Module 18: Managing PPPs

18.1. Why is contract management important?

A significant and often, in the past, neglected stage of a PPP arrangement is the contract management phase. It is an essential, although time-consuming and potentially costly element, of any successful PPP.

Experience acknowledges that while significant consideration is given to the tender, procurement, evaluation and contract negotiation areas of PPPs, rather less attention is paid to contract management. At the same time, contract management skills have tended not to be widespread in the public sector.

While performance can be driven through appropriately structured performance incentives or disincentives, sound contract management arrangements are required to ensure performance standards meet – and preferably exceed – expectations throughout the contract life. Without such arrangements in place, what may have been a beneficial project for a government could quickly become an even more costly exercise than if traditional procurement methods had been adopted in the first place.

Effective contract management will, in most circumstances, secure the interests of the public sector and the community by the development of sound working relationships with the service provider. This will allow services to be tailored continually to the current needs of the users in ways that are mutually beneficial to both parties.

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