More Than Banks and Lawyers Can Achieve Alone

London-based PIPC sees itself as a ‘do-tank’
By Sarah Murray

Financial Times, 17 November 2006

When Tom Sampson, executive managing director of the Taweelah Asia Power Company, was embarking on a bid for the right to down, operate and expand a power and water project in Abu Dhabi he realised it would take more than investment banks and lawyers to get the deal done. He turned to PIPC, a London-based project management consultancy. The deal went through in April 2005.

The bid in a project that was the largest among a several sell-offs by the Abu Dhabi Water and Electricity Authority (ADWEA) and was complex. It involved a consortium of four companies; Marubine Corporation, the Japanese trading house; JGC Corporation, another Japanese company; BTU Power Company of the US and Powertek Berhad of Malasia.

“With these complex project, it’s fine line between organised, disciplined teams and chaos.” Says Tom Samson, an engineer with a project management background. “I was keen we made sure we were on the right side of that line.”

What was needed says Mr Samson, was a consultant that could establish a framework to manage priorities and resources, bring in tolls for planning and risk management and, most importantly, deliver all this at speed. PIPC fitted the bill. “This is their bread and butter.” Says Mr Samson.

For PIPC, the project was just the kind of cross-border challenge the company likes to get its teeth into. Described by its founder Pip Peel as a “do tank” rather than think tank, PIPC works with clients to execute strategy rather than formulate it. “When you’re forming a programme, you challenge the strategy, work out what’s practical and how to get the value out of it.” Explain Mr Peel. “But you’re not there to say ‘go and buy this’ or ‘stop selling curtains and start selling mushy peas’.”

However, while PIPC is often brought in at the end of a deal to assist with the integration of two companies and to extract cost from the combined business, Mr Peel reckoned it management skills and tools to the deal itself. The Abu Dhabi bid certainly presented challenges. As well as the four companies in the bid consortium, there were five lenders, plus sub-lenders, tax advisers, due diligence experts and environmental impact experts. Moreover, ADWEA had imposed a strict timeframe, with a date for submission of the first bid after which a shortlist of two was to be selected before a final partner would be chosen.

“You had lots of activities to get through,” says Mr Peel. “You couldn’t put a proper bid in until you’d done some technical due diligence and by law you had to do environ-mental impact assessment. So there was a train of activities that had to happen in sequence – and there was a timeline.”

The first challenge was to get everyone on the team working together with clearly defined goals and target dates for them. PIPC established what it calls a “critical path” – in effect, an action plan – and set up a communications hub in London from which a team of four talked to everyone on the project basis to keep the project on track and on time. Moreover, because PIPC was independent – its fees were for getting the project done on time and did not represent a portion of the deal – it had the distance with which to challenge the activities of the team if deadline slipped.

The bid was successful. “We met all the dates, and it was having this disciplined framework in place that helped us to track were we were and work as a team,” says Mr Samson.

Since then PIPC has been working with the new management - the Taweelah Asia Power Company – to deliver the targeted return on capital and work on team dynamics. With a total project cost of $3bn, including purchasing the existing plant and constructing units. Taweelah B, as it is now known, is now one of the world’s largest independent water and power project, both in terms of production capacity and finance.

Mr Peel argues that, when it comes to these types of deals, project managers such as his team are better placed to handle the process then financers or lawyers.

“We had to be able to work with engineers, lawyers, accountants, investment banks, acquiring companies and infrastructure companies.” he says. “I’d argue that any law firm or investment bank would struggle to manage across those complexities.