2.3.12 PPP projects generally involve long-term contracts, where the private sector is committed to providing services to Government or the public. Government is also committed to a payment stream over the long contract period. If no variation provisions are included in the PPP contract, the PPP contract will be too inflexible to handle unforeseen circumstances, e.g. changes in demand from the public or changes in technology.
2.3.13 To avoid this pitfall in such long-term projects, it is important to build a flexible PPP contract to allow for variations in specifications and requirements, with appropriate changes in payment to the private sector. The variation provisions should be fair to both the public and private sector. In addition, termination clauses should also be included to allow both parties to terminate the contract under exceptional circumstances, with fair compensation (to either party), where necessary. Developing a give-and-take altitude between the stakeholders and the concession party is also very important for such long term contractual relationship