c





  

Vickram Cuttaree
The World Bank

St. Petersburg ± May 24, 2008

 ` 






° is the process that enables both

parties to a contract
° to meet their respective obligations
° in order to deliver the objectives
required from the PPP agreement.

Œ
  

  



    
 
 `     


     
   

 


  
 
 
  


  
 
 c



 

 

°
ith the appointment of project

manager and team
°
ith development of project¶s
outputs, benchmarks and risk
allocation
°
ith an understanding that things

ill change do
n the road

   




 

 

 

 
  
 ÿ 








i



 

°




 ° 

 

° 


 ° 

 

° 





 

° 




°





° 

 







 



 D
 
!"

!# 
$
 "
 $ 
      

° What happens after contract expires?

± Service continues?
± By
hom?
° Transfer of assets
± In the case of NADEX: concessionaire
ill
rene
rolling-stock and value of total assets at
end of concession is not negligible
± Is the City prepared to takeover?
± Does the City have capacity?
° inal project assessment
± Deliverables and outputs
± Employee transfers
 D
 
!"

!# 
$ 

"
   
    
  

° What happens before contract termination?

° Decisions should take into consideration the all
stakeholders of the Public-Private Partnership
± VfM/Affordability for Government/City
± Availability/Quality/Affordability of service for users
± Profit/return for the private party
° Win-
in situation
ith no losers
± Importance of respecting contracts: attitude to
ards
contract
ith private partner
ill have an important
impact on perceive risks and attractiveness/cost of
subsequent projects
± Contract renegotiations: good preparation minimizes risk
of re-negotiations but it can be justified and does happen
± Dispute resolution mechanism should be put in place
and be satisfactory for both the public and private
partner
  D  



 




    

° Expect the unexpected during

implementation phase
± Who does
hat?
± Ho
?
± By
hen?
± Example:
hat happens if increasing costs
means concessionaire is enable to operate
NADEX under current agreement?
° Institution¶s priorities and relative
importance of risks
ill shift and change
± Revisit and reconsider on regular basis
± Ensure appropriate risk transfer throughout
 c  

° Each PPP is unique

± Construction vs. operations
° WHSD and Orlovski mainly about construction
° NADEX¶s operation is a key determinant of success
± Length of contract
± lo
of funds bet
een public and private
sector (availability payments, concession fees,
etc 
° All require periodic monitoring
± What: level of performance
± Ho
: quality control
± If: consequences
± Who: self, institution, independent party
c




 c




$ 

     
   
     
 


 
  


    

 
 
   
    

° Implications on service delivery

° Ho
variations of PPP agreement are going to be
managed?
± Who should approve variation in agreement
± What type of variation
ill be considered (change in
schedule for NADEX, maintenance program, etc 
± Ho
to assess the impact on users, VfM, affordability
° inancial administration
± Keep records and accounts
° Importance of preparing and updating regularly a
management plan and manual
c
      
 
# 
   
  

° PPP projects can be very much impacted by ne

la
s and regulations governing the sector
° While it is understood that Government/City must
keep control over future policies
± Impact on current operators should be assessed (ne

road, ne
tariffs for metro, etc 
± Solution might involve compensating the private
operator from missing revenue
° Quality of regulation and clarity of policies
ill
reassure the private sector and ultimately benefit
the project, sector and City
± Risk that city perceived risk could increase
± uture projects
ill likely attract less interest or
ill be
more expensive for the City
 


%
 



   

%  
  

 
 
  


 

  
 

c

 

  


 







c  
 
 
     


& 

'( )

%
 
  
 


*
    


 

  
 


  




  


 


%
 
  

+

   *
  
 
 

       

 


   #   

 
  
c




  

,-.ÿ/0111

Vickram Cuttaree
The World Bank

vcuttaree@
orldbank.org