Designing the PPP Contracts: What is crucial?

“PPP Contract Design is a complex task. To achieve this, first of all, you have to fulfill the steps of the PPP Project Cycle.”

Before the PPP transactions are implemented, the draft PPP Contracts should be prepared. But before doing that, the below mentioned approach which is called PPP Project Cycle should be realized.

1   Project Identificaiton

The Project Identification phase is important because it determines whether the selected project can be delivered as a PPP instead of using traditional procurement.

Identification

Output Specifications

2   Project Appraisal

In the Assessment Phase; an appraisal process is realized to review if developing and implementing the potential PPP projects will make sense.

Project Viability and Economic Viability

Environmental and Social Studies

Commercial Viability

Value for Money

3   Structuring

The Structuring phase means; identifying risks, allocating responsibilities, rights and risks to the relevant party.

Identifying Risks

Procurement Method

Allocating Risks

Draft PPP Contract

4   Designing the Contract

Designing the Contract phase has a crucial role on the sustainability of the PPP project. Because PPPs are long term contracts, they need to have balanced flexibility to enable dealing with the changing circumstances within the contract.

Payment Mechanism

Output Specifications

Dispute Resolution Mechanisms

Termination Provisions

5   Bidding Process and Financial Close

In the Bidding Phase the government selects and signs a contract with a private party. And, the private party secures finance which means financial close.

Notice and Prequalification

Invitation to Tender

Bid Evaluation

Financial Close

6   Contract Management 

The Contract Management Phase begins from the effective date of the contract to the end of the contract period including monitoring and enforcing the requirements, and managing the relationship between the partners.

Monitoring Service Outputs

Change Management

Dispute Resolution

Expiration of the Contract and Asset Handover

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