7.1 Prepare scenarios of what might happen for all parts of the PPP and put mechanisms in place (contractually or elsewhere) to deal with these.
7.2 Value from PPPs comes from the allocation of incentives and risks between the partners.3 Prepare a risk matrix indicating risks and to which party they are allocated. If incentives and risks are incorrectly allocated then PPPs will not produce better performance.4
7.3 PPP opportunities should be competitively and publicly tendered wherever possible. This principle applies to PPPs of all sizes and types.
7.4 Examine carefully how the money will flow in the PPP arrangement.
7.5 Identify who will monitor compliance to PPP contracts service quality. Build in a community role and make sure there is capacity.
7.6 When designing / tendering PPPs, focus on the desired outputs (clean community) and let the private partner come up with new ways of arranging the inputs (collection by bicycle, trucks or compactors).
7.7 Put clear performance requirements, rewards and punishments in contracts.
7.8 Make sure there are conflict resolution mechanisms stipulated in contracts, or established somewhere.
7.9 Clearly outline who will do what in the PPP and where responsibilities lie.
7.10 Clarify who will make any investments and link these to incentives and risks. Also who owns the assets created and who is responsible for maintenance?
7.11 Think about a small PPP involving local SMEs in the same way you would approach a large water concession - the underlying issues are the same even though the scale is very different.
7.12 Use business and financial plans. Standard formats can be developed, also for specific PPP application in different sectors.
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3 This allocation determines performance - for example, a recyclable waste collector can profit by selling the waste (incentive), but might be replaced (risk) if waste is not collected also from poor households.
4 If a municipality involves only one company in a joint venture without tendering, the company probably will not invest its own money and will perform poorly if there is no danger it will be replaced.