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Strategy Delivery and Commissioning

74.3. Contract Administration Planning, Establishment and Execution

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:

  • Formalize management responsibilities for transition between the project stages;
  • Monitor project delivery, service outputs, and contract performance;
  • Manage change and variations;
  • Maintain the integrity of the contract;
  • Promote strong working relationships with the project parties;
  • Resolve project issues and disputes fairly and efficiently; and
  • Advocate for regular contract and project reviews to ensure continuous improvement[9].

BOX 7.2: Contents of Contract Management Plan<br />
• A summary of the proposed systems and procedures for variation management, PPP contract monitoring, and financial administration.<br />
• The roles and responsibilities of the procuring authority and the private partner in relation to variation management, PPP contract monitoring, and financial administration.<br />
• The plans for the development of the PPP contract management manual that will be used to provide details of all documents relating to the PPP contract, variation management, PPP contract monitoring, and financial administration procedures.<br />
• An estimate of the resources that the procuring authority will devote to variation management, PPP contract monitoring, and financial administration.<br />

 

 

 

 

 

 

Therefore, the contract director should preparethe PPP contract management plan, paying attention to PPP contract administration responsibilities. The PPP contract management plan should set out those points covered in box 7.3.

4.3.2. Formulating the Contract Management Manual

A contract management manual is a collection of policies and procedures. It should be written in plain language and needs to explain what is expected from the government with respect to its duties and obligations, as well as what needs to be done in order to successfully monitor the private partner’s progress and delivery. The manual should also provide processes and procedures that need to be followed between the organizational structures and departments. This is typically the case for internal procedures involving different departments within the government’s administration, for example the operational management team and accounts department for the payment procedure. With respect to projects that involve numerous public stakeholders such as schools and hospitals, the scope of the manual may be broadened to deal with the interaction among the key public stakeholders.[10]

The contract management manual should always be read in conjunction with the signed contract and must be aligned with the processes contained within the contract. It should never be substituted for the contract itself. The contract management manual must build on the contract management plan and must also be practical and relevant to both the day-to-day and the longer term management of the project contract. Box 7.4 below provides an example of what should be covered in the contract management manual.

 

· BOX 7.4: Contract Management Manual: Main Components Necessary steps for taking action: The contract management manual must highlight the most immediate and critical actions that must be taken by the contract director and relevant team members while administering the contract. These actions need to be set in the context of a clear understanding of the commercial intent of the parties, and the relevant commercial, legislative, regulatory, and policy background.

  • Alignment of resources: The contract manual must enable the contract director to identify the resources required to perform necessary tasks and manage the most time critical and materially significant risks at various stages during the project life cycle;
  • Provide support to governance: The contract manual must support the governance practices of the government, which include communications, accountability, and decision-making processes;
  • Contract management tools and processes: The contract manual must provide a single point of reference for contract management tools and processes; and
  • Adaptability: The contract manual must be a dynamic document and must be updated regularly to ensure that it remains relevant throughout the project life cycle.

Source: Partnerships Victoria, 2003.

The contract management manual further serves as a knowledge management tool, and it will be particularly important for succession planning and transfer of knowledge. For that reason, when new members join the contract management team, it is recommended that they be given specific training in use of the manual.

Finally, the contract management manual will serve as a tool to facilitate the hand-over from one phase to another, and as a comprehensive reference document of the processes and procedures to be followed under these circumstances.

4.3.3. Implement Information and Documentation Management

The government relies on accurate information and relevant documentation in order to make sound decisions, monitor the private party’s performance, comply with its contractual obligations, and manage project specific risks[11]. In a typical PPP project, most of the information is provided by the private party. The government’s role consists primarily of receiving this information and verifying that it is accurate and consistent.

The most common requirement by a government is to ensure that the private partner provides information surrounding financial, legal, and technical issues that are needed for the government to successfully monitor and review the performance of the private partner.

When drafting the contract, the government should be clear and prescriptive with regard to the level of detail, format, and deadlines of the data to be produced by the private partner. EPEC (2014) states that the documentation and information requirements differ between the Construction and Operating Phases. However, for both phases, the type of information needed from the private partner should be carefully considered so as to avoid:

  • Requiring too much information, which would be costly to produce and collate for the private partner and ultimately for the government to analyze; and
  • Requiring too little information, which would limit the government’s ability to perform its duties.

4.3.4. Management Information Systems (MIS) in a PPP Environment

Activities and documentation management of a PPP project are recorded and managed by a MIS. Because the PPP contract ultimately aims to deliver an efficient service to a range of end-users, performance must be closely monitored by the government so as to ensure proper and constant engagement by the private partner.

Certain activities must be performed by a government in order to successfully implement a MIS solution as an integrated communication tool for PPPs[12].

  • Stress in the tender documents that the government expects to have transparent access to these tools throughout the life of the contract;
  • Discuss during the Procurement Stage (to the extent that this is possible under the applicable procurement rules), which MIS solutions the bidders are planning to use and the extent to which they can be shared with the authority (for example, licensing rights, personal data protection issues);
  • Request that the private partner design appropriate MIS interfaces, such as dedicated web portals, for the government; and
  • Test-run the private partner’s MIS solutions in advance of operations commencement in order to ensure that they are functional.

The objective of a sound MIS solution is to ensure that performance can be measured and monitored using the MIS, and that the MIS generates reliable and accurate data on a regular basis. The government will need to ensure that there is full consistency between the contractual performance of the private partner and the MIS interfaces that will be adopted.

Given the rapid evolution of MIS technology, the private partner should have the obligation to upgrade the MIS regularly. It should also avoid expensive, bespoke MIS solutions that rely on the unique intellectual property of one service provider. For example, open source systems are typically cheaper to upgrade and are developed with innovation in mind. Such systems vary in their capabilities, and they can provide: sophisticated document management solutions; clear, auditable communication between the parties; and drive efficiencies over weeks, months, and decades by linking approved processes, notice templates, and prescribed tasks to the underlying PPP documentation.[13]

In some circumstances, however, the private partner or one of its consortium members may have an existing proprietary system that can be used for the project at a low cost. In such cases, it may not be Value for Money for the government to insist upon the use of an open system.

Some systems can also be used by the procuring authority during the tender process for document management and communication with bidders. However, it may not be Value for Money for the procuring authority to mandate the use of the same system through the life of the contract.

 

[9] Partnerships Victoria, 2003. Contract Management Manual: Main components.

[10] European PPP Expertise Centre (EPEC). (2014), Managing PPPs during their Contract Life – Guidance for Sound Management

[11] European PPP Expertise Centre (EPEC). (2014), Managing PPPs during their Contract Life – Guidance for Sound Management.

[12] European PPP Expertise Centre (EPEC). (2014), Managing PPPs during their Contract Life – Guidance for Sound Management.

[13] See, for example, Affinitext website https://www.affinitext.com/solutions/ppps.htm [accessed 01/07/2015]

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