The following definitions have been used for the purpose of the reference tool. Many of the definitions are based on those defined by the APMG Public-Private Partnerships Certification Program,[1] but have been adopted for the context in which they are being used.

Applicable laws
The laws and legal frameworks that apply to a given PPP contract and project. The applicable laws may depend on the country and jurisdiction in which the project is located, the law of the PPP contract, or some other consideration.

A form of alternative, non-judicial dispute resolution, where the parties select an impartial third party/panel subject to a written agreement. The exact procedure to be followed may be governed by a country's arbitration laws, by the arbitration rules prescribed by an international body or by another agreement. Arbitration is detailed in Chapter 5 (Disputes).

Availability payment
Payment made over the lifetime of a PPP contract in return for the Project Company making the infrastructure available and in compliance with agreed performance standards. Non-compliance with the performance standards typically leads to payment deductions.

The ability of a project to be accepted by lenders as an investment under a project financed structure, or the ability of the project to raise a significant amount of debt financing by means of long-term loans under a project financed structure, due to the creditworthiness of the project in terms of sufficiency and reliability of future cash-flows.

Brownfield project
From a technical/engineering perspective, investments in a project on a site that has previously been used for industrial purposes or has been the site of significant buildings.

From an investor perspective, project investment in an infrastructure asset that was existing before the time of procurement, or that was previously a greenfield project but is in operation at the time the investment is made.

Case Study
The case studies developed as part of the development of the reference tool and which comprise Appendix B (Case Studies).

An assertion, by one of the parties to a PPP contract, of a right to compensation and/or time relief from the other party, in accordance with the terms of the PPP contract.

Civil law
Civil law is typically a codified system of law which is generally more prescriptive than a common law system. In a civil law system, the judge’s role is typically greater and the parties to an agreement typically have less freedom to contract. The system of law becomes relevant to the reference tool as there are common differences in the way certain events are treated in civil law jurisdictions, noting also that every legal system is different.

Common law
Common law is a system of law used in many jurisdictions, which is generally uncodified. Although common law typically also relies on several statutes, it is based also on precedent set by past court decisions. Parties under a common law system typically have more freedom to contract. The system of law becomes relevant to the reference tool as there are common differences in the way certain events are treated in common law jurisdictions, noting also that every legal system is different.

Construction contract
An agreement entered into between a principal and a contractor for construction works. In the context of a PPP, the agreement will typically be entered into between the Project Company and the construction contractor for the design and construction of the PPP project assets. Also often commonly known as a ‘design & build (D&B) contract’, ‘design and construction (D&C) contract’, or ‘Engineering-Procurement-Construction (EPC) contract’.

Construction contractor
The party that is responsible for the construction works under a construction contract. In the context of a PPP, it is typically the party that is responsible for the design and construction of the PPP project assets. Often also referred to as a “Design and Construction (D&C) Contractor” or “Engineering-Procurement-Construction (EPC) Contractor”.

Construction phase
The period from financial close to the completion of testing and commissioning during which the construction works are completed. On brownfield projects, this includes work such as rehabilitation to existing assets and so may run concurrently with the operations phase. The term ‘construction’ is also used in the reference tool to describe this phase.

Contingent liabilities
Obligations/liabilities triggered by a discrete but uncertain future event. This reference tool applies this term especially for those liabilities that affect the government under a PPP contract. The types of contingent liabilities that are relevant to governments in relation to PPP contracts are payment obligations under a PPP contract that are subject to the occurrence of certain events, such as termination.

Contract management manual
A knowledge management tool for succession planning and transfer of knowledge through the team. It may also provide a guide which highlights the most immediate and critical actions that must be taken by the contract manager when administering the contract.

A party that is agreeing to perform services for another party under a contract. Common examples in the context of a PPP are construction contractors and operations contractors, though other contractors may be relevant, such as a supply contractor for the supply of a specific part of the project assets or a fuel supply contract.  

Cure period
A period of time allowed for a party to remedy a default under a contract. For example, the Project Company may have cure periods under a PPP contract to remedy its default under that contract, and the construction contractor may have cure periods under a construction contract to remedy its default under that contract.

Demand risk
The risk that actual demand (that is, usage or patronage of an infrastructure project) does not meet the demand forecast at financial close.

