7  Contract management during construction, operation expiry and termination

The operational stage, which includes construction, operation and maintenance, is the longest stage in the life of a PPP contract. It is a process which extends over time and entails a permanent interaction to preserve the equilibrium that balances all parties interests. Indeed, during this stage the private sector will test its ability to carry out the activities entrusted to it, and the contract's goals and objectives should be achieved (i.e., the project's expected outputs). Therefore, the operational stage is critical for the success of the project pursued by PPPs. This does not play down the importance of the previous stages of contract design and bidding, analyzed in the previous modules. However, everything achieved at such stages will be ruined without the adequate cooperation among the parties to the PPP, including an efficient control by the public partner during the operational stage, which guarantees the project's success.

Consequently, the contract's follow-up and oversight is essential. For that purpose, certain abilities are required, which should be procured before the contract's execution The way in which such follow-up and supervision will be carried out, should also be previously, and formally, determined. In this sense, a clear definition of the project's outputs is also fundamental to set out the way of monitoring. Therefore, the control of the operational stage shall be strongly conditioned by the acts performed at the previous stages.

The objective of this Module is to analyze and describe the conceptual framework of institutional and governance aspects of public sector's participation in PPP projects during Construction & Operation Stages, which allows supervisors to manage risks, minimize the probability of failures in the PPPs (bad performance, exit of private operators) and maximize supervision during this stage through processes and tools aimed at minimizing information asymmetry (performance indicators, benchmarking, regulatory accounting, economic and financial models) while ensuring the compliance with the contractual obligations.