Generally, handback provisions specify residual service lives expected at expiration of the contract period for different structures and components of a highway or roadway. For example, the United Kingdom's standard is that 25 percent of the asset life remains at handback. Handback processes described in project or concession deeds are not unlike the turnover practices at the end of construction. Generally, a series of joint inspections between the government and the contractor will occur to determine whether adherence to the specified level of maintenance and repair has been achieved. Provisions to remedy unsatisfactory conditions are typically detailed. For instance, the contract may require establishment of a program of actions with milestones to bring the facility up to the expected standard. "Example: Handover Provisions" shows example handover provisions in a recent concession deed.
Table 9. Basic contract management roles in operations period.
| Role | Responsibilities | Examples |
| Performance Monitoring | ♦ Formal audits | Spot checks |
| Financial Monitoring | ♦ Traffic data | Annual reconciliation |
| Contract Administration | ♦ Liaison | Liaison |
The effectiveness of these provisions and the processes for their enforcement have yet to be tested in the countries visited, or the staff did not have direct experience with concessions that had previously expired. In New South Wales, however, the RTA is preparing for the return of the M4 Motorway in February 2010. The RTA began this process in 2007 to provide adequate time to address issues that may arise, particularly since the handover provisions of this early arrangement were not as robust as more recent provisions (see "Example: Handover Provisