1. SADC PPP Network PPPs in SADC
Public Private Partnerships
Kogan Pillay
Head
SADC PPP Network
7 March 2014

2. Public Private Partnerships
Contract Management

3. Contents The Concept of Contract Management, Monitoring and Regulation
The Objectives of Contract Management
The Methodologies of Contract Management

4. Contract Management Functions
Varies from project to project, BUT
- Has three main functions and can
- considerable overlap
Partnership
Management
Contract
Management
Service Delivery
Management
Contract
Administration

5. Contract Management Framework

6. Contract Management – Approach by Government
Government does not row – government steers
Must respect transfer of responsibilities to service provider
Focus is on Output/Outcomes through
Quality assurance
Performance monitoring
Corrective actions, where required

7. Contract Management – Government’s Roles and Responsibilities
Primary Government persons – Government’s Project Representative (HoD) and the Project Officer
Government’s Project Representative
Senior official, responsible for all project activities
Mobilizes & maintains political support
Appoints the Project Officer
Obtains approval for Contract Management Plan
Signs the PPP contract
Delegates necessary powers to Project Officer, post contract signing
Resolves disputes not sorted by Project Officer
Provides executive commitment to partnership management
Provides financial oversight to ensure PPP operates in the public interest
Appointed as soon as PPP identified
Provides continuity throughout entire PPP process

8. Contract Management – Role of the Project Officer
Accountable to Govt’s project representative
Has delegated authority to:
Manage project on behalf of government
Ensures continued affordability, value for money & transfer of risk during the PPP
Ensures both parties meet all contractual obligations
Ensures Output Specifications all met
Appoints Contract Management Team
Builds strong partnership with private sector service provider
Prevents/resolves disputes
Manages risks
Monitors private sector performance & corrects if necessary
Helps develop Contract Management Plan
Implements Contract Management Plan
Reports on management of the Contract
Manages variations – changes – in the Contract
Develops effective communication network
Organises Contract Management reviews
Administers remedies for a breach
Is the liaison officer with the private sector service provider for all aspects of the project

9. Contract Management Team
Provides support to Project Officer in managing Contract
Composition of Team varies, but may include:
Technical
Financial
Legal
Human Resources disciplines
Composition reflects competencies required by the project, during each phase
Composition may change from phase to phase
To extent necessary, outside expertise obtained to supplement skills possessed by Team
Team should be established early on
PMT from Procurement Processes a good place to start
Team members interact with private sector counterparts

10. Partnership Management Function
Key dimensions:
Corporate Governance
Communication and information sharing
Dispute Resolution

11. Partnership Management Structure

12. Partnership Management – Corporate Governance
Corporate Governance – structures, systems, policies and mechanisms of accountability within an organisation
South Africa has King Code of Corporate Practices & Conduct
Broadens financial focus to include environmental and social aspects
Applies fairness, accountability, responsibility and transparency to all activities
Requires accountability to the organisation and stakeholders

13. Partnership Management – Communication and Info Sharing
Communications can make or break a partnership
Failure to communicate causes more problems than failure to perform
Information sharing based upon trust and balancing negotiating positions
Communications take place between different levels in both organisations
Strategic level – government’s project representative and CEO of private sector service provider
Business level – project officer and the private sector service provider counterpart
Operational level – government staff and private sector service delivery management
Important that communication levels be maintained when problems arise – Do Not “take this straight to the top”

14. Partnership Management – Dispute Resolution
Dispute Resolution processes in PPP Contract
All disputes must follow same route from project liaison personnel on both sides to the government’s project representative and private sector’s CEO
Important to:
Record problems as they occur
Notify of problems by correct route at correct level
Document approaches to resolving problems
Escalate only as per Contract

15. Service Delivery Management
Two Principal Areas
Risk Management – managing project threats
Performance Management – ensuring the project continues to be affordable, provide value for money, and that significant risks stay with the private sector service provider

16. Risk Management Central component of contract management
Contract risk allocation reflected in Contract Management Plan
Project Officer allocates “ownership” of each risk to member(s) of the Project Management Team
Risk measures determined and implemented
Assessment of mitigation measures is on-going

17. Performance Management
Ensures contract anticipated affordability, value for money and risk transfer
Performance monitoring methodology
Level of performance to achieve Outputs
Methods government can use to promote performance
Consequences to private sector for failure to perform
Reflects contract provisions & includes:
Reporting obligations
Performance management system to review quality management system
Govt officials responsible for monitoring
Estimate of resources govt will require
Performance monitoring systems

18. Performance Management – Monitoring Mechanisms
Check progress to ensure milestones met
Regular performance progress meetings
Regular and random inspections
Feedback mechanisms from stakeholders/end users
Inspecting deliverables to ensure quality
Maintaining comprehensive performance monitoring records

19. Consequences for Failure to meet Service Levels
Monitoring should provide basis for measuring performance against outputs
Failure to meet outputs dealt with per contract
Formal warnings
Penalty deductions
Step-in rights
Should be implemented to achieve positive response

20. Contract Administration
Administrative process to manage all documents and processes
Contract Administration Plan

21. Contract Maintenance
Processes and procedures to ensure
Contract & related documents up to date & consistent
Accessible to all relevant parties
Provides basis for common view of contractual obligations
Relevant reports are produced

22. Financial Administration
Systems and procedures to:
Make and receive financial payments
Keep records of all financial statements, per contract
Making Unitary and Incentive payments
Administering penalty deductions
Calculating inflation
Dealing with late payments
Receiving financial reports

23. Contract Management - Summary
Contract Management Plan a critical document
Contract Management Framework for implementation
Partnership approach by government essential – “rowing”
Government’s Project Representative & Project Officer
Contract Management Team & “ownership” of issues/risks
Partnership Management
Performance Management
Contract Administration

24. Thank you
Kogan Pillay
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