Public-Private Partnership (PPP) is a long term contract. What are the avenues for price and contract variations to respond to unexpected changes?
The PPP contracts will typically include provisions for price review and adjustment. During the construction phase, if the public agency initiates changes to the project, there will be provision for both parties to review and adjust the price arising from such changes. This is no different from contract variations in direct government contracts. The price payable by the government agency during the operational or service delivery phase is dependent on the service availability and service levels. The price adjustment may be carried out in two ways, i.e. (a) a pre-determined rate for an increase or decrease in capacity; and (b) an agreed set of procedures to vary the price for other changes in scope or other requirements. Either party may initiate changes to the scope of the contract, e.g. the PPP partner may propose changes to take advantage of innovation and technological advancement.
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