Beyond the initial development of PPP, and in order to achieve (as opposed to forecast) VfM outcomes, contracts must be prudently managed during the operational phase. Although it is the responsibility of the private partner to deliver agreed services, the public partner is ultimately responsible for ensuring services are actually carried out and that specified delivery standards are met.
As contracts are not designed to cover every eventuality of something going wrong, effective relations between the partners is important for dealing with issues as and when they arise in administering contractual provisions. A key benefit of PPP is risk transfer - or more explicit allocation of risks between the public and private partners. However, not all risks can be transferred to consortia during the operational phase. In some situations government should (and often must) accept and manage its risk positions. PPP are also expected to deliver real benefits to communities through the delivery of services. The public partner should take necessary and timely action to resolve service provider under-performance or non-performance whenever it occurs so that planned social outcomes are achieved. Thus active management of partnership, risk and performance by the public partner during the operational phase of PPPs is crucial.
This Chapter establishes partnership, risk and performance management as elements within a PPP administrative environment. It provides relevant definitions; theoretical frameworks underlying the application of these techniques - presented from a public sector perspective; and outlines relevant principles and practices. The aim is to establish the essential theory base for the development of the Integrated Management Model.