4.3.1. Process for Planning of Administrative Process

Management and control of risk is one of the most important factors during the PPP life cycle. Properly implemented administrative processes are imperative for effective risk management. However, the planning and establishment of administrative processes is not an easy task and when doing so, the government must:

4.2.1. The Role and Responsibilities of the Private Partner

From a practical perspective, the Value for Money generated through a PPP depends on the quality of the private partner and the government’s contract management systems and teams. This is especially true for PPP contracts that have some form of risk retention on the part of the government, be it in the form of a minimum revenue guarantee or some other form of contractual undertaking.

Contract management is a complex function, which consists of multiple activities. However, the primary activities can be divided into four main components.

A tangible contract management function assists in managing obligations in an effective manner; this saves the two parties significant time and effort and provides benefits in terms of business strategies and procedures.

Contracts dictate every aspect of key business strategies and relationships. Many contractual parties spend a considerable amount of time and resources concluding contracts to their liking.

The objective of PPP contract management is to obtain the services specified in the output specifications and ensure ongoing affordability, Value for Money (VfM) and appropriate management of risk transfer.

This general introduction shows the main components of PPP contract management, together with steps that need to be taken in order to be effective. The learning objectives are outlined in box 7.1 below.

Once the PPP contract is signed and financial close has been achieved (refer to chapter 6), the Construction Phase commences. This culminates in a form of commissioning, which triggers the beginning of the Operations Phase. While the structure of the PPP Certification Guide treats the Construction Phase and the Operations Phase as being distinctive phases and provides separate guidance on each, there is an overarching theme that unites the two phases. The theme is contract management.

6.8.1 Negotiating with Banks

The complexity of the procuring authority’s PPP project requires the consortium to adopt a project management approach to ensure that all necessary experts and skills are managed in an effective and timely manner. Upon signing the Letter of Intent (LOI), Memorandum of Understanding (MoU), or Consortium Agreement (CA), and certainly no later than receipt of the RFP, the consortium will ensure that a bid manager is appointed. The bid manager will be responsible for the following tasks: