F. PFIZER
5. Los desabastecimientos son ahora menos frecuentes que en el pasado
Contracting authorities should, as far as possible, structure their PPP contracts in terms of capacity and technical standards on the basis of foreseeable, stable expectations. Ideally, changes should be avoided after finalization of the contract. However, in the case of lengthy contracts changes in services involving both construction and operational changes are almost inevitable. The contract needs to address these issues. Measures could include:
Formulae to take account of deflation/inflation and other price-related variables ensuring the service charges the public partner has agreed to pay in future years will not be in excess of future market prices for such services
Break clauses after a period of time Renegotiation clauses
Periodic review mechanisms
Referrals to mediation, arbitration, etc.
Compensation Events - clearly the contracting authority’s responsibility and in
respect of which the consortium will be compensated.
Force Majeure Events - a narrowly defined and limited set of events which arise
during the life of the contract through no fault of either party, which are best managed by the consortium (although not in its control) and in respect of which rights of termination for either party may arise after a significant delay (e.g. six months) has occurred. Force majeure events are not usually insured.
5.4.4. Changes management
Contracting authorities should, as far as possible, structure their PPP contracts in terms of capacity and technical standards on the basis of foreseeable, stable expectations. Ideally, changes should be avoided after finalization of the contract. However, in the case of lengthy contracts changes in services involving both construction and operational changes are almost inevitable. The contract needs to address these issues. Measures could include:
Formulae to take account of deflation/inflation and other price-related variables ensuring the service charges the public partner has agreed to pay in future years will not be in excess of future market prices for such services
Break clauses after a period of time Renegotiation clauses
Periodic review mechanisms
Referrals to mediation, arbitration, etc.
Compensation Events - clearly the contracting authority’s responsibility and in
respect of which the consortium will be compensated.
Force Majeure Events - a narrowly defined and limited set of events which arise
during the life of the contract through no fault of either party, which are best managed by the consortium (although not in its control) and in respect of which rights of termination for either party may arise after a significant delay (e.g. six months) has occurred. Force majeure events are not usually insured.
In particular, the PPP contract should show whether the contracting authority or the private partner assumes the risk of certain classes of change. For example, general changes in economic conditions, costs of labor and materials, as well as taxation and changes in general law may be met by the private partner; whereas discriminatory specific legislation affecting the project may be met by the contracting authority. However, consideration should be given to managing situations where such changes fall outside of normal bounds such that the private partner does not suffer unsustainable losses or enjoys unconscionable profits.
The contract should contain clear terms and conditions governing the criteria for pricing a variation in the contract; any grounds on which the private partner may refuse to implement a variation; and any remedies available in the event of such a refusal.
Types of changes
In PPP contracts the changes during the project life can be categorized as follows:
By Origin: By Impact:
Authority change Private partner change Changes in law
Financial only Works only Services only
Works and Services
By Timing: By Type:
Construction Early operations
Steady public partner
Change in use or functionality Change in capacity
Change in service
In particular, the PPP contract should show whether the contracting authority or the private partner assumes the risk of certain classes of change. For example, general changes in economic conditions, costs of labor and materials, as well as taxation and changes in general law may be met by the private partner; whereas discriminatory specific legislation affecting the project may be met by the contracting authority. However, consideration should be given to managing situations where such changes fall outside of normal bounds such that the private partner does not suffer unsustainable losses or enjoys unconscionable profits.
The contract should contain clear terms and conditions governing the criteria for pricing a variation in the contract; any grounds on which the private partner may refuse to implement a variation; and any remedies available in the event of such a refusal.
Types of changes
In PPP contracts the changes during the project life can be categorized as follows:
By Origin: By Impact:
Authority change Private partner change Changes in law
Financial only Works only Services only
Works and Services
By Timing: By Type:
Construction Early operations
Steady public partner
Change in use or functionality Change in capacity
operations specifications or performance standards. By Value: By Origin: Small Medium Large Authority change Private partner change Changes in law
Table 7: Types of change during a PPP project’s life