A formal disagreement between the parties to a PPP contract, which is subject to the dispute resolution provisions of that contract.

Environmental Impact Assessment (EIA)
The formal process used to predict the environmental consequences, positive or negative, of a project. This is usually carried out by an agency or authority other than the Procuring Authority, and may result in conditions being requested or necessary to meet in the design and construction of the project.

The portion of the financing provided in the form of share capital or other debt that is subordinated to the senior debt provided by the lenders of the Project Company.

Equity Investors
Investors who finance the equity portion of a Project Company’s financing, typically as share capital or subordinated debt. Another term commonly used is shareholders.

Financial close
The point in time at the end of the procurement phase where the PPP contract has been signed, any conditions precedent for financing are met and financing is in place so that the Project Company can commence construction.

The source of money required up front to meet the costs of the project. Financing is typically sourced by the government through surpluses or government borrowing  for traditional infrastructure procurement, or by a Project Company raising debt and equity finance for PPPs, and can be a combination of both.

Force majeure
The phrase force majeure typically refers to events that are outside of the control of the parties, could not have been anticipated and make it impossible for a party to comply with the PPP contract. Force majeure provisions are common in PPPs and what constitutes a force majeure event may be set out in the relevant PPP contract or in the relevant law (particularly in civil law jurisdictions).

The source of money required to meet payment obligations. In a PPP context, it refers to the source of money over the long term to pay the Project Company for the capital investments and operating, financing and maintenance costs of the project. Funding is typically sourced from taxes (in government-pays PPPs), or from user charges (in user-pays PPPs), or a combination of both.

Refers to federal, state, and/or local/municipal government and their respective line agencies and/or ministries.

Government-pays PPP
Broadly refers to a PPP in which the revenue of the Project Company is in the form of budgetary payments made by the Procuring Authority, usually linked to performance or use, although this can be an overly simplified definition.

Greenfield projects
From an engineering point of view, these are projects to be developed on sites that have not had previous industrial use or significant buildings. From an investor perspective, they are project investments that relate to a PPP that has recently been awarded or is under construction, and where there are significant new structures or very significant upgrades of existing infrastructures.

The transfer of the project assets, and responsibility for those assets, to the government or to a new Project Company or new operator upon the termination or expiry of the PPP contract.

An independent third-party normally appointed by both the Project Company and the Procuring Authority, whose remit is to certify that the construction works comply with the specifications and standards set out in the PPP contract.


Key Performance Indicators (KPIs)
KPIs are designed to allow the Procuring Authority to measure the level and quality of service that is being provided. They are a collection of measurable indicators of performance chosen to reflect how well the Project Company is providing the service that the project was designed to deliver. KPIs are detailed in Section 3.2 (Performance monitoring).

Institutions that provide lending or debt capital to the project: mainly banks through loans and institutional investors through project bonds.

Long stop date
A final date set by the Procuring Authority by which services must commence. Non-commencement of services by this date may lead to termination of the PPP contract. Also referred to as a sunset date.

Net present value
The discounted value of an investment’s cash inflows minus the discounted value of its cash outflows. To be adequately profitable, an investment should have a net present value greater than zero. Often also referred to by its acronym, NPV.

Operations contract
An agreement entered into between a principal and a contractor for operations and maintenance (O&M) works. In the context of a PPP, an agreement entered into between the Project Company and the operations and maintenance contractor for the operations and maintenance (O&M) of the PPP project assets. It also includes a “maintenance contract” and a “facilities management contract”.

Operations contractor
The party that is responsible for the operations and maintenance works under an operations contract. In the context of a PPP, it is typically the party that is responsible for the operations and maintenance of the PPP project assets, as well as for providing all of the material, labour, equipment (such as engineering vehicles and tools), and services necessary for the operations and maintenance of the project. Also commonly known as the “operations & maintenance contractor”.

Operations phase
The period from the end of testing and commissioning to the end of the term of the PPP contract, during which the Project Company is responsible for the maintenance, and in many cases the operation, of the infrastructure. It is also referred to as the maintenance phase when there are no operations involved, or the operations and maintenance phase where both are required.

Output specifications
The design and construction and service requirements under a PPP that are typically defined on the basis of outputs rather than inputs or prescriptive activities.

