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5.7 Contracting and Financing Aproaches - Coggle Diagram
5.7
Contracting and Financing Aproaches
Contracting instruments
contracting describes the formal relationship between institutions and organisations
Approaches to Contracting
Employing different types of formal instruments for the delivery and operation of a major project
the most common formal instruments are
contracts
Public institutions typically grant
public concessions
and provide the stakeholder concerned with special rights
Built-Operate-Transfer (BOT); Built Own Operate Transfer (BOOT); Built Operate (BO); Built Own Operate (BOO) and Design Built Finance Operate Maintain (DBFOM). Public Private Partnerships
turn-key contract
Different contracting networks and the attribution of responsibilities between the key stakeholders
Using different contracting standards
International Federation of Consulting Engineers (FIDIC)
New Engineering Contract (NEC)
Contracting during project phases
In major projects, configuring the contracting network can be very complicated
The contracting network evolves depending on the project phase and contracting is inextricable from the financing approach you adopt
Contracting and financing are two sides of the same coin
The shareholder agreement is used to establish key governance and financing provisions for the special purpose entity. In particular it sets out
:
the percentage share ownership in the project
the procedure for future equity subscriptions
voting of shares at the annual general meeting
board representation and voting
provisions to deal with conflicts of interest (eg if the Engineering, Procurement and Construction contractor is a sponsor, then they are not allowed to be involved in board discussion or vote on issues relating to the EPC contract)
the appointment and authority of management
the distribution of profits
the sales of shares by sponsors (usually other sponsors are given first refusal when shares are being sold.)