Risk Management in Transport PPP Projects
In the Islamic Countries
243
The period of monitoring reporting may vary according to the sector, procuring authority and
initiative. In the highway sector, the frequency of reporting is monthly.
In addition to the auditing and monitoring activities related to each contract, a monitoring and
reporting system is also in place between the procuring authorities and the PSB.
Construction and operation activities monitoring reports are issued to PSB on their specific
request or periodically, depending on the sector, procuring authority and initiative. Financial
monitoring reporting to PSB occurs on a more structured basis. Indeed, AYGM and KGM issue
quarterly reports to PSB and the Ministry of Treasury and Finance. Structured reporting from
DHMI does not appear to be in place as the Ministry retains liability for airport projects.
In general terms, according to evidence collected by means of consultation of the Turkish
Authorities, the monitoring system in place is considered to be generally effective. The
procuring authorities reported no widespread cases of significant performance issues
concerning delays or traffic operations; similarly, the authorities reported that
underperformance leading to the application of penalties regulated in the PPP contracts is not
recurrent. Particularly concerning the construction phase, in our interviews, the procuring
authorities mentioned that delays are not a common issue in the implementation of PPP
contracts.
Despite this general positive picture, cases of underperformance in terms of discrepancies
between real traffic and traffic guarantee thresholds did materialize as reported in publicly
available literature, concerning the forecasted and real observed demand. For certain road
projects, real demand could be lower than predicted, specified that according to KGM this may
be explained by the later completion of additional sections of the network (see also the Boxes
on the Osmangazi Bridge above and Yavuz Sultan Selim Bridge below). Undoubtedly, delays in
the implementation of complementary projects may negatively impact the operational
performance of PPPs, related to network-based infrastructure such as roads. The fact that the
implementation of the projects under the conventional public procurement is also deemed to be
not-effective with construction periods lasting up to 10 years further amplifies this problem. In
this context, the remuneration of the PPPs based on demand guarantees represents a mitigation
risk for the PPP concession itself, but may have negative long-term implications for the state
budget if not properly managed.