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Structuring and Drafting the Tender and Contract

5A realistic timescale is essential

Regardless of the envisaged order of the tasks, it is crucial to schedule and organize the work properly in advance, so as to minimize time disruptions and smooth the process. This work, like the appraisal work, is time consuming and requires a realistic time scale to ensure the required quality (see box 5.4). Structuring and drafting, as well as the whole process of the PPP, is a project in itself. As in any project management function, work organization and time scheduling are paramount factors to successfully manage the project. In this case, project success is achieved through the outcome of tendering out the project in the time expected (and announced in the market) with all conditions checked and approvals received.

BOX 5.4: How Much Time Should be Spent on Structuring and Drafting the Tender Package?

The length of each task and the time required for the whole work process of this phase depends on many factors, especially the level of work done in appraisal, the need for further assessment and preparation, and the level of progress and certainty in the defined pre-structure.

The existence of a clear framework that sets out the criteria to be met by the project contract, the process of authorizations and approvals, and guidelines will help to ensure a smoother process without compromising the quality and reliability of the outcome. Proper planning and organization of the work, identifying key stakeholders and defining/allocating responsibilities clearly within the project team are also paramount.

Insufficient time lies at the heart of many failures in PPP projects. Rushing these critical tasks to meet unrealistic time frames will produce unreliable project structures not duly tested or not properly incorporated in a clear contract that can handle future changes and uncertainties.

The time required for this phase of the cycle (as with appraisal) depends on the particularities of the specific project. The length of time used in countries globally to structure and produce the tender package may vary from around 6 months for simple projects (with no significant challenges in terms of technical and risk complexity) undertaken in accordance with sophisticated guidelines and standards, to 12 or 18 months for more complex projects. This range assumes that the Appraisal Phase produced a highly prepared project with sound feasibility tests and a significantly developed preliminary contract structure. The time must also be sufficient to allow the procuring authority to implement any appropriate early risk mitigation measures (see section 5.5).

If preparation of the tender package is rushed but appropriate quality checks are in place, the approving bodies may require further refinement before tendering. The reputation of the procuring authority will be damaged if this results in rescheduling of the time announced for tendering (see “marketing and testing the project” in section 6). However, if the preparation of the tender package is rushed and appropriate quality checks are not in place, there is a high risk of failure of either the tender process or any PPP contract entered into as a result of that process.

The description in the following section reflects a common structuring and drafting process, notwithstanding that many countries may use variations.

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