Governments enter into a wide range of contracts with private companies. Some of these contract types share some or all of the typical PPP characteristics-such as being long-term, output based, or performance-related. For example, these include:
• Management contracts typically include similar performance indicators and requirements to PPPs. However, these contracts are typically of shorter duration as PPPs, and do not involve significant private capital investment-with performance incentives created primarily through payment and penalties schemes. The World Bank's explanatory notes on water regulation [#122, pages 36-42], for example, describe how management contracts are used in the water sector. Operations and Maintenance (O&M) and performance-based maintenance contracts may also fall outside the definition of PPP where these contracts are of short duration
• Design-build, or 'turnkey' contracts include similar output-based specifications; however, as shorter-term contracts they do not create the same long-term performance incentives as PPPs
• Financial lease contracts are long-term contracts for providing public assets. However, these contracts transfer significantly less risk to the private party than PPPs.
While the material in this Reference Guide focuses on PPP arrangements, many of the references provided in this guide may also be useful for governments considering these related contractual arrangements; conversely, some references dealing with these contract types are provided, where these may provide applicable lessons for PPPs. However, readers should bear in mind that the differences in risk allocation can make for significant differences in bidding and operational behavior.