Contract Management & Performance Monitoring Flashcards

Under a typical PPP, what is the purpose of the lenders' 'step-in' rights contained in the direct agreement?

Answer: To allow lenders to cure project company defaults and avoid termination

Lender step-in rights let financiers remedy defaults, often by replacing the operator, to protect their investment.

When a procuring authority requests a change to service scope during operations, which contract process normally applies?

Answer: The variation (change) procedure

Authority-initiated changes are handled through the variation procedure, which prices and implements the change.

Which KPI characteristic is MOST important for avoiding disputes over performance deductions?

Answer: KPIs should be specific, measurable, and objectively verifiable

Objective, measurable KPIs reduce interpretive disagreements about whether a deduction applies.

A deduction regime is calibrated so severely that a few minor failures wipe out the project company's equity return. What is the likely risk?

Answer: Reduced bankability and higher bid prices

Overly punitive regimes make projects less bankable and push bidders to price in excessive risk premiums.

What is the main function of 'rectification periods' in PPP performance monitoring?

Answer: To give the private partner time to fix a failure before deductions apply or escalate

Rectification periods allow a defined window to cure failures, with deductions applying if the fix is not timely.

Which of the following is typically a 'compensation event' in a PPP contract?

Answer: A breach of contract by the procuring authority that delays works

Compensation events are authority-caused risks entitling the private partner to time and money relief.

In an operational PPP, what is the role of an independent engineer or certifier?

Answer: To impartially verify milestones, completion, and sometimes performance

The independent engineer provides impartial technical certification relied on by both parties and lenders.