DET developed a risk matrix to determine the appropriate allocation of assessment project risks between the public sector and the private sector proponent. Based on this, and based on soundings of what the market was prepared to bear, DET determined that risks should be transferred as shown below.
DET's plan to transfer risk to the private sector ■ design risk should be transferred to the private sector operator and ultimately to the design and construction contractor ■ construction risks including delivery to cost and to time, should be transferred to the private sector operator ■ day to day risks of operating the facilities should all be transferable to the private sector operator ■ the contractor should take on the risk of making available schools to an acceptable standard when required for the purpose of education delivery ■ the contract should be structured with a payment mechanism linked to the consumer price index, a risk carried by the State ■ once the contract takes effect, the risk of interest rate changes should pass to the contractor ■ the private sector would not take the risk on the number of pupils attending school. |
In our view DET's plan for risk transfer was well suited to the circumstances and to securing value for money.