Also, when the project is highly dependent on technology, longer terms may unduly increase the risk profile. However, for certain infrastructure (especially social infrastructure), terms above certain limits can introduce significant renewal risks for bidders, or (for example, in roads) risk/uncertainty of significant upgrading. This then focuses the bidders on providing an optimal whole-of-life solution, and it ensures that at the end of the contract (when the asset reverts to the public sector at the end of the concession), the asset is in good condition. It is important that the term is long enough to include life-cycle costs, such as refurbishment of mechanical systems in social infrastructure projects or, for example, the resurfacing of road projects. Life-cycle management and effective risk transfer: PPP contracts should provide long terms so as to capture VfM from life-cycle management and for risk transfer to be effective. This is explained later in “other considerations”. In addition to these factors, there is also the influence of precedents and the convenience of setting a standard term for all projects in a PPP program (for example, all health PPPs). Relationships with other projects and other contracts.Flexibility to accommodate risk and uncertainty and.Commercial feasibility (especially in user-pays projects).Private financial structure optimization.Life-cycle management and effective risk transfer.There are a number of considerations to be taken into account when assessing the optimum term for a specific project (see figure 5). Regardless of the legal limit, for some projects and in some markets, there will be term limits beyond which the project contract is not adding VfM. Many legal frameworks restrict the term that may be granted in a PPP contract (even prescribing different terms for different legal types of contracts in some jurisdictions). However, at some point, increasing the contract term will not provide any additional or incremental VfM, or it may introduce more disadvantages than advantages. There are other factors that can provide an incentive for the government to extend the term. Privately financed infrastructure PPP contracts have long terms so that the government can obtain Value for Money (VfM) from life-cycle management and from effective risk transfer. Appendix A– Description of Main Risks in a PPP and its Potential Allocation.Control Check and Approvals before Launching the Tender, and Planning Ahead Defining and Drafting Other Commercial Terms and Contract Provisions ![]() Defining Proposal Requirements and Evaluation Criteria Structuring and Drafting the Request for Proposals. Defining Qualification Criteria: Structuring and Drafting the RFQ Testing, Marketing and Communicating the Project before Project Launch
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