There are five main elements that a partnership or concession contract will need to capture

Given that these types of contract create a closer relationship between the public and private parties, it is worth thinking about the main elements that the contract needs to capture. There are five main elements:

• A detailed description of the facility/service required by the public sector. This is often an output-based description rather than an input-based one. For example, the contract for a road should set out the route, the intersections required, the life of the assets, and so on, but it will not set out the construction method to be used.

• A detailed description of how the private sector will get paid for providing the facility or service. The options will range from availability and performance payments, lease payments, shadow tolls,1 and user-based payments to grants, subsidies, and tariffs.

• A formalization of the risk allocation between the public and private sectors in all conceivable situations.

• A definition of each party's legal rights and obligations.

• Provisions for the consequences of situations where there might be a need to terminate the contract earlier than anticipated.

Table 2: Roles for the public and private sectors during the operational phase