To the extent that government is able to control the quality of inputs to be used by the private party for providing the contracted services, under optimal risk allocation principles, the government should assume that part of network risk that relates to the availability and quality of the inputs.
Where government is not entirely able to control the input availability and quality, but can do so better than the private party, government may agree to take or share the risk if it is in the public interest or would improve value for money.
In a raw water project, for example, government may take the risk that at the point where the government network delivers the raw water into privately-operated water treatment plants, the water will have a turbidity outside certain specified standards. If the risk materialises, there may be an increased charge (to government) under the contract. Alternatively, the water may be processed to a lower output level, without financial penalty to the private party.