5.24 Purpose: To set out the obligations of each party and the processes which need to be followed. Since the contract is a legal document, the contract administration manual should explain the key contractual provisions and processes in plain English. The manual should set out who does what, when, how and where. This will enable project accountabilities to be allocated and checked against the risk register. It must fully reflect and refer to the Project documentation i.e. it cannot reflect an individual "slant" on the contractual position.
5.25 Useful documents: The principal document is the project contract which contract managers should be familiar with. In addition, SoPC deals with events which may occur during the construction and operational phases of a project. Separate FPU Guidance sets out information and procedures for undertaking a benchmarking and market testing exercise.
5.26 Areas to consider: Research into operational PPP projects found that 78% of the contact managers surveyed agreed that the payment mechanism supported the effective contract management of their project. The contract manager should know exactly what needs to be done when and how, and what happens if there is any failure to meet contractual requirements. The contract manager needs to identify all of the risks and obligations of both parties. The contract administration manual may well be the most appropriate place to document the ways in which contract processes and obligations fit with the governance arrangements. At a minimum, the manual would be expected to provide information in the following areas:
• monitoring compliance with contract conditions;
• the procedures to follow in respect of events which could arise during the contract including market testing and/or benchmarking exercises, variations (whether Authority or Contractor), poor Contractor performance, and disputes;
• financial management and monitoring, including indexation; and
• contingency plans in case things go wrong (see paragraph 28 of this Section).
• payment mechanism: overview and principles; how this works and how to make deductions;
• performance monitoring: requirements; points system, recording; obligations of the Contractor. The contract will define the minimum information to be included within the performance and payment report which accompanies the monthly invoice.
• helpdesk: how it works; key contact details; procedures;
• how the project performance reporting requirements are to be met and reported back to the Project Board; and
• milestones and key deliverables/outcomes.
5.27 Further details of the payment mechanism can be found in Briefing Note 1: Payment Mechanisms in Operational PPP Projects. This can be found on the Scottish Government website at www.scotland.gov.uk/Topics/Government/Finance/18232/BF1.