Queensland's Public Private Partnership Policy - Achieving Value for Money in Public Infrastructure and Service Delivery is a key strategic initiative that supports the Queensland Government's central economic objective of achieving high and sustainable levels of economic growth and employment by providing efficient and effective services and infrastructure. The objectives of this policy are to:
• deliver improved services and better value for money through appropriate risk sharing between public and private sector parties
• encourage private sector innovation
• optimise asset utilisation
• integrate whole of life management of public infrastructure.
This document is part of a suite of guidance material issued by the Department of Infrastructure and Planning (DIP) providing practical guidance on key technical issues that arise from the development and implementation of public private partnerships in Queensland.
The initial guidance material issued by the Department of Infrastructure and Planning comprises an overview document, the framework document and a range of supporting documents that provide further detail on specific aspects of the public private partnership process. The supporting documents detail the following issues:
Risk management
• project resourcing
• probity and process governance
• business case development and
• contract development and management.
This document should be read in conjunction with the other guidance material, as each contains relevant information that is not duplicated herein.
The purpose of the risk management supporting document is to:
• introduce risk and risk management in a public private partnership context;
• identify major risks relevant to public private partnership projects and outline the associated commercial issues;
• increase agencies' understanding of risk allocation and the likely objectives of public and private parties when negotiating risk allocation; and
• indicate the government's likely preferred position on allocating major risks and offer guidance to government practitioners on how each of these risks may be best addressed in their particular project, (recognising that each has unique features).
The term 'risk' in the context of this document is defined as 'the chance of an event occurring which would cause actual project circumstances to differ from those assumed when forecasting project benefit and costs'1.
This document focuses on risk and risk management in privately financed public private partnership projects. However, many of the principles are broadly applicable to other types of public private partnership projects. Additional information on risk management is available through publications of Standards Australia, including Risk Management (AS/NZS 4360:2004), HB 436:2004 (Guidelines to AS/NZS 4360:2004), and Risk Financing (SAA HB141-2004).
Part one of the document introduces risk and establishes the guiding principles.
Part two identifies the major risks in public private partnership projects and discusses related commercial and legal issues in detail. Government's likely preferred position on each risk is outlined with regard to privately financed public private partnership projects, however, on occasions, more than one satisfactory approach to risk allocation may be outlined.
Appendix A - risk allocation matrix illustrates the range of risks that may apply and broadly sets out the government's likely preferred position on risk allocation, the consequences of particular risks and possible mitigation techniques.
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1 Chris Furnell, Risk identification and risk allocation in project finance transactions, paper presented at the Faculty of Law, The University of Melbourne, May 2000, p. 1.