Design and construction risk also embraces the extent of design adaptation that may be necessary to keep service delivery efficient over time or to meet service delivery specifications, particularly where these are set by reference to external benchmarks. Where a project is technology dependent, the private party has usually priced-in periodic upgrades as a means of managing the obsolescence and operational risks associated with technical innovation.
As discussed in chapter 13 (Asset ownership risk), the risk of major technological change that could not have been foreshadowed at the time the contract was entered into, may be shared by including a process in the contract for either party to propose a major technological conversion, with an appropriate cost allocation including adjustments to the service charge. The decision to share this risk would need to be made on a case-by-case basis, with regard for value for money considerations. In extreme circumstances, where it is no longer efficient for either party to persist with an outmoded facility, the parties may agree to terminate the contract on mutually acceptable terms.