Risk category

Description

Consequence

Mitigation

Likely preferred allocation

Site risks - Section 4

The risk that the project land will be unavailable or unable to be used at the required time, in the manner or at the cost anticipated, or that the site will generate unanticipated liabilities, with the result that the contracted service delivery and/or projected revenues are adversely affected.

Acquisition of Site

The risk that preferred site is in third-party ownership and has to be acquired for the project.

The risk of unanticipated land acquisition costs and delays in acquisition.

State may use its statutory powers of compulsory acquisition.

private party.

Existing structure (refurbishment/ extensions)

Risk that existing structures are inadequate to support new improvements.

Additional construction time and cost.

private party will pass to builder who relies on expert engineering reports.

private party.

Site conditions

The risk that unanticipated adverse ground conditions are discovered which cause construction costs to increase and/or cause construction delays.

Additional construction time and cost.

private party will pass to builder which relies on expert testing and due diligence. The government may commission initial reports if appropriate.

private party.

Approvals (1)

The risk that necessary approvals may not be obtained or may be obtained only subject to unanticipated conditions that have adverse cost consequences or cause prolonged delay.

Delay in works commencement or completion and cost increases.

Where the project is unusually complex or the processes to obtain the approvals are likely to be lengthy, the government may start the process of obtaining approvals prior to the commencement of the tender process.  The work done would then be transferred to the Preferred Bidder under a [Project Development] agreement to enable them to obtain the approval. The Bidders are ultimately responsible for determining which approvals are necessary.

private party unless government assumes some or all of risk due to complexity or sensitivity of particular project

Approvals (2)

The risk that additional approvals required during the course of the project cannot be obtained.

Further project development or change in business operation may be prevented

private party to anticipate requirements.

private party unless government has initiated the change requiring approval.

Environmental (1)

The risk that the project site is contaminated requiring significant expense to remediate.

Clean-up costs and delay

Reliance on expert reports and insurance

private party will generally assume the risk although because of the time and cost implications of full due diligence for each Bidder, some risk sharing may be a cost effective solution.

Environmental (2)

The risk that a site chosen by the private party (i.e. not the government-preferred site) is contaminated requiring significant expense to remediate.

Clean-up costs and delay.

Reliance on expert reports and insurance.

private party assumes all risk as it has selected the site.

Environmental (3)

The risk that prior to financial close offsite pollution has been caused from a government preferred site (any site) to adjacent land.

Clean-up liability.

Government to commission reports; government should also have greatest knowledge of past uses of its site.

Government may assume responsibility by way of indemnity or obligation to compensate for unidentified off site pollution pre financial close

Environmental (4)

The risk that prior to financial close offsite pollution has been caused from a non-government preferred site to adjacent land.

Clean up liability.

private party should commission reports and investigations.

private party will take risk of offsite pollution from any site that is not a government preferred site.

Environmental (5)

The risk that after financial close offsite pollution is caused to adjacent land.

Clean up liability.

private party can manage site activity.

private party will be in control of activities on the site post financial close and will be required to assume risk of offsite pollution caused by those activities.

Clean-up and rehabilitation

The risk that the use of the project site over the contract term has resulted in a significant clean up or rehabilitation obligation to make the site fit for future anticipated use.

Financial liability on residual owner.

private party able to manage the use of the asset and attend to its maintenance and refurbishment.

private party to take risk (whether government is to resume or not) and must demonstrate financial capacity or support to deliver the site in the state required by government.

Native title

The risk of costs and delays in negotiating indigenous land use agreements where project site may be subject to Native Title or risk injunction and/or invalidity of approvals.

Delay and cost.

Search of registers and enquiry if appropriate and take expert advice. private party must engage with traditional owners to establish relationship over whole of project life. Government may assist in progressing procedures for native title clearances in early stages, and where necessary exercise available compulsory acquisition powers.

Government and private party to jointly manage risk.

Cultural heritage

The risk of costs and delays associated with archaeological and cultural heritage discoveries.

Delay and cost.

Search of registers and enquiry if appropriate and take expert advice. private party must engage with traditional owners to establish effective relationship over whole of project life. Government may assist in progressing procedures for Cultural Heritage clearance in early stages.

Government and private party to jointly manage risk.

Availability of site

The risk that tenure/access to a non-preferred site that is not presently owned by government or private party cannot be negotiated.

Delay and cost.

Bidders obligation to secure access prior to contract signing.

private party, as it makes the decision to bid on a non-preferred site.