Given the long term nature and complexity of PPP projects, it is not uncommon for there to be some form of disagreement or dispute during the contract management period. Disputes have the potential to damage the relationship between the Project Company and the Procuring Authority. In addition, while they are being resolved there is a risk that the service levels will be affected. The most important goal of any party involved in dispute resolution is to make decisions that will ensure the project moves forward in a viable and sustainable manner while maintaining value for money.
The Procuring Authority and the Project Company may have differing opinions on a range of issues where they have conflicting interests. In this chapter reference to a disagreement is to a disagreement which is not the subject of a formal dispute resolution mechanism. Reference to a dispute is reference to a disagreement where formal dispute resolution mechanisms are implemented. Typical dispute resolution mechanisms are detailed in Section 5.1 (Background).
The Procuring Authority should focus on avoiding disagreements turning into disputes where possible. There are, however, a variety of reasons why disputes arise and they will not always be avoidable. When disputes do arise the focus will need to shift to managing the disputes appropriately to reach a conclusion quickly and in a cost-effective manner while also maintaining a strong relationship between the contractual parties.
This chapter provides a background to disagreements and disputes in PPP contracts in Section 5.1 (Background) and provides guidance on managing disagreements and disputes. The key elements of successfully managing disagreements and disputes are summarised below and detailed in Section 5.2 (Guidance).
D. Treat disagreements and disputes objectively: Do not allow a poor relationship with the Project Company to affect the approach taken to a dispute and do not let the existence of a dispute affect an otherwise positive relationship
Section 5.3 (Summary data analysis) provides a summary of the data analysis with respect to disputes.