Implementation
Table 6.1: Contact Management Structures
Level
Elements
Within the contracting authority
Reporting procedures Information flows Internal approval processes
Between the contracting authority and the SPV
Communication protocols Escalation procedures for decision making Escalation procedures for dispute settlement
In the Caribbean, there are few experiences with long-term contract management during the implementation stage. One successful example is the management of Sangster International Airport, as presented in Textbox 6.1. Textbox 6.1: PPP Contract Management in Jamaica Sangster International Airport PPP, Jamaica In 2003, the Sangster International Airport of Jamaica was privatised via a 30-year PPP concession. Key Concession terms: • Tenure: 30 Year BOOT • Payment Mechanism: Work Load Unit (monthly), Additional Concession Fee (Yearly), Excess Benefits Payments (Hurdle IRR) • Financing - Equity, Debt, Airport Improvement Fee • Approval Processes: Lenders, Airports Authority of Jamaica, GOJ Concessionaire reports to the asset owner through quarterly review meetings, management interaction is crucial for the partnership. Legal Monitoring: • Custodian of Concession Agreement and related Agreements • Stakeholder Meetings – bi-annual Airport Forum • Owners Meetings – Quarterly Reviews • Insurance and risk monitoring • Bonds maintenance • Debt Maintenance Compliance • Governance Changes – Changes of Shareholder/CEOs/Execs Technical / Operational / Commercial monitoring: • Master Plan Monitoring • Maintenance Programme Works Monitoring • Development Programme Works Approval and Monitoring • Regulatory Compliance – ICAO • Service Levels – IATA and ACI Financial Monitoring: • Financial Model – 30 Years • Annual Business Plans – Rolling 5 years • Audited Accounts – Annual • Quarterly Reports – Financial and Operational • Monthly Reports – AIF, Operational • Economic Regulatory Rate Review Lessons Learned: • Know the Concession Agreement inside out. • Contract Management requires continuing oversight and administration. • Failure to effectively manage the private operator results in reduced value to the Government and a failure to meet the objectives of the project. • Important to continually monitor the allocation of risk over the life of the PPP • Concession Management has to be a long-term, mutually beneficial partnership, between both parties, involving constant dialog to resolve issues, before they become problems. Source: Audley Deidrick (President and CEO, AAJ/NMIAL). Contract Management Experience Sangster International Airport PPP. A Presentation at the 3rd PPP Boot Camp for the Caribbean, February 5, 2016, Kingston, Jamaica
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