The route to enhanced contractual outcomes starts with a clear understanding of the rights and obligations of each of the contracting parties. PPP contracts have a complex structure and are very detailed. It is rare once a contract has been signed for a full review of its terms to be carried out and in most cases terms are checked only in relation to a typically narrow range of issues which arise in the course of day to day performance.

Over time, strict compliance with contractual obligations can become eroded and contractual compliance begins to be judged by a subjective perception of the extent to which current expectations are being met. We call this process “deal creep”.

Deal creep causes a diminution of value. If not arrested, this can in time result in significant loss being suffered. It is not uncommon for an employer to have a perception that something is wrong with the way in which contractual obligations are being met, without being able to identify the fault.  Management pressures and the risk of opening an expensive ‘can of worms’ may lead to inaction and continuing acceptance of the status quo. This can jeopardise goodwill, lead to disputes and cause opportunities to be lost      

AFC’s contract review will identify and categorise all relevant obligations against which actual performance can be measured throughout the period from service commencement for which reliable records have been maintained. AFC’s approach envisages that results are shared with the contract parties and a programme for achieving compliant performance is agreed. AFC will assist implementation as required.

In addition to financial reconciliation, the key outcomes of AFC’s contract compliance review are:

• Restoration of confidence
• Creation of an accountability benchmark
• Validation of value for money