How Risk is Managed in PPP Contracts

Course Overview Every project has risk. Robust risk management is essential to ensure that expected project outcomes are achieved. “How Risk is Managed in PPP Contracts” will provide an in depth examination of risk management in public Private Partnership projects. Delegates will learn how risk can impact upon project outcomes and master techniques to identify and manage risks. The course will cover both the government and private sector perspectives, drawing on a range of real-life illustrations and case studies. Specific risk management issues covered include: Managing risks in PPP tender processes to ensure a successful tender outcome The use of legal documentation to allocate and manage risk Commercial and financial analysis of risk in PPP projects Preparing for and responding to unexpected events that may affect the project The importance of ensuring that a project is bankable and financially sustainable At the end of this course you will: Understand the importance and role of risk management in PPP projects Be able to identify key risks in PPP tender processes and the causes of tender process failure Understand processes for identifying, analysing, allocating and managing risk in PPP projects, and be aware of the potential pitfalls of these processes Understand the mechanisms within PPP contracts for allocating risk between government and the private sector Be able to identify which risks should be shared by government and the private sector, and appropriate mechanisms for sharing these risks Understand the mechanisms used for allocating risk amongst the private sector consortium in a PPP Understand specific risks in PPPs that may compromise project outcomes, such as demand risk and design risk, and techniques for their management Understand techniques for managing risk once the PPP contract has been signed Methodology As with all Euromoney Training courses, this programme makes use of case-studies and exercises to ensure that you leave the course, ready to apply your new knowledge. Who should attend this training course? The course will be relevant to a wide range of delegates from differing backgrounds including: Legal Professionals Commercial Managers Project Managers Construction Managers Risk Managers Facilities Management Professions Infrastructure Operations Professionals Banking and Finance Professionals
Day 1 Understanding Risk Management in PPP Projects A PPP refresher What are PPPs? Why do governments use PPPs? Key PPP features and concepts The central role of risk in PPPs PPP Development and Tendering Processes Ongoing Management of PPPs Fundamentals of Risk Management What is Risk? What is Risk Management? The Risk Management Process Group Exercise: Identifying Risks in a Potential PPP Project Risk Quantification Risk Management in the PPP Tender Process Understanding and Managing Tender Process Risks Case study: Failed PPP Tender Processes Understanding and Managing Cost Risks Risk Management through the Concession Agreement Structure of the Concession Agreement Case Study: National Highways Authority of India Standard Concession Agreements How is the Concession Agreement developed? Management of Risk through the Concession Agreement Allocating Risk between Government and the Private Sector Risk Sharing Mechanisms Group Exercise: Allocating Risks in a PPP Project Key Obligations of the Project Company Project Company entitlements to relief and compensation Exercise: Mechanisms for dealing with construction delays Key Obligations and Rights of Government The Payment Mechanism Availability based projects - structuring and calibrating the payment mechanism Exercise: Assessing the efficacy of PPP payment mechanisms based on real project examples Day 2 Managing Risk within the private sector consortium Assessing and Allocating Construction Risks Key features of Construction/EPC contracts in PPP projects Exercise: Understanding “back to back” obligations Construction Security Sub-contracts Construction Security - What value is appropriate, from whom, on what terms? Exercise: Understanding the financial impact of late delivery Commercial Aspects of PPP Project Insurance Insurance coverage – how much and on what terms? Exercise: Determining required insurance levels Managing Insurance Premium Risk Construction Insurances Assessing and Allocating Operating and Maintenance Risks Key features of Operating/Maintenance Contracts in PPP projects Operating Security Operating Insurances Assessing and Allocating Financing Risks Equity finance - Shareholder agreements, Subscription agreements and letters of credit Case Study: Example of the financing package for a PPP Debt finance - Loan Agreements, Bond Documentation and Swap Documentation Security documentation Documenting how and when money is invested in the project, and how and when returns are paid to investors Tying the Project Together – Ensuring a comprehensive Risk Management Solution Site Documentation Interface Agreements Tripartite Agreements and Side Deeds Independent Certifiers / Reviewers Management Agreements Day 3 Special Risk Issues and Ongoing PPP Management Special Risk Management Issues: Understanding Demand Risk Case Study: Demand Risk Management Mechanisms used in South Korea, Chile and the United Kingdom Managing Design Risk Case Study: Mechanisms for Managing Design Risk Managing Government Counter-Party Risk Case Study: The Indonesia Infrastructure Guarantee Fund Managing risk during Construction Design Development Case Study: Design Development in Government Operated Social Infrastructure Projects Monitoring Construction Progress Commissioning Requirements Defect Rectification Managing risk during Operations Performance Monitoring Audit and information rights Review points Preparing for handover Varying the PPP arrangement without undermining your risk position Variation/Modification processes Case Study: International comparison of variation processes Managing Contingent Liabilities Managing Underperformance or Late Delivery Case Study: Cost overruns and delays in the Victorian Desalination Project and Ararat Prison Project – Similar issues, different consequences Managing Unexpected Events Managing Force Majeure Events Managing Issues and Disputes Managing Default and Termination Processes Compensation on contract termination