Module 20: Managing Conflict

20.2. Conflict preparedness

Sector programmes should organise activities that aim to analyse and anticipate potential conflict situations so that appropriate interventions may be designed to prevent or mitigate the likely consequences. For example, programmes may have early warning systems or may establish contingency plans in conflict situations.

Carefully worded contracts can avoid many problems. However, the urban services market is relatively new, and some problems are likely to occur even with carefully developed contract language.

It is becoming clear that governments in developing countries are not experienced in negotiating what are often very complex contracts that specify level and quality of service, monitoring and success indicators and so forth, in the midst of a difficult-to-estimate growth in demand for a particular service. Contracts also have cultural contexts that differ widely and should be accounted for in specific contract language, such as that related to dispute resolution.

Clear specification of the dispute resolution process in the contract is an important part of the PPP project negotiation process; it will help mitigate the risks associated with PPP investments. A perception regarding whether an appropriate system is in place to address disputes that may arise many years into the future is a significant feature in any risk analysis of the project.

These perceptions can subsequently affect the ability to fund and finance the project. It is imperative that the contract contains a clear step-by-step guide for resolving conflicts, one that lays down the procedures that should be followed before the partners consider legal action. It is necessary to develop practical procedures that build upon local institutions and practices; such procedures should be free from corruption and difficult to circumvent.

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