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PFI/PPP
Explained

A Project Explained
  Procurement & Bidding
  Key Contracts
  Risks and Risk
   Mitigation
  Facilities Management

Financial Aspects

Accounting for PFI

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PFI/PPP Glossary

Home > PFI/PPP > A Project Explained > Key Contracts

Key Contracts

The SPC established for each PFI project will put in place contracts with each of the entities involved to explicitly define the terms under which the various aspects of the project are to be operated, and the parameters under which certain scenarios and consequences are relevant. Among the specifications are:

the scope, nature and quality of services to be provided;
details relating to the design and construction of facilities;
the relationships between all parties and the allocation of responsibility;
the way in which payment to the SPC (the unitary fee) will be related to performance or other criteria;
the conditions of the senior lenders for borrowing the debt and the requirements for repaying the funds.

Contracts will also have an element of index linking, with revenues adjusted in relation to inflation.

The key contracts drawn up at the financial close of a PFI scheme include:

Project Agreement
Design & Build Contract
Facilities Management Agreement
Senior Lenders Facility Agreement
Shareholders’ Agreement

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