3.12 The underlying considerations relating to desirability are:
Desirability
Risk Management - Does the project involve the purchase of a capital asset? - Are the risks of cost and time overruns likely to be significant? - Are there significant operational cost risks?
Innovation - Is there likely to be scope for innovation in service delivery?
Service Provision - What is the role of soft services i.e. facilities management? - Are there good strategic reasons to retain soft services in house? - Is soft service transfer essential for achieving improved service delivery?
Incentivisation - Is incentivisation likely to result in enhanced service delivery?
Lifecycle Costs and Residual Value - Is it possible to integrate asset design, construction and operation? - Is it possible to achieve significant whole life cost savings? |
3.13 The following risks should be considered on a Programme / Project Level basis:
Risks 1. Design: can the service provider be made responsible for ensuring the design is fit for purpose and for all resources required for design and development activity? 2. Financing: can the service provider be made responsible for establishing and maintaining the funding for service provision throughout the contract life? 3. Implementation: can the service provider be made responsible for all aspects of implementation, transition and certification? 4. Operation: can the service provider be made responsible for delivery of a high quality service at required levels of availability and continuity? 5. Usage: can the service provider be made responsible for costs associated with variations in demand? 6. Regulatory change: can the service provider be made responsible for the consequences of changes in non-discriminatory legislation, such as national minimum wage? 7. Obsolescence: can the service provider be made responsible for ensuring that the technology underpinning service delivery - and the service delivery mechanism itself - remains consistent with contemporary market standards? 8. Service provider lock-in: can the service provider be made responsible for ensuring that the service is provided in such a way as not to constrain the Authority's ability to continue to meet its requirements cost-effectively in due course via an alternative supplier/solution? 9. Residual value/disposal: can the service provider be made responsible for the residual value of the assets at the conclusion of the service contract? |
3.14 In assessing the above considerations, the relevant benefits of different procurement routes should be assessed (for example, by reviewing optimal risk transfer; the impact of signing a long term service contract; the scope for innovation; the appropriateness of internal / external FM provision; the relationship between design, whole life costing and operation).