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Public contracting

Addressing the risks from climate change in performance-based contracts

Chris Bennett's picture


Output and performance based road contracts (OPRC) is a contracting modality that is increasingly being used to help manage roads. Unlike traditional contracts, where the owners define what is to be done, and oftentimes how to do it, OPRC contracts define the outcome that the owners want to achieve, and the contractor is responsible to meet those outcomes. Performance is measured against a series of key performance indicators (KPIs) or service levels.
 
Critical to the success of any OPRC contract is the assignment of risk between parties. Climate change has major implications for OPRC contracts because it affects the risk exposure of both parties. With funding from the Public Private Infrastructure Advisory Facility (PPIAF), a new analysis considered how to incorporate climate change risks into OPRC contracts.
 
What’s Happening Right Now?
 
Without clear expectations around climate risk, neither the asset owner nor the companies bidding for performance contracts will adequately address the risks. Bidders cannot be held accountable for risks that are not specifically cited or linked with performance criteria.
 
At present, climate change risks are generally carried by the asset owner through the Force Majeure provisions of the contract, and treated as ‘unforeseen’ events, with repair costs reimbursed to the contractor. This impacts the overall cost of the OPRC, and where extreme weather events are becoming common-place, reduces the efficacy of OPRC as a contracting modality. The most pressing issues challenging stakeholders during each phase of development are summarized in this chart.

Pushing the frontier of e-government procurement in Africa with the open contracting standard

Lindsey Marchessault's picture

Public procurement is a linchpin for good governance and effective public service delivery, both of which are critical to the sustainable development of Africa. In many countries throughout the region, strengthening procurement to address weaknesses in public sector governance has become a priority. 
 

Rebuilding trust in governments through Open Contracting

Luis Vélez Pretelt's picture


Building trust between citizens and governments is crucial to successfully address, in a collaborative and engaged manner, many of the issues that affect the everyday lives of citizens, like corruption, government inefficiency and lack of service delivery.

Recent data, however, has shown that trust between citizens and governments ranks low.

In fact the 2015 Edelman Trust Barometer stated that the number of “truster countries” are at an all-time low, reflecting a general decline of people’s trust in institutions of governments, NGOs, business and media.