3.7 The rigorous identification and management of risks throughout a projectwhether procured conventionally or through PFI- is one of the key factors driving VfM. Some of the risks which need to be considered in assessing the merits of different procurement routes are covered in Box 3.2 below and are referenced later in the detailed methodology (Tables 3.1 & 4.1).
| Box 3.2 Risk Allocation 1. Design: can the service provider be made responsible for ensuring the design is fit for purpose and for all resources required for design and development activity? 2. Financing: can the service provider be made responsible for establishing and maintaining the funding for service provision throughout the contract life? 3. Implementation: can the service provider be made responsible for all aspects of implementation, transition and certification? 4. Operation: can the service provider be made responsible for delivery of a high quality service at required levels of availability and continuity? 5. Usage: can the service provider be made responsible for costs associated with variations in demand? 6. Regulatory change: can the service provider be made responsible for the consequences of changes in non-discriminatory legislation, such as national minimum wage? 7. Obsolescence: can the service provider be made responsible for ensuring that the technology underpinning service delivery - and the service delivery mechanism itself - remains consistent with contemporary market standards? 8. Service provider lock-in: can the service provider be made responsible for ensuring that the service is provided in such a way as not to constrain the Authority's ability to continue to meet its requirements cost-effectively in due course via an alternative supplier/solution? 9. Residual value/disposal: can the service provider be made responsible for the residual value of the assets at the conclusion of the service contract? |