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Module 4 -17 Negotiation & Contracting


17.1 What is the process of negotiating?
17.2 What is the process of contracting?
17.3 What should the contract cover?
17.4 Who should conduct this stage?
17.5 What are the key issues to keep in mind?
Further Guidance

Key Questions:


Why carry out negotiating and contracting?
What does negotiating and contracting entail?
How does negotiating and contracting achieve poverty reduction objectives?

Related Tools:


4 Collecting Information
6 Defining Objectives



Implementation – Negotiation & Contracting

17.2 What is the process of contracting?

A contract is a legal agreement between two or more parties where one party (the contractor, in this case the private sector) agrees to carry out certain tasks in return for a reward (or in legal terms, a consideration) paid by a party (the users of the service). The process of contracting is therefore a series of interactions between the stakeholders to a PPP contract; this in turn leads to the execution of the contract (delivery of the required services). Negotiation characterises all stages of the contracting process.

The rights, responsibilities and obligations of each stakeholder (the private sector and the municipality) fall into two categories.

  • There are specific duties and obligations required by the contract; these are set out in the contract documents.
  • Then there are general legal requirements – the laws of the country concerned.

It should be stressed that the principal objective of the contract is the successful completion of the tasks identified, for which each party is making a contribution (either in cash or kind). Ideally, the contract must be executed with the least possible trouble and to the highest standard possible within the provisions of the contract. This can only be achieved if all parties involved in the PPP aim to work together – not against each other, as is the case on occasions. Therefore cooperation, despite differences of opinion and personality, is essential.

The process of contracting in a PPP involves the following stages:

  • the pre-bidding phase;
  • the procurement phase; and
  • the operation phase.

The contractual issues that need to be tackled at each phase of the PPP are discussed in the following section.

 

 



 
     
  S T A R T P A G E  
  Module 1 - Before PPPs  
  01-Starting Out  
  02-Strategic Planning  
  Module 2 - Preparation Stage  
  03-Planning & Organising  
  04-Collecting Information  
  Module 3 - PPP Development Stage  
  05-Identifying Constraints  
  06-Defining Objectives  
  07-Defing Parameters (Scope)  
  08-Establishing Principles  
  09-Identifying Partners  
  10-Establishing Partnership  
  11-Selecting Options  
  12-Financing (Investment)  
  13-Financing (Cost Recovery)  
  14-Preparing Business Plans  
  15-Regulating the PPP  
  Module 4 - Implementation  
  16-Tendering & Procurement  
  17-Negotiating & Contracting  
  18-Managing PPPs  
  19-Monitoring & Evaluation  
  20-Managing Conflict  
  21-Capacity Development  
  Contact Information