Careful attention must be given to managing potential disputes in Private Public Partnership (PPP) projects. PPP projects are inherently complicated, and involve many contractual participants. There is no steadfast answer as to which type of resolution method will fit a particular situation. The ability to adequately resolve disputes, which may arise at any point in the PPP’s hierarchy, is critical to ensuring the long term viability and profitability of any project.
In a typical PPP project, the master agreement represents a contract between the municipal government and a private consortium working to design, build, and operate the project. The private consortium will normally create a new entity, called a “special purpose vehicle” (SPV), solely for this undertaking. The SPV will be governed by a separate contract which will outline the rights and obligations of the private consortium’s members (a shareholders’ agreement). The SPV will then enter into various contracts, such as with a construction contractor, to build the project. The contractor will then enter into various sub-contracts, and these sub-contractors will frequently enter into sub-sub-contracts to accomplish particular tasks.
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