Under the terms of the SDA, responsibility for the management and operation of the Southern Cross Station was effectively transferred from the SCSA to the concessionaire over a phased transition period from August 2006 to December 2006.
The operational risk burden for the delivery of services rests with the concessionaire. The SCSA, as the owner of the station, is ultimately responsible for management of key public infrastructure and the provision of residual services and, therefore, has retained some residual operational risk associated with its contract management and oversight role with regards to the performance of the concessionaire.
This aligns with Partnerships Victoria guidance on the allocation of risk for PPP contracts, requiring that operational risk of delivery remains with the private party and is not inadvertently taken back by government.
This operational risk allocation is common in PPPs, as the overall responsibility for service delivery invariably reverts to the State as any serious underperformance would inevitably be raised by the public with government.
In our view, operational risks are allocated appropriately; commercial operational risks are allocated to the concessionaire, while contract management risks remain with the SCSA.