Metronet was responsible for upgrading and maintaining most of the London Underground under one of the largest PPP programmes ever undertaken.

The structure was sophisticated.

The contracts were enormous.

The advisers were experienced.

And the incentives were fundamentally wrong.

“That doesn’t apply to our project.”

Of course not.

Your project is unique.

So was Metronet.

Well… in our case.

Metronet’s shareholders were also its principal suppliers.

Con 2 c*jones… or with 2 eggs.

Strong governance, just as I like.

So, as you can imagine, much of the work was awarded within that closed circle of friends… and, of course, with limited competitive pressure.

The lenders were expected to provide financial discipline.

You know… PPPs, right?

But. 95% of their lending was effectively protected if Metronet failed.

So bankers were in Fiji with their bonuses and forgot the part of oversight..

This was not new.

Anyone with 2 inches of forehead, or 2 dedos de frente, could anticipate this issue.

In fact, even the World Bank I’m not very fan of, as you know, writes things like this:

You cannot replace aligned incentives with contractual complexity.

You cannot expect strong oversight from parties protected from the downside.

You cannot create competitive tension when the suppliers control the buyer.

You cannot transfer risk to someone who does not truly carry it.

Of course, this project was different…

… until Metronet accumulated a projected £2 billion overspend and entered administration.

Extremely common mistakes.

Your asset may be unique.

Your contract may be unique.

Your consortium may be unique.

The principles determining whether they work are not.

Use this information at your own risk.

For more insights… check below.

​THE ROOM: 15 Great Lessons of a Successful PPP Project​

​THE ROOM: The 15 Top Lessons of a PPP Project Nightmare​

​THE ROOM: How to Break Into PPPs (Without the Bullshit)​

​The ROOM: The ONLY way of doing a proper procurement process​

​THE ROOM: Back-to-Back PPP Gap Analysis Explained​

​THE ROOM: The Top 10 Errors That Kill Your PPP Deal​

​THE ROOM: How to Deal with Frustrating Lenders' Approvals in PPPs.​

​THE ROOM: THE ROOM: Minimum size for a PPP Project​

​THE ROOM: Buildings in PPP - Discussions with an African colleague​

​THE ROOM: Key Challenges and Solutions in PPP Highway Projects - 5 Clauses You Should Improve​

Or… of course, you can have them all… and many other interesting lessons in The Room.

​The Room​

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