Regional Hospital of Tlalnepantla contract supervision
The project comprised the development of a new hospital in Tlalnepantla to replace the existing facility using a design-build-finance-maintain PPP scheme that will last for 25 years.
The two bodies involved in the public-private partnership are the Social Security Institute of the State of Mexico and Municipalities (ISSEMyM) and Infraestructura Hospitalaria del Estado de México, S.A. de C.V.
The ISSEMyM retains responsibility for the clinical services, while the private subsidiary company is responsible for construction, facility management and non-clinical services. The subsidiary will also provide all medical equipment and consumables during the lifetime of the contract. The financing deal for this hospital was significant because it featured the first equity investment from pension funds in Mexico in a greenfield social infrastructure PPP project using a development certificate. The project received the 2011 Project Finance Latin America Deal of the Year Award for its innovative structure.
Currie & Brown is responsible for monitoring the compliance of the private entity with respect to the PPP contract and the applicable laws surrounding it. If a breach of obligation is detected, we identify the necessary remedies and apply the appropriate deductions. Our role includes the inspection, monitoring and control of the activities developed by the private entity during all the phases of the project (design, construction, equipment, operation and maintenance). We monitor fulfilment of the obligations and responsibilities of the parties with the terms of the contract. We are also responsible for auditing the deductions and payments reported by the private entity every month, ensuring that they respect the financial clauses of the contract.
Based on a revised and established methodology that Currie & Brown developed, we monitor and evaluate that the services provided by the private entity are in accordance with the terms and conditions outlined in the contract. Our involvement helps reduce overall risk for the client and ensures that the private entity adheres to the obligations defined in the contract.
Currie & Brown accompanies and advises the public entity throughout the entire duration of the project in both contract management and strategy. This prevents the generation of an asymmetry of knowledge between the private and the public entity, which can arise because of a lack of expertise or the high turn-over of public officials.
The success of the Tlalnepantla Hospital set a precedent for the viability of PPP projects in Mexico. The ISSEMyM benefited from its ability to monitor costs and its increased control over the execution of the contract. The supervision scheme further set an example of best practice for evaluating the performance of both stakeholders in infrastructure development projects. Our participation increased the ISSEMyM’s and the State of Mexico’s confidence in the quality of the construction process and in the PPP model as a desirable alternative for future developments.