Page Specific Disclaimer

The Guidelines have not been prepared with any specific transaction in mind and are meant to serve only as general guidance. It is therefore critical that the Guidelines be reviewed and adapted for specific transactions To find more, visit the Guidelines to Implementing Asset Recycling Transactions Section Overview and Content Outline, or Download the Full Report.

This is a new section of the website and is currently in draft form.  For feedback on the content of this section of the website or suggestions for links or materials that could be included, please contact the PPPLRC at ppp@worldbank.org.

 

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Contract Management in Asset Recycling

Asset recycling transactions involving a long-term concession or lease of an asset to a private partner constitute a long-term commitment by the private sector to operate and maintain, and sometimes redevelop and/or expand, a Relevant Authority's existing infrastructure project to deliver services to the public or the Relevant Authority. These activities are governed by the project agreements.

As a result, effective delivery of the transaction hinges on the ability of both the Relevant Authority and the private sector party to execute their responsibilities, as outlined in the project agreements. Even if a contract is drafted in accordance with international best practice and industry standards, the parties’ objectives may not be achieved if the contract is not underpinned by effective contract management and performance monitoring over the life of the project.

This calls for an effective approach for managing the project agreements / contracts at every stage of the project term.

Contract management overview

Contract management defines the processes and procedures which the contracting parties follow in order to: 

  • meet their respective obligations; 

  • demonstrate their compliance with these obligations to their counterparts; and  

  • monitor the compliance of their counterparts with the counterparts' obligations. 

Collectively, these efforts are intended to ensure that the contracting parties work towards the project objectives.  Effective contract management ensures that the users of the project (the general public, customers, riders or, in some cases, the Relevant Authority itself) continue to obtain the services set out in the output specification of the project agreement. The contract management process should also set out relevant measures that can be used to monitor the risk profile of the project.  

This section details the guidelines for effective contract management, which will identify, monitor and manage all risks over the life of the contract to assist in achieving project objectives. 

For those projects deemed to have medium to high-climate related risks it is wise to include climate change / climate resilience expertise as part of the contract management team. 

Guidelines

Understand the Stakeholders and the Contracts in… The contract management approach must be developed for each specific project, in a manner consistent with project'… more
Establish the Contract Management Team in Asset… A contract management team monitor operations under the project agreements and undertake regular reviews and… more
Identify Contract Management Team… Find the key responsibilities of the contract management team.
Develop the Contract Management Plan in Asset… The contract management plan and what to include.
Monitoring and Reporting Strategy in Asset… Understand what an effective performance monitoring and reporting strategy has to incorporate.
Performance Monitoring Process in Asset Recycling The contract management team should develop a process to monitor performance. Find an illustration of a typical process… more
Penalties for Non-delivery in Asset Recycling The contract will also stipulate financial penalties and consequences for non-delivery of contractual services or… more
Hand-back Procedure in Asset Recycling The contract management team needs to monitor the private sector’s compliance with the exit obligations under the… more
Dispute Resolution in Asset Recycling There are a number of existing dispute resolution approaches which may be included in the project's dispute… more
Note/s:

The Guidelines have not been prepared with any specific transaction in mind and are meant to serve only as general guidance. It is therefore critical that the Guidelines be reviewed and adapted for specific transactions To find more, visit the Guidelines to Implementing Asset Recycling Transactions Section Overview and Content Outline, or Download the Full Report.

This is a new section of the website and is currently in draft form.  For feedback on the content of this section of the website or suggestions for links or materials that could be included, please contact the PPPLRC at ppp@worldbank.org.