WHY PPP CONTRACTS CAN FAIL

4.1.9 If a PPP contract is not well managed by the GPE, any or all of the following may happen, and ultimately the contract becomes unworkable:

a) the PPP provider may take control, resulting in unbalanced decisions that do not serve the GPE's interests;

b) decisions are not made at the right time, or not made at all;

c) new business processes do not integrate with existing processes, and therefore fail;

d) people (in both the GPE and the PPP provider) fail to understand their obligations and responsibilities;

e) misunderstandings, disagreements and underestimations may arise, and too many issues would be escalated inappropriately;

f) progress is slow or there seems to be an inability to move forward;

g) the intended benefits are not realized; or

h) missed opportunities to improve value for money and performance.

4.1.10 There are several reasons why a GPE may fail to manage contracts successfully. Some possible reasons include:

a) contracts that are poorly drafted;

b) inadequate resources are assigned to contract management;

c) the GPE team does not match the PPP provider team in terms of either skills or experience (or both);

d) a failure to adopt a partnership attitude;

e) personality clashes between the people in the project teams;

f) the context, complexities and dependencies of the contract are not well understood;

g) a failure to validate the assumptions of the PPP provider;

h) authorities or responsibilities relating to commercial decisions are not clear;

i) a lack of performance measurement or benchmarking by the GPE;

j) a focus on current arrangements rather than what is possible or the potential for improvement; or

k) a failure to monitor and manage retained risks (statutory, political and commercial).