Defining the Essential Elements of a Bus Project’s Concession Contract | 137
• The authority’s publication of administrative decisions after the notification and analysis of pledges and information • Processes, rights, and obligations pertaining to mechanisms to cease activities and transfer assets. Finally, the concession should carefully plan for transition mechanisms and the transfer of assets, even if the assets are not expected to survive the concession. Otherwise, in case of early termination, their lack of definition can lead to disputes and costs.
Dispute resolution In order to guarantee continuity in the provision of the service, preserve order, and reduce the possibility of conflicts of interest, the concession must consider procedures that enable the resolution of disputes between the subjects or the parties that constitute it. Dispute resolution has several key mechanisms: • Friendly agreement among the parties. Conflicts of interest between the parties of the concession may be resolved through the intervention of a third-party friend of both parties without subjecting their procedures to preestablished rules of law. • Arbitration. A controversy or conflict of interest may be submitted, by agreement of the parties, to an arbitrator or a court, which then issues a decision on the problem that is mandatory for the parties. • Mediation. A third neutral entity (mediator) may help the parties to communicate and find a way to settle the conflict. The mediator may also recommend a form of conciliation. The importance of having instruments and mechanisms for resolving disputes is to avoid affecting the general interest and putting at risk the realization of a concession’s public service objectives.
ECONOMIC AND FINANCIAL ELEMENTS The economic and financial elements of a concession are critical, since the participation of private (and public) investors largely depends on them. Therefore, the concession must support the general interest, the quality of service provided, and the return on participants’ investments. Other than ensuring fairness, economic and financial elements are important, but are less critical if financial risks are mitigated by requirements that help to ensure that any selected concessionaire is in good financial condition.
Financial management The concession contract should be consistent with the project’s financial management arrangements. Financial management arrangements are also operationalized in financial management instruments. Such instruments concentrate resources received through the collection of public transportation service fares as well as the rights derived from the exploitation and operation of other services or business units’ portion of the concession (related services, advertising). Fare collection trust funds are the most commonly used financial instrument for urban transportation projects. They involve assigning the rights
