Legal and Risk

Legal and risk-related activities include an ongoing set of legal conformance reviews that, in many ways, are model-specific. Approvals and permits must be defined, long-lead activities initiated and key items (such as a Record of Decision) obtained prior to financial close. Schedule risk associated with permits and approvals can have a significant effect on overall project economics and represent a key uncertainty in project financial modeling.

A structured "business risk management framework" must be developed and updated at each iteration of this final project design process. Teaming and subcontractor agreements must be developed and defined during this process as part of the Contractor/Developer's risk management process.

The authority to toll must be clear and unambiguous, including any requirements such as toll-free periods or limitations on rate-setting or rate-of-return. These provisions are very important for projects covered by Title 23, where selection of applicable governing provisions has contracting, permitting and financing implications. (See Table 2 below) Specific adjustment provisions required must be defined and the limitations related to non-compete provisions carefully considered and integrated into the traffic and revenue modeling. Force majeure and incentive clauses, if any, must be addressed and any flowdown of requirements as a result of either project design or statutory requirements completely addressed.