The private party bears the risk that the location of the site may prove unsuitable for delivering the proposed services, regardless of whether the site was originally selected by government. The private party's bid is based on its own assessment of site suitability - effectively representing to government that services can be delivered to the requisite standard and on a commercially viable basis from that site. Shifts in demographics and other changes which may make a site commercially unsuitable should be part of the private party's risk modelling and be priced into its bid.
Where a site has ageing infrastructure or identified contamination, there may be a need to address site deficiencies before the project begins or during the project's duration. Whether the property was brought to the project by the private party or is an existing government property will determine which party will bear the costs of addressing site deficiencies. Generally speaking, government requires the private party to assume 'ground risk' and the residual risks of assumed infrastructure, except perhaps where there is identified contamination on a government site or known defects in existing government infrastructure.
In cases where government land or infrastructure has identified liabilities, government may either pay a direct financial allowance for their repair or allow the private party to price that repair cost into its bid, especially if such a payment (made directly or indirectly through a higher service charge) discharges further liability for ageing infrastructure - and in effect allocates liability for unidentified defects to the private party. Alternatively, unidentified liabilities may be made subject to a material adverse effect clause, requiring the parties to cooperate in mitigating the consequences of a materialised risk that adversely impacts on the project returns, as in the case of unanticipated ground contamination discussed in section 4.4.