all or some of which may warrant further investigation.
2. Second, the municipality will need to look at what the potential impacts of these delivery mechanisms are on the poor? Each of the service delivery options will have a particular impact on low-income individuals and groups and/or those living in poor areas. This aspect is addressed throughout the Toolkit, each Tool providing a list of key issues that must be taken account of with regard to the poor during each of the partnership process stages.

H. Selecting a way forward

The municipality must then select the best way to proceed. In doing so it must consider:

1. what vehicle of delivery is most appropriate to the context and constraints? [See Tools 11, 12 and 13]; and
2. what are the key risks and how will these be mitigated? [See Tool 3].

I. Coordinating the system of service delivery

The municipality should consider its coordinating role. Usually the task force that has been set up acts as the central coordinating body for the ongoing development of the public-private partnership project and guidance material and its application to projects within other agencies [Tool 3].
Depending upon the PPP option, the municipality will have to take upon itself more or less coordinating responsibilities. For instance, in the case of a service contract the municipality will have to take on more responsibility for coordination than in the case of a concession [Tool 9].

J. Considering implications of non-delivery of services

It is important to foresee a situation when a partner fails to deliver the services agreed. This could happen because of:

– construction-related problems, including failure to meet the schedule and/or quality issues;
– revenues that are substantially off-target;
– regulatory and legal problems; and
– other barriers [Tool 5].

If these problems were not considered in the original bid, the partners should follow the mechanisms for requesting renegotiation and should renegotiate and settle the issue as described in the contract.
However, there could be cases of complete failure. Then the local government may need to maintain an option to re-emerge as a provider of the service.

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