Bidders for the project were expected to understand and accept the State's preferred risk allocations and price those risks accordingly in their bid.
Expected risk allocations for the project were carried through from the procurement strategy review to the EOI and RFP documents.
An extensive risk identification exercise was carried out for the project by the legal advisor, which has been distilled to a risk matrix and is presented regularly to the steering committee. (We discuss risk management in more detail later in this part of the report.)
Our review of the development's risk allocation patterns confirmed that they conform to the allocations recommended in PV guidance.
The structured negotiation process identified and analysed any risks or contractual departures prior to contractual close and minimised any adverse impact. The PPP contract was drafted to be compliant with the standard commercial principles espoused by DTF14, and to protect the State's residual and future rights including default, change, cure and step-in clauses.
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14 <http://www.partnerships.vic.gov.au/CA25708500035EB6/WebObj/PVStandardCommercialPrinciple sFinal/$File/PV%20Standard%20Commercial%20Principles%20Final.pdf>