H.7.8  Contingency planning

Contingency planning is vital to a PPP project because it may not be possible to fully transfer responsibility for the risk of service delivery failure to the private party. If the private party fails to deliver services according to the requirements of the contract, the government party, and possibly government as a whole, may retain accountability and potentially face adverse reaction from end users and third parties. In addition, the private party's obligation to provide services may be suspended through the operation of force majeure provisions. If so, the government party may be compelled or subjected to strong pressure to ensure that the public or other third parties are not inconvenienced by a disruption to the supply of those services.

In a well-managed PPP project:

•  Potential contingency events have been identified and their financial consequences have been assessed.

•  Information explaining the operation of the relevant contractual provisions is available for easy access and use by contract management personnel.

•  Appropriate contingency plans have been developed. These may include disaster recovery and business continuity plans, step-in plans and default plans.