The VfM generated through a PPP depends on the quality of the IBE and the GCA’s management of contract systems and teams. This becomes more important in PPP agreement which include some form of risk retention on the GCA’s part e.g., minimum revenue guarantee or a type of contractual undertaking.

The PPP agreement will set out the various obligations of the IBE with regard to the management and reporting of its activities and achievements against the output specifications. As a PPP agreement may have limited obligations for the GCA, it is common for the GCA to assume that the PPP agreement will be self-regulating and self-reporting. However, the GCA shall not rely on this assumption. The assumption may result in:

• Weak governance;
• Weak management of contract frameworks being established by the GCA; and
• Reduction in the overall project benefits compared to estimation in various ex-ante (forecast) studies.

The GCA shall make efforts to prevent the above situations. Hence, as a good practice, the GCA shall establish a management of contract team.

Governance in management of contract functions during the project’s early stage unlocks benefits such as:

• Helps build in-depth project knowledge from the inception and therefore a strong negotiating position when the project is in procurement;
• Eases co-ordination and integration of all stakeholders and works once the project is in the construction stage; and
• Builds familiarity with proposed service measurement targets and preparation for their monitoring.

Governance and management of contract functions also reduce the chance of possible pitfalls such as:

• A lack of knowledge and understanding of the IBE’s intentions when devising their solution and the content incorporated into the contract, resulting in conflict and affecting the establishment of the partnering relationship;
• Poorly monitored and executed financial management because the management of contract function is not involved in the design of the payment mechanisms at the transaction stage;
• A lack of opportunity to influence the implementation of services. A lack of awareness of problems and the implementation of the solutions can be avoided if the management of contract function is involved from the inception of the project; and
• A lack of knowledge of the signed contract, obligations, and roles and responsibilities arising from the late appointment of the management of contract function may delay the project, bring indecision and in certain circumstances, affect the GCA-IBE relationship.

Properly implemented administrative processes are crucial for effective risk management. This is because risk management & risk control are most important factors in the PPP lifecycle. Hence, for planning and establishment of administrative processes, the GCA shall:

• Formalise management responsibilities for transition between project stages;
• Monitor project delivery, service outputs, and contract performance;
• Manage change and variations;
• Maintain contract integrity;
• Promote strong working relationships with the project parties and service providers;
• Resolve project issues and disputes fairly and efficiently; and
• Conduct regular contract and project reviews to ensure continuous improvement.

Therefore, the contract director shall prepare the PPP management of contract plan, focusing on PPP management of contract responsibilities and include in it:

• Summary of the proposed systems and procedures for variation management, PPP agreement monitoring, and financial administration;
• Roles, responsibilities, and obligations of the GCA and the IBE and independent experts in relation to variation management, PPP agreement monitoring, and financial administration;
• Plans for the development of the PPP management of contract plan that will be used to provide details of all documents relating to the PPP agreement, variation management, PPP agreement monitoring, and financial administration procedures; and
• An estimate of the resources that the GCA will devote to variation management, PPP contract monitoring, and financial administration.

A management of contract plan is a collection of policies and procedures, as a living document used throughout the life of the project. It reflects the specific contract to be managed and meets the needs of the contract director and the management of contract team.

The plan serves as a tool of knowledge management and is important for succession planning and transfer of knowledge. The GCA ensures that new members of the management of contract team receive specific training regarding the use of the plan.

The plan should be able to provide answers to key questions such as:

• What needs to be done, by whom and when?
• What are the effects of any failure to deliver contracted services or default by the IBE or the GCA and how should such failures be addressed?
• What are the service delivery requirements and payment arrangements?
• Who are the key stakeholders and what are the communication arrangements?

And, the plan should provide the historical context and address strategic issues such as:

• How will the GCA's role be performed?
• What is the strategy for managing the project and for dealing with the IBE?
• What was the rationale for key project decisions made so far? What lessons have been learnt?

The GCA relies on accurate information and relevant documentation to make sound decisions, monitor the IBE’s performance, comply with its contractual obligations, and manage project specific risks. In a typical PPP project, the IBE provides most of the information. The GCA’s role is to receive this information and verify that it is accurate and consistent.

The GCA’s most common requirement is to ensure that the IBE provides information surrounding financial, legal, and technical issues. The GCA requires these to successfully monitor and review the IBE’s performance.

When drafting the contract, the GCA shall be clear and prescriptive with regard to the level of detail, format, and deadlines of the data expected from the IBE. During both, construction and service delivery stages, the type of information needed from the IBE should be carefully considered in order to avoid requiring too much information, which would be costly to produce and collate for the IBE and also for the GCA to analyse.

Given the importance of information and documentation cited above, the GCA is required to put in place a system of information and documentation management applicable for throughout the life of the contract.

An MIS records and manages activities and documentation of a PPP project. Using an MIS, the GCA is able to closely monitor the performance of a PPP agreement to ensure the IBE’s proper and constant engagement. This is because the PPP agreement should ultimately aim to deliver an efficient service to a range of end-users.