Lessons learned during PPP contract management can and should inform the structuring of future similar projects, such as relating to environmental permits.
The project highlighted an important issue with the typical timeframes that the Procuring Authority had previously set for the construction phase of its PPP contracts. Allocating the full risks related to delays caused by environmental permitting to the Project Company may not be appropriate, as the requirements can vary significantly from one administration to another. The Procuring Authority recognised that the timelines it prescribed for project companies to acquire permits and complete construction works may not always be appropriate.
New PPP contracts now define the environmental permitting as a shared risk and allow more time for permitting. The project is a good example to demonstrate how lessons learned during PPP contract management can inform the structuring of future similar projects.
The financial stability of the Project Company should be monitored as it could provide an early warning of future risks.
In this project, the Project Company has a great deal of freedom to manage its business without the involvement of the Procuring Authority. Financing arrangements, project costs and detailed financial performance information are not shared with the Procuring Authority. This has not presented any major issues so far; however, when a Project Company or its shareholders are in financial distress, the Procuring Authority feels that its ability to provide support and ensure the success of the project is limited by the lack of knowledge.
Here, the ultimate shareholder of the Project Company is currently the subject of insolvency proceedings and the Procuring Authority will find itself in a difficult position if that were to affect the Project Company. The Procuring Authority may not have the same opportunity to prepare for, or mitigate against the risks associated with such an event because of the lack of detailed information on the financial position of the Project Company.
Annual training across a programme of PPP projects can be an effective way to deliver structured training to contract management teams.
There is an annual training programme provided by the Procuring Authority to all its employees across a programme of projects. The programme covers a wide range of skills considered key to successful management of PPP contracts. Thereafter, individual teams/offices provide their own training programmes designed in line with specific staff and project requirements. These training programmes can be delivered either by experienced internal staff or by external training providers. Quite often seminars, workshops and dedicated courses are provided by international market leaders and institutions such as the Council on Large Electric Systems (Cigré), universities and equipment producers.