PPP contract management is one of the most important aspects of PPP delivery. If done effectively, it will support the long-term success of the project in line with the agreed contract terms. But, if managed poorly, it can seriously undermine years of project preparation and procurement and can ultimately lead to major cost implications for taxpayers and service disruptions for end users.
In the face of growing investment needs and constrained budgets, many governments are increasingly looking to the private sector to bring expertise and financing to infrastructure delivery; often through the use of PPPs. However, despite the growing trend among governments to consider PPPs as a procurement and financing model for infrastructure projects, the contract management of these projects through their construction and operations phases is one of the more overlooked areas of infrastructure delivery.
Given the long-term nature of these contracts, combined with their size and complexity, there is clear potential for significant impact on the delivery of public services if they are not appropriately managed. Variations, scope changes and other changes after a contract has been negotiated, even if agreed by all parties, will not necessarily maintain the initial value and competition inherent in a project's procurement.
Contract management is important not just in the context of an individual project, but because no project is undertaken in isolation from other PPP initiatives. The learnings from one project should inform improvements in subsequent projects.
The public sector must therefore recognize the value and opportunities created by effective PPP contract management, and must develop a strategic approach to capitalising on this model throughout the project life cycle, to continuously inform and improve the way we utilize private sector involvement in the delivery of public infrastructure.