PROJECTS

Standard Management Contract for Water and Electricity Utilities

The problem

Water utilities in emerging markets are often poorly managed: losing money and providing poor service. One solution is to bring in a team of expert managers on an incentivized contract; yet this has often gone wrong due to poorly designed contracts and uncertainty about the procurement approach to use.

How we helped

Castalia was engaged by the World Bank to develop its standard Utility Management Contract. This contract contains world class standard provisions on payment arrangements, monitoring and dispute resolution, yet is highly versatile through use of schedules that allow the scope of work and performance incentives to be tailored to the client’s needs. It comes with a suite of pre-qualification and bid documents tailored to comply with World Bank procurement rules. The best-practices embodied in the documents were derived from a critical review of what had and had not worked in utility management contracts in Albania, Armenia, Gaza, Ghana, Guyana, Lesotho, Malawi, Tanzania, and Trinidad and Tobago.

Impact

The Management Contract and bidding documents have been adopted by the World Bank as its standard contract for utility management services. They have also been used by other agencies, including as a base of the successful utility management services contract that helped to rapidly restore water services to Port au Prince, Haiti, after a devastating earthquake in 2010.