The nature of privately financed public private partnership projects requires a number of contractual mechanisms that may be new to some agencies. An understanding of these mechanisms and how they allow for risk allocation, mitigation and management are important elements for the development of the draft contract. While this work would be undertaken by the legal advisor, an understanding of the contractual mechanisms is required to assist in the development of the public private partnership business case.
The draft contract is then provided to potential proponents during the binding bid stage. This allows for government to discuss specific contractual issues during the competitive process in line with probity requirements.
Following the selection of preferred bidder and financial close, the project moves into the implementation phase. For government, this presents the contract management phase. Given the long term nature of the contracts associated with public private partnership projects, effective contract management is required to ensure ongoing success of the project.
The Contract development and management supporting document provides detail on the type and nature of contracts that will be developed and utilised during the development and delivery of a public private partnership project. The range and scope of contractual documents in a public private partnership project will be familiar to line agencies. What may be foreign territory is the fine detail of the contracts and the interrelationship between the various documents.
The supporting document provides a guide as to the parties involved and their roles within the ongoing partnership. It gives an understanding of the relationships between the various parties including government, financiers, special purpose vehicles, contractors and subcontractors. It identifies the issues that may arise between the parties and possible solutions.
The contract management section of the document explains the key contract management implications, including the main pitfalls and suggested ways of avoiding them. This includes the various mechanisms for monitoring and encouraging optimal performance.
For further information:
Department of Infrastructure and Planning
Strategic Infrastructure Procurement Division
visit Level 5 Executive Building 100 George Street Brisbane
post PO Box 15009 City East Qld 4002 Australia
tel +61 7 3224 2934
strategyandgovernance@dip.qld.gov.au
www.dip.qld.gov.au