Edgars BiržeDecision Logic Audit
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CASE STUDY · Ongoing

Long-Term Municipal Heat Supply Model

Evaluation of a long-term heat-supply organisational model in a situation where financial, legal, technical, institutional and governance questions are interdependent.

PROJECT SCALE

A decision with long-term financial and institutional consequences.

  1. EUR 52.77 millionIndicative PPP contract valueexcluding VAT, at 2025 prices
  2. 21 yearsContract term1 year of construction + 20 years of maintenance
  3. Gulbene MunicipalityPublic partnerpublicly documented framework of the PPP / concession project

Public source:Central Finance and Contracting Agency — “Gulbene Heat Supply Concession”

STARTING SITUATION

A solution had been put forward. Confidence in its suitability had not been established.

At the start of the project, one solution had already been brought to the foreground, but there was not sufficient confidence that the justification for its suitability matched the scale of the project and its long-term consequences.

The work began as strategic consulting — reconstructing what the chosen direction rested on, which assumptions were embedded in it, and whether the alternatives remained sufficiently open for comparison.

ADVERSARIAL REVIEW

What conclusions could actually be drawn from the expert findings at the level of the whole project?

The justification for the existing direction was subjected to adversarial review. Examining the chains of reasoning showed that arguments from individual expert findings could not automatically be extended to a conclusion about the project as a whole.

That does not in itself mean that the expert findings were incorrect within their respective professional domains. The object of review was a different transition — whether a particular domain finding actually supports a conclusion about the suitability of the entire long-term model.

  1. What exactly is being evaluated?

  2. What does the specific expert finding establish?

  3. What may legitimately be concluded from it at the level of the whole project?

ALTERNATIVES

The work did not end with criticism of the existing direction.

Once the initial justification was no longer treated as sufficient support for the entire decision, alternative heat-supply organisational models were reopened for consideration.

Each alternative was converted into a testable roadmap — not merely named, but broken down into prerequisites and questions that need to be resolved before the options can be compared properly.

VERIFICATION GATES

An alternative becomes comparable only when the conditions it must satisfy are visible.

  1. Legal framework

    What may legally be done under the specific model and what obligations it creates.

  2. Roles of the parties involved

    Which functions, responsibilities and options remain with the municipality, the operator or other parties under each model.

  3. Financial and risk structure

    Where the costs, financing obligations and financial consequences of specific risks sit.

  4. Institutional and operational capacity

    What capabilities and resources are required for the particular model to be executable in practice.

WORKING WITH THE TEAM

As the number of alternatives increased, the reasoning process itself also became an object of work.

Legal, financial, technical, institutional and governance questions are being addressed simultaneously in the project. To prevent them from collapsing into a single discussion, the process keeps track of what has already been established, what remains unresolved, which conclusion depends on which prerequisite, and which question needs to be referred to a specific expert or party.

During the work, the project's previous owner also rejoined the process, bringing additional context from the project's history and technical experience back into the discussion.

ENGAGEMENT FORMATS IN THE PROJECT

The form of work changes with the location of the problem.

  1. STRATEGIC CONSULTING

    Direction or position

    Test what the chosen direction rests on and reopen other alternatives for comparison.

  2. NEGOTIATION STRUCTURE SUPPORT

    Team reasoning process

    Keep questions, arguments, expert conclusions and unresolved points separate and traceable.

  3. DECISION LOGIC AUDIT

    A specific decision structure

    Test whether a particular conclusion actually follows from the available facts, assumptions and expert findings.

These are not three linear stages of the project. Within one extended decision process they recur depending on whether the problem at a particular moment lies in the direction, the structure of the discussion, or the justification for a specific conclusion.

CURRENT STATE

The final model has not yet been determined.

The team is currently continuing to test the critical prerequisites of the alternatives, including the legal framework and the capabilities and constraints of the parties involved.

At this stage, the role of the Decision Logic Audit is to keep visible which conclusion depends on which evidence, what has already been tested, and what must not yet be treated as established.

For that reason, this case study is not presented as a completed success story. It documents an ongoing process of structuring and testing a decision.

SOURCES AND BOUNDARY

Public project facts are separated from observations of the working process.

Public project-scale facts:

Central Finance and Contracting Agency — “Gulbene Heat Supply Concession”

Process description:

The description of the working process is based on the author's direct involvement in the project. Confidential information from documents, the identities of non-public individuals, and final conclusions that have not yet been tested are not disclosed publicly.