Contract arrangements that incorporate different characteristics of a range of contract types can also be developed. Called "hybrid arrangements", these bring together the attributes most suitable to a particular project's requirements and the operating conditions. Hybrid arrangements provide a tailored solution in terms of scope, risk sharing, and/or scope that is most directly suitable to the project at hand. Obviously, the variations are endless, but examples include:
• A "management contract plus" arrangement, in which the performance-related element of the management contract is substantial enough to transfer real risk. For instance, the payment of bonuses to the management contractor might be linked to achievement to increases in the operating cash flow of the utility by a predetermined amount. To achieve the bonus (if sufficiently large), the contractor may put additional inputs at risk to achieve the cash flow outputs.
• A private contractor, LEMA, through a management contract, is responsible for water distribution and wastewater collection in Amman, Jordan. The contract provided LEMA with a fixed-fee and a bonus based on the improved performance of the utility. Similarly, LEMA faced penalties for not achieving improvements. Under this structure, the management contract in Amman was one of the first to adopt risk-sharing mechanisms more typically associated with deeper forms of PPP.
• In Gabon, a concession contract was offered for a vertically and horizontally integrated national utility, providing both water and electricity. The Government decided to keep water and electricity services together in the scope to permit continued cross-subsidies from electricity to water. This contract design yielded several benefits, including cost reductions through the sharing of human, financial, and technical resources and creation of a platform for investment planning that is more integrated.
• An "affermage-lease plus" arrangement has the ability to share responsibility for investments. Under a standard affermage/lease, the contracting authority retains full responsibility for undertaking and financing new investment even though the operator may be in a better position to manage new construction and some other investment obligations.
In some cases, the operator is given a limited investment responsibility, such as extension of network service coverage in certain areas. Alternatively, the operator and contracting authority may reach an agreement to cofinance investments.