From an institutional point of view, the public partner should perform some specific tasks in the process of supervision during the construction and operation and maintenance stages of PPP projects. And following partnership Victoria, we can group the main tasks of PPP contract management under four major headings: performance, relationships, change, and contingency events.
Managing performance deals with ensuring that the service delivery terms of the PPP contract are being met. Supervision of the contract involves monitoring the private party's performance but also ensuring that the government is fulfilling its own obligations in an efficient manner.
The monitoring of performance requires detailed information about the service and the market in which the service is provided. Moreover, analytical instruments should be available so as to permit a clear understanding of the firm's operation and the "business" of the private partner.
Managing the relationship between the different stakeholders is one of the main elements of contract management. A clear identification of the key stakeholders, their respective roles and the relationship between them is an important step in an effective contract management process. One key element in this regard is to ensure regular and effective communication with all stakeholders (e.g. through regular meetings and progress reports).
Change will be required to the contract at some point in time due to the very long-term nature of PPP agreements and the number of variables that will change over time. According to Australia's Department of Finance and Administration the main reasons for contract change are:
• major new developments in information and other technology;
• changes in government policy and priorities;
• oversights, omissions or errors by either agency or contractor;
• a contract deliverable is not achieved or does not meet stated performance or quality standards;
• excusable delay in accordance with the terms of the contract;
• contractor underestimates the scope or complexity of work under the contract; and
• major cost increases unable to be absorbed by the contractor.
An efficient contract management should ensure that it is possible to accommodate changes over the life of the contract. Establishing clear variation procedures allows change to be managed effectively and avoids the emergence of disputes.
Within this change management strategy, an institutional memory of the contract (knowledge management) is required from the beginning and should include all variations, updates and interpretations agreed between the parties in order to reach efficient decision making.
Finally, dealing with no contracted issues and contingency events is the fourth area in which contract management is needed during the operational stages of the PPP contract.