Contents
Regardless of the characteristics of a PPP project (such as the size, project type, complexity or contract structure), the Procuring Authority must have a team that is responsible for its management. The complexity, size and duration of PPP contracts means that success is dependent on having staff within the Procuring Authority who have defined responsibilities for managing the different phases of the PPP project, including relationships with key stakeholders and effective lines of communication with other relevant government departments and regulators.
Setting up a contract management team should be carefully planned and reviewed, as the skillset required following financial close is different from the transactional expertise needed to successfully reach agreement on the terms of the PPP contract.
The requirements for managing the risks taken by the Procuring Authority and the associated liabilities on a PPP project should not be underestimated. PPPs are different from traditional government procurement (e.g. under a construction contract), as they involve significant risk transfer and have a long contract duration. This must be taken into account when developing the Procuring Authority’s contract management team when procuring long-term PPP contracts.
The existence of a dedicated team is key to ensuring value for money is retained through the life of a project and that the project’s objectives are met. Understanding project-specific challenges and PPP contract terms from an operational perspective is essential for determining the optimum size of the contract management team, and the nature and timing of the expertise needed for effective contract management.
Some of the common challenges identified during the data collection process regarding the set-up of a contract management team were:
- Vision, values and strategic objectives of the Procuring Authority not being communicated to and shared with the Project Company, leading to underperformance by the Project Company
- Lack of clarity on roles and responsibilities within the Procuring Authority's contract management team
- Lack of clear and sufficient delegation of authority to the contract management team to make timely and informed decisions without continuously seeking approvals from other relevant government agencies
- Lack of capability within the contract management team
- Inadequate stakeholder engagement
- Lack of an effective performance management framework
- Ineffective systems and processes
