The service fee will include amounts to fund the private party's maintenance and refurbishment obligations. This will generally be reflected in a smooth service payment profile, although, depending on the project's funding arrangements, government may consider a lumpy payment profile.
The service fee will generally be abated to the extent the private party's obligations are not satisfied.42 On some projects, government may consider exempting the lifecycle/maintenance component of the service fee depending on the project's funding proposal (in particular, the associated reserve costs).
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42 In projects where it is expected that a high degree of technological obsolescence will occur or where major refreshes of facilities will be required, it may be value for money for government to carve out refurbishment obligations from the service fee and benchmark them separately.