H.6.2 Contract administration

Contract administration is generally the most significant task (in terms of time and resources required) in managing a PPP project after contract execution. Contract administration requires an understanding of the legal documentation for the project and:

• the commercial intent of the parties;

• the operating, industry and community issues associated with service provision; and

• the legislative and regulatory context in which the project operates.

In a well-managed PPP project, the contract director, with assistance from the procurement team, prepares a comprehensive contract administration manual (or similar) that enables the Contract Director to understand the key contract provisions and the environment in which the contract must be administered. The contract administration manual answers the following key questions relating to the project:

• What needs to be done, by whom and when? The manual assigns accountabilities, identifies government's obligations, mitigation and control of risks and how it will monitor the private party's performance of its obligations.

• How will government's role be performed? The manual identifies the resources, delegations and authorisations required for government to perform its obligations.

• What are the ramifications of any non-performance or default by the private party or government, and how should these be addressed? The manual identifies contingency plans, and issue and dispute resolution mechanisms.

By answering these questions, the contract administration manual assists the contract director to anticipate and mitigate risk, maximising the project outcomes. Ongoing review and periodic updating of the manual ensures it remains of value throughout the project lifecycle.