Managing the changing environment and emerging risks through amending and adapting contracts is key to de-stressing projects. As such, there are very few, if any, absolute prohibitions on amendment of PPP agreements in any jurisdiction with significant PPP projects. The European Union (EU) has one of the most regulated procurement environments and may be taken as a reasonable representative of good practice on the subject of renegotiation of concession agreements.

As noted, the general risk of implementing the PPP contract lies with the private partner. Exceptions to this general principle are limited to areas of specific relief such as relief events, compensation events, and force majeure events. In such cases, the PPP contract must specify the manner in which such events are notified between the parties.

Scope management is essential to ensure that the project actually delivers that which the ultimate users of the project works require. The output specifications, which are set out in the PPP agreement, should take into account the government’s current, as well as future, requirements to the extent that these are identifiable and quantifiable. Variations to the output specifications may, however, be necessary to cater for changes in the government’s requirements, which could not be anticipated or quantified at the commencement of the contract.

It is common for the private partner to seek to change its shareholding arrangements and thereby, its owners. Provided that such a change does not increase the risk to the government or diminish the public benefit, it should not be prohibited by the PPP contract. The following circumstances are examples in which such a change may be appropriate.

One of the common questions asked about PPPs is why, despite the great development of standardized PPP contracts, so many PPP contracts are varied or amended during their term. With standardization in all areas of PPP project development and implementation, why would any form of change or amendment to the PPP contract be required?

For the purposes of this PPP Guide, quality management is defined as a set of policies, processes, and procedures required for planning and execution (production/ development/ service) in the core business area of an organization. A Quality Management System (QMS) needs to integrate the various internal processes within the organization, as well as within a specific project. It should also provide a process approach for project execution.

It is crucial that the government is aware, at all relevant times, of the development and progress of the project. The most efficient way to ensure that this is done under the circumstances is by requiring the private partner to liaise with the government on a regular basis and report on progress against the construction schedule. The reporting should include information on the progress of the works, notice of any anticipated delays, the program for managing any delays, and other issues of importance during construction.

The private partner should be solely responsible for the design. Although the government should have a right to review the design (see section 6.1.2 above), it should have no rights of approval in respect of the design. Accordingly, all changes in the design to ensure that the output specifications are achieved should be at the risk of the private partner. The government will want the reassurance that the construction or development is capable of delivering the services on time and in a way that meets the output specifications in the PPP contract.

As the Construction Phase progresses, the private partner (and the government in cases where the government makes a capital contribution) must make payments that match the progress made by the construction contractor in completing the construction works. These payments are typically made against milestones that are pre-agreed and part of the PPP contract. Thus, at each milestone, it is necessary for evidence to be provided that the work has advanced to the required stage and is of adequate quality to meet the output specification.