This Guidance is intended to provide Contracting Authorities with an analysis of, and drafting guidance for, specific provisions that are typically included in a PPP Contract and/or its related agreements in order to achieve a successfully financed PPP Project that will deliver the service or asset desired by the Contracting Authority. The Guidance draws on over 20 years' PPP market practice internationally, including guidance published by governmental bodies for Contracting Authorities, as well as the extensive experience of legal advisers supporting Contracting Authorities, Private Partners and different types of funders on PPP Projects, in both developed and emerging markets. This unique and comprehensive perspective enables the Guidance to present a real-world view of contractual issues and outcomes to help Contracting Authorities manage the private sector's expectations, as well as their own, when they have selected PPP as a method of infrastructure procurement.3
Prior to reviewing the detailed analysis and contractual provisions provided in this Guidance, it is key for Contracting Authorities to first understand the overall context in which a PPP Project is being developed. This is because the circumstances of each individual PPP Project will shape and determine the drafting of its PPP Contract and related agreements.
To that end, set out below is a brief overview of why governments establish PPP programmes, what a PPP involves, key aspects of risk allocation between the Parties and approaches to ensure "bankability", as well as an overview of variations in approach that may be encountered in different legal systems, sectors and countries. It is important to take these factors into account in formulating and negotiating the terms of a PPP Contract.
Also included in this Guidance are links to more detailed sources of information on these areas, all of which will inform the Contracting Authority's approach towards developing the specific terms of a PPP Contract for its particular PPP project. See Appendix, Additional PPP Resources.
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3 A tool aimed at assessing fiscal costs and risks associated with an envisioned PPP Project, and therefore designed to help governments to make informed decisions as to whether to procure a project as a PPP or not, is the PPP-Fiscal Risks Assessment Model (PFRAM) as developed by the International Monetary Fund and the World Bank in 2016. See link in Appendix, Additional PPP Resources.