“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.
Phases of
PPP
Project Cycle
01
Project Identification
02
Project Appraisal
03
Structuring
04
Designing the Contract
05
Bidding Process and Financial Close
06
Contract Management
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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