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Project Documentation. A presentation for the HK Efficiency Unit PPP Project Financing Seminar John Maxwell/Christopher Bradley 30 September 2005. Introduction. Project Documentation Overview Project Agreement Key Terms Recent Developments in maturing PPP markets.

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project documentation

Project Documentation

A presentation for the HK Efficiency Unit

PPP Project Financing Seminar

John Maxwell/Christopher Bradley

30 September 2005

introduction
Introduction
  • Project Documentation Overview
  • Project Agreement Key Terms
  • Recent Developments in maturing PPP markets
project documentation structure
Project Documentation Structure

Sponsors/ Shareholders

Government

Project Agreement

O&M Contractor Guarantor

Construction Contractor Guarantor

Project Company

O&M Agreement

Construction Contract

Construction Contractor

Operations Contractor

Interface Agreement

Architect

Sub-contractors

project documents
Project Documents
  • Project Agreement
  • Construction Contract
  • Operating Contracts
  • Ancillary Contracts
project agreement
Project Agreement
  • Term
  • Land
  • Design, Construction and Completion
  • Operations and Maintenance
  • Payment
  • Time and cost issues
  • Termination
  • Termination compensation
slide7
Term
  • Usually fixed number of years
  • Factors to take into consideration
  • Must be long enough to earn back debt and costs
slide8
Land
  • Who will have responsibility to obtain?
  • Is a particular site key to the Project?
  • Appropriate form of land grant
  • Responsibility for planning permission
design construction and completion
Design, Construction and Completion

Design:

    • Concessionaire risk/responsibility but within specified output criteria
  • Construction:
    • Will be agreed construction schedule
    • Concessionaire will warrant quality and rectify defects
  • Completion
    • Completion will be signed off by Government, and lenders will also be involved
    • Protections against late service commencement
operation and maintenance
Operation and Maintenance
  • Agreed operation and maintenance regime
  • Availability
  • Performance Monitoring
  • Handback
payment mechanisms
Payment Mechanisms
  • Can be structured many ways
    • demand based (shadow or real)
    • availability based
    • hybrid based
time and cost issues
Time and Cost Issues
  • How delay and increased cost will be dealt with will depend on project and how payments will flow
  • Time
  • Time and money
  • Force Majeure
termination
Termination
  • Rights to terminate
  • Concessionaire will be concerned to protect investment by limiting rights to terminate
  • Lenders also will be concerned to protect their loans to the Concessionaire
  • Will depend upon compensation regime - where protected will be less concerned
termination compensation
Termination Compensation
  • If it DOES all go wrong, how much will the Government pay, if anything?
  • Competing Interests, but usually:
    • lenders are protected and ‘kept whole’
    • Concessionaire is protected where not at fault
    • rationale for payment even where at fault is that Government acquires asset
developments in maturing ppp markets
Developments in maturing PPP markets
  • Standardisation of documentation
  • Improved risk allocation/value for money
  • Monoline wrapped bonds/Credit Guarantee Facility
  • Support/Experience for public sector
  • Flexibility and partnership
  • Confidentiality and freedom of information
  • Refinancing controls
  • Winning over public opinion/political issues
  • Treatment of employees