2.9 The risk allocation inherent in SoPC4 is well understood and is capable of delivering value for money. HM Treasury recognises, however, there will be circumstances where departments and local authorities wish to adopt alternative PPP arrangements. HM Treasury encourages departments and authorities to think carefully about the most appropriate delivery route for their projects, and to consider new approaches where they believe these are value for money.
2.10 HM Treasury will work with colleagues across government to ensure the lessons learned about risk allocation, which have been captured through SoPC4, can be utilised in new delivery approaches. HM Treasury will also consider how the disciplines associated with the PFI assurance and derogations processes can be harnessed to scrutinise more effectively alternative PPP arrangements.
2.11 One of the benefits of standardisation is that the commercial aspects of a project can be understood, assessed and scrutinised relatively quickly. Where authorities are looking at other forms of PPP - particularly where these involve long term financial commitments - HM Treasury will pay particular attention to assessing the commercial structures being proposed. In particular departments will need to address how the commercial arrangements will drive VfM and what the associated deliverability risks are. Departments and local authorities should highlight non-standard projects at an early stage of the assurance and approval process. For example, there will be a need to demonstrate that the additional cost of placing private finance at risk is capable of delivering commensurate benefits.
2.12 While PPPs will not be required to adhere to SoPC4 or other standard form contracts such as the ICT model contract2, these should be a useful reference point for Authorities in developing alternate approaches.
2.13 HM Treasury has also provided guidance for public bodies entering into joint ventures. It looks at the issues associated with the creation and use of joint venture entities across the wider procurement spectrum and can be found on the HM Treasury website.3
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2 http://www.ogc.gov.uk/policy_and_standards_framework_model_ict_contract.asp
3 http://www.hm-treasury.gov.uk/d/joint_venture_guidance.pdf