♦ All public agencies emphasized the importance of adequate front-end or preliminary planning for a project to fully comprehend its business case and potential life-cycle value. This is necessary to understand what service a potential asset should provide and where value is derived. Such compre- hension will undoubtedly influence the remaining decisions on project delivery, including whether the project is a PPP candidate.
♦ When defining or scoping a PPP project, the primary focus should be on identifying and conveying the outputs desired without inappropri- ately compromising existing technical standards. Project outputs are what customers focus on: reliable travel times, safe travel environment, comfortable ride, etc. Thinking first about what customers desire rather than developing a prescriptive definition of the asset is a major transition in practice.
♦ Risk analysis and allocation are paramount to PPP project success. Certainly, risk allocation is not a new concept, but the public agencies with significant PPP experience the scan team met with have evolved from stressing maximum risk transfer to optimal risk allocation in PPP arrangements.
♦ Most countries use an independent verifier or reviewer to monitor the design and construction phases of a PPP project. The independent verifier serves as an objective third party to administer (certify pay requests, etc.) and review (check compliance with requirements, make onsite visits, etc.) the project during design and construction.
♦ All countries use key performance indicators (KPIs) or performance measures in their PPP contracts to assess service along with incentives and disincentives to motivate contractor performance. KPIs are the means for assessing whether the PPP contractor is providing the outputs desired from the asset. Contractors are usually rewarded monetarily for exceeding performance targets or showing positive trends, and they are debited monetarily for missing performance targets or showing negative trends.
♦ Effective PPP contract management is vital to maintaining the public sector's risk posture and to sustaining a good working relationship with the PPP contractor. The public agency's contract manager must understand the line between risk liability and risk transfer when interacting with the PPP contractor on issues. Further, the contract manager must recognize that the PPP contractor is likely his or her counterpart for the better part of 30 years or more, so keeping the bigger picture in perspective is more important than a petty disagreement or discrepancy.