This is the phase during which the project finance is drawn down and the construction contractor and subcontractors engaged by the private partner begin construction, testing, and commissioning of the different components of the project according to an implementation schedule. The major responsibility related to the implementation tasks in this phase lies with the private partner. However, a management process by the government needs to be in place from the outset to ensure timely completion and satisfactory operation.
PPP contracts are complex and detailed. Depending on the asset needing to be constructed, such as transportation sector infrastructure (roads, rails, ports), health sector infrastructure (hospitals), and commercial buildings (office accommodations, schools), contract management must be appropriate for the specified construction or implied construction method. It is therefore important that the government has some understanding of the technicalities involved when a private partner designs and constructs the specific asset. Even although the government does not have control over this particular phase, it is important that it understands and acknowledges the relationship of the main components of construction which are time, quality and cost of an asset.
It is also important to distinguish between the wants and needs of the government as the “wants” might exceed the “needs” and not necessarily achieve VfM. Whatever the “wants” and “needs” are of the government, the private partner’s obligations are set out in the PPP contract. If the government decides that its wants or needs differ from what is in the contract, change management processes and decision-making come into play.
In order for the Construction Phase to commence and run smoothly through to the Delivery and Commissioning Phase, several points need to be considered and actioned by the government:
- Take steps to resolve differences in the interpretation of the output specification;
- Monitor the progress of project delivery and the quality of work;
- Oversee the conduct of required tests, evaluate the test results, and take decisions as required;
- Consider variations to the output specifications;
- Inspect equipment to be installed; and
- Certify and provide approvals as may be needed under the contract.