Proceedings of the 14th Meeting of the
Transport and Communications Working Group
7
3. Procurement and contracting:
The third phase of the conceptual framework covers the following aspects: procurement
strategies; PPP contractual arrangements; performance metrics; remuneration.
Analytical points:
High quality of tender documentation reduces the overall risk vulnerability for the public sector.
Preparing PPP contracts revolves mainly around risk allocation, i.e. defining which party is
expected to assume each risk. In this regard, a useful tool is represented by the risk matrix, i.e. a
tool detailing, for each risk, whether it is borne by the public sector, by the private sector or
whether it is shared. The general risk matrix developed as part of the conceptual framework
indicates that political and legal risks are generally borne by the public sector; macroeconomic
risks are generally shared; risks related to financial credit, design, construction, operation, and
financial sustainability are generally allocated to the private sector; finally, force majeure and
early termination risks are usually shared and need to be assessed on a case-by-case basis.
PPPs are defined by the fact that remuneration to the private sector is commensurate to the
service delivered. In this regard, performance metrics are directly linked to the ongoing activity
of risk monitoring during construction and operation.
Key messages from the literature review and good practices:
 In the procurement phase, there is a need to build on VfM considerations. This has a
twofold meaning: first, during the tender and then in the contracting phase, there must
be consistency with the risk allocation identified in the VfM assessment; second, if
negotiations take place and the allocation of risks is modified, a VfM assessment should
be carried out anew;
 With regard to negotiations, there is a need to raise awareness of likely legal and
technical asymmetries in negotiation skills between the public and the private sector;
 It is essential to establish at project level a skilled tender management team to direct
tender preparation, publishing, and award.
4. Construction and asset delivery:
The fourth phase of the conceptual framework covers the following aspects: management of
risks during design; management of risks during construction.
Analytical points:
Design risk consists of defects in design resulting in the requested service standards not being
met, or in an increase in operating costs. As regards construction risks, these can be caused by
either internal factors (defects in methods used, negligence by a private party, inadequate cost