A guidebook on public-private partnership in infrastructure

CHAPTER 6 
POST PROJECT IMPLEMENTATION:
CONTRACT MANAGEMENT AND DISPUTE RESOLUTION 
 
Key Tasks 
The key tasks in contract management are: 
• Establishment of an administrative process and a 
contract management team, 
• Formalization of management responsibilities, 
• Monitoring of operation and service delivery, and
• Management of financial matters. 
 
A. CONTRACT MANAGEMENT
34
Contract management is an important activity in PPP programme/project 
administration. The management process needs to be in place from the outset to 
ensure timely completion and satisfactory operation of a project. A separate process 
may also be considered to monitor the PPP programme performance of a sector or 
for the country as a whole.
The contract management process not only helps to fix responsibilities, but 
also allows timely response to any deviation in project implementation or operation 
from the provisions in the contract agreements and thus helps to avoid disputes 
between the parties at later stages. The three key aspects of contract management 
are: 
• Contract 
administration 
• Service delivery management 
• Relationship 
management 
Contract administration involves the establishment of administrative 
processes to ensure that all the procedures and documentation relating to the 
contract are effectively managed. The major activities in contract administration 
include: variation management, maintaining the integrity of the contract, and financial 
administration. Clear administrative procedures for these activities help to ensure 
that all parties to the contract agreement clearly understand their individual 
responsibilities, and time and procedure of action.
Service delivery management has two major elements: risk management and 
performance management. Risk management involves keeping the exposure of the 
project to potential risks at an acceptable level by taking appropriate action in time. 
Performance management is concerned mainly with ensuring the quantity and 

34.
Parts of the discussion in this section draw from National Treasury, PPP Unit, South Africa, “Public Private 

Partnership Manual” (undated), accessed from http://www.ppp.gov.za/Documents/ Manual/ 
Main%20Intro+Contents.pdf; and other sources. 

---

A Guidebook on Public-Private Partnership in Infrastructure 
73 
 
quality of service delivery as per the contract, resource utilization, and performance 
improvement in the future to reflect technological and other new developments as 
appropriate. 
Relationship management between the private party and the government 
implementing agency over the long contract tenure of a PPP project is vital for its 
success. Building an effective relationship that is mutually beneficial does not imply 
that either party has to compromise its contractual rights and obligations.
The key factors to a successful relationship are mutual understanding, open 
communication and information sharing, and recognition of mutual objectives. 
Appropriate lines of communication at strategic, business and operational levels 
between the implementing agency and the private party are necessary to build a 
successful relationship. The clear lines of communication at the appropriate levels 
help to reduce confusions and ensure a prompt resolution of issues that may arise.
Usually, a team comprising officials from the implementing agency and other 
concerned departments of the government supported by a range of specialists and 
technical advisors with varying levels of involvement is required for contract 
management. The resource requirement of the team is affected by the overall size 
and complexity of the project and its implementation stage in the overall project 
cycle. In some cases, it may be possible for the contract management function to be 
carried out by a single individual. But for large projects it would normally require a 
team work. The contract management team, in effect, may evolve from the project 
team in the inception, feasibility and procurement phases, taking on different 
technical skills and experience as needed throughout the project cycle.
Besides the implementing agency, some other agency/department of the 
government (for example, the central bank) and the respective sector/industry 
regulator may also be involved in the contract management process. The main tasks 
in contract management include: 
• Formalization of management responsibilities by the organization at 
different levels. A critical aspect is to identify and clarify the roles and 
responsibilities of key individuals involved in the contract management 
process. Ambiguity about the functions of important individuals in the 
contract management process could lead to unnecessary delays and 
disputes. 
• Monitoring of project delivery (construction phase). 
• Management of variations during project implementation (time schedule, 
change of design and specification, etc.) and operation. 
• Monitoring of operational aspects and service outputs after project 
implementation. 
• Maintaining the integrity of the contract. It involves establishing procedures 
to ensure that the contract agreement and related documentation are 
consistent, up-to-date and accessible to all the relevant parties. Contract 

---

74 
A Guidebook on Public-Private Partnership in Infrastructure
 
 
agreement maintenance also involves taking action to allow all parties to 
develop a common view of contractual obligations.
• Fiscal obligations of the government (if any).
• Financial matters. Effective financial administration involves the 
development of systems and procedures to make and receive financial 
payments according to the provisions in the contract agreement, and to 
keep records of such transactions. 
• Redressal of public grievances. Monitoring of action taken by the 
concessionaire for redressal of complaints by affected persons. 
• Compliance with reporting requirements by the concessionaire under 
contract.
The reporting requirements are specified in the contract. Usually, templates 
for the regular reports are also provided. 
Separate monitoring frameworks may be developed for the construction and 
operational phases. A mechanism is also required to gather, collate and analyze the 
required information on a regular basis for these frameworks, and to feed that 
information to the relevant authorities according to their requirements.
The information requirements for different agencies are generally different. As 
such, the implementing agency, regulator and the government may require separate 
monitoring frameworks to serve their own specific needs. However, the monitoring 
frameworks for the implementing agency should be based primarily on the 
performance indicators mentioned in the contract/concession agreement and other 
administrative procedures related to PPPs as may be required.