WorksheetsChap5. Structuring and drafting the tender and contract
Total questions: 21
Worksheet time: 21mins
Name
Class
Date
1.
Which correctly describes an input to the Structuring and Drafting Phase from the Appraisal Phase?
a)
a. Request for proposal
b)
b. Request for qualification
c)
c. Final draft contract
d)
d. Definitive scope and project design or detailed project outline
2.
Which type of ‘structuring’ defines the contract term?
a)
a. Risk structure
b)
b. Financial and budgetary or fiscal structure
c)
c. Tender/procurement structure
d)
d. Resource structure
3.
Which of the main tasks in the Structuring Phase may use data rooms?
a)
a. Pre-tender interaction
b)
b. Drafting the contract and packaging the tender documents
c)
c. Finalising due diligence and preparation
d)
d. Establishing the project team
4.
Which statement about financial structuring from the public perspective is true?
a)
a. The higher the payments, the lower the burden for either the government or the public
b)
b. The higher the user tariff levels, the higher the commercial feasibility
c)
c. The level of user charge or NPV of government payments should be fixed if there is strong competition
d)
d. None of them are true
5.
Which statement about the optimum term for a PPP contract is true?
a)
a. A PPP DBFOM contract should fall within a range of 15-30 years
b)
b. The term should capture key life-cycle costs
c)
c. The term should be shorter than the debt term available
d)
d. The term should equal the maximum debt term achievable minus a “loan tail” cushion
6.
Which is NOT a factor in favour of long-term PPP contracts?
a)
a. Higher debt terms permit higher leverage
b)
b. Higher fiscal commitment in overall aggregated terms
c)
c. Lower yearly burden in government-pays PPP
d)
d. Tariff levels remain socially acceptable
7.
Which of the following are usual reasons for a government to provide pure co-financing in a PPP?
1. To solve a viability gap in a socially and economically sensible project
2. To increase Value for Money and reduce risks to the private partner
3. To increase the commercial feasibility of a privately financed project
4. To increase affordability by lowering the cost of capital
a)
a. 1, 2, 3
b)
b. 1, 2, 4
c)
c. 1, 3, 4
d)
d. 2, 3, 4
8.
Which describes MOST accurately a public participative soft loan?
a)
a. Usually subordinate to the equity provided by the investor
b)
b. Provided on favourable or below-market conditions in terms of price or tenor
c)
c. The government receives part of the upside of a project in exchange for the below-market conditions
d)
d. Increases the long-term burden committed in the payment mechanism of a government-pays PPP, or increases the feasibility gap in a user-pays PPP
9.
Identify the missing word(s) in the following sentence.
When providing complementary revenues in a user-pays PPP through public budgetary payments, it is preferable to structure these as [____________] payments.
a)
a. service-type
b)
b. irrevocable
c)
c. unconditional
d)
d. pure co-financing
10.
Which of the following statements about equity participation in a PPP by the government are true?
1. Equity participation by the government can discourage bidders and create conflict
2. Government can only share in profits if it takes an equity stake in a PPP
a)
a. Only 1 is true
b)
b. Only 2 is true
c)
c. Both 1 and 2 are true
d)
d. Neither 1 or 2 is true
11.
Which is an appropriate reason for government to retain user revenues and structure a PPP so that the private partner’s revenue consists entirely of government payments?
a)
a. The user charges are insufficient to meet the private partner’s costs and provide a return on investment
b)
b. The private partner wants to assume higher risk and reward
c)
c. The government wants the private party to retain the risk and reward from the PPP
d)
d. The government wants to retain the risk and reward of the traffic revenues
12.
Which structuring parameter in a user-pays PPP is appropriate and common?
a)
a. The private partner should define the toll/tariff with full flexibility
b)
b. Concession fees should be considered when the value of excess revenue is unclear
c)
c. In over-feasible projects, the government can decrease the cap on tariff and pass excess revenue benefit through to final users
d)
d. Government should increase its grant when demand risk is considered significant
13.
Which of the following statements about availability payment mechanisms are true?
1. An asset can be deemed ‘unavailable’ for the purpose of calculating payment deductions, even while it is being used
2. When a deduction, based on unavailability or condition criteria, is calculated to be of a higher value than the unitary payment during a period, the private partner is required to make payments to the procuring authority
a)
a. Only 1 is true
b)
b. Only 2 Is true
c)
c. Both 1 and 2 are true
d)
d. Neither 1 or 2 is true
14.
Which statement about breaches to availability or condition criteria is true?
a)
a. No payment deduction will be made if it is rectified within the rectification period
b)
b. Any breach should result in a payment deduction, regardless of when it was rectified
c)
c. Calculation of payment deductions is based on when the rectification period is finished
d)
d. Every breach should have a rectification period
15.
Which is a definition of endogenous risks?
a)
a. Risks that the either party cannot assess
b)
b. Risks that the private partner can do something about to ensure the expected outcome
c)
c. Risks that the private partner cannot control
d)
d. Risk that the procuring authority cannot control
16.
Which is an appropriate allocation of uninsurable risks?
a)
a. Shared by both parties
b)
b. Transferred to an agent in the market place
c)
c. Transferred to the private partner
d)
d. Retained by the public authority
17.
Which statement applies to the risk assessment conducted in order to allocate risks?
a)
a. Calculates the most likely possible outcome
b)
b. Calculates the full range of outcomes, including their probabilities
c)
c. Usually quantitative in nature
d)
d. Usually qualitative in nature
18.
Which risks should the public authority undertake early mitigation measures for?
a)
a. Retained risks
b)
b. Shared risks
c)
c. Transferred risks
d)
d. All risks
19.
Which does NOT describe a force majeure event?
a)
a. Related to the performance of the private partner
b)
b. Always related to exogenous factors
c)
c. Difficult to estimate in terms of likelihood
d)
d. Impossible to assess in terms of impact estimates
20.
Which category of risk should be borne by the public party?
a)
a. Permits
b)
b. Revenue risks linked to availability and quality issues
c)
c. Residual value and hand-back conditions
d)
d. Land availability and acquisition
21.
Which statement about compensation events and rebalancing is NOT true?
a)
a. The private partner may be requested to finance the loss
b)
b. Events that impact on Capex will be compensated by a government direct payment
c)
c. A relief event has to be compensated too
d)
d. Events that affect future revenues will be compensated by supplementary payments or an increased service price/tariff
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