Owners representative
A third party individual or company that is hired by the Procuring Authority to represent its interest as the owner on site, either in the construction phase, operations phase, or both.  For example, during construction owners representative performs on-site inspections, facilitates communication between the Procuring Authority and Project Company and verifies compliance with the output specifications and general standards.

Performance monitoring system
A system typically comprising a set of Key Performance Indicators and procedures agreed upon in the PPP contract, primarily for the purpose of determining whether the Project Company is delivering the contracted services according to the service specifications.

PPP contract
A long-term contract between a Procuring Authority (government or other public agency), and a Project Company (private partner or commercial partner) for the development and/or management of a public asset or service, where the Project Company bears significant risk and management responsibility throughout the life of the contract, and where remuneration is significantly linked to performance and/or the demand or use of the asset or service. It covers both greenfield and brownfield projects. This definition is deliberately broad. It includes projects where demand risk is passed entirely on to the private partner (also known as ‘user-pay’ projects or concessions), and projects that are based on availability payments by government irrespective of demand (availability-based projects). It also includes, for example, power purchase agreements where a government entity is the purchaser of the power.

PPP unit
A government organization that supports contracting authorities in implementing PPP projects. They are often part of or attached to one of the central ministries, such as the ministry of finance. PPP units are detailed in Chapter 2 (Contract management team set-up and training).

Project Company
The company that acts as the counterparty of the Procuring Authority in a PPP. Also sometimes referred to as “special purpose vehicle” (SPV).  It is ordinarily a private sector entity however for the purposes of this reference tool, the definition of Project Company may include state-owned enterprises and project companies in which the Procuring Authority may be an equity investor.

Procuring Authority
The unit/body/department within a government that is tendering and contracting the project; the public counterpart in the PPP contract. This is usually the same unit or body that promotes the project (the public promoter), for example, the ministry or department of transportation, the ministry of finance, and so on.  It also includes “contracting authority” “public party”, “public partner”, “public authority”, and “grantor.”

A mechanism stipulated in many PPP contracts in Latin America which allows for the tariff or availability payment to be changed with the intention of restoring the economic equilibrium of the PPP contract. This adjustment can be made as a response to a PPP contract renegotiation, or as a response to external events such as a change in the rate of inflation. Rebalancing is detailed in Chapter 4 (Renegotiation).

Right of Way
A right to a corridor of land typically required in linear infrastructure projects, such as roads or transmission lines.

An uncertain event which, if it occurs, may cause actual project outcomes to differ from expected outcomes.

Risk allocation
The allocation of the consequences of each risk to one of the parties in the contract, or agreeing to deal with the risk through a specified mechanism which may involve sharing the risk. For guidance on typical risk allocation arrangements between the Procuring Authority and the Project Company, see the GI Hub’s PPP Risk Allocation Tool. [2]

The government’s or the lender’s option to assume the contractual responsibilities of the Project Company through managing their contract in cases when the Project Company is not meeting its obligations under such a contract. Procuring Authority step-in is detailed in Chapter 6 (Insolvency).

A contract between the Project Company and a third party, providing for performance of part of the Project Company’s obligations under the PPP contract. Common examples are construction contracts and operations contracts, as well as specialist subcontracts sitting under the construction contractor.

Substantial completion
The stage at which construction is sufficiently progressed, in accordance with the PPP contract, such that the project facilities can be utilised for their intended use and operations can begin. Substantial completion is typically certified by both the Procuring Authority and Project Company and the independent certifier (if appointed) once the compliance with contractually defined conditions can be verified.

Termination payment
A payment made by the government under the PPP contract, following termination of the PPP contract. A termination payment can also be payable to the government in limited circumstances.

Testing and commissioning
The process of testing that occurs to signify the completion of the construction of a project to ensure that the Project Company has met all of the preconditions necessary for the project to commence operations, as well as demonstrated that the infrastructure can deliver the services in accordance with the output specifications.

Unitary payment
A term for government payments common under a government-pays PPP contract.

User-pays PPP
Broadly refers to a PPP project in which the revenues for the Project Company are based on user-payments (for example, tolls for a road), though this can be an overly simplified definition.

Value for money
Broadly speaking, to obtain or receive Value for Money (VfM) means that the money spent is worthy, that is, the value of the product or service received equals or exceeds the amount spent. The decision to spend (or invest in this context) is a wise decision as it is creating net value for the payer.

[1] Available at

[2] Available at