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The G20 initiative has launched its Public Private Partnership (PPP) Contract Management Tool, a free online resource that provides practical, user-friendly guidance for public officials in charge of managing PPP infrastructure projects after financial close, through construction and operations. The aim of the PPP Contract Management Tool is to help government officials address the various challenges of PPP projects, preventing potential setbacks and disruptions throughout the construction and operations phases of a project. 

Chris Heathcote CEO Global Infrastructure HubThis tool has been created with global professional services consultancy Turner & Townsend to provide practical guidance to increase the quality of PPP infrastructure investments. Using 250 infrastructure PPPs reaching financial close between 2005 and 2015 as a basis for understanding successes and challenges, the tool has also been informed by three global workshops with government participants from over 30 countries, as well as multilateral development banks, including the World Bank, the Inter-American Development Bank and the European Investment Bank, and infrastructure legal practitioners from King & Wood Mallesons and Norton Rose Fulbright.

According to Chris Heathcote, CEO of the Global Infrastructure Hub, a great deal of attention is paid to the preparation, procurement and negotiation processes of PPPs, but this is only the start of delivering a successful project, and in many ways the hard work begins after financial close. “Simply signing a PPP contract and letting it run its course will not automatically lead to the private sector delivering the public service to the level of quality expected, and has the potential to undermine the entire process of project preparation and procurement.”

He adds that stronger public sector oversight and contract management are essential to realising the true value of investment through PPPS, and governments therefore need to focus on the management of PPP infrastructure projects to ensure that the public is receiving the full benefit of the infrastructure services. “Governments need to monitor the obligations of a private sector operator and ensure that scope changes are managed effectively to ensure value for money and minimise the risk of disputes. Governments also need to ensure that community stakeholders are consulted in relation to disruptions through construction and operations.”

Procuring authorities need to ensure PPP contract management teams are well-resourced, and that adequate training is provided to the officials responsible for handling both day-to-day management issues, and the significant challenges that can arise, such as requests for renegotiation, Heathcote says. “Our research finds that up to 48% of PPP contracts globally are renegotiated within the first 12 years. The key issues associated with renegotiation are that they don’t typically benefit from a competitive tender process and often lack transparency. Therefore, it’s important that the government’s contract management team has the capacity and resources required to successfully manage a renegotiation.” 

Murray Rowden, Regional Managing Director, Americas & Global Head of Infrastructure at Turner & Townsend, points out that PPPs offer a huge opportunity to unlock infrastructure investment, but these long-term programmes require a long-term view if they are to deliver for all parties. “Learning from past examples, the tool sets out the skills and expertise required to both procure and manage programmes across their whole lifecycle – ensuring that infrastructure assets are set up for success from day one.”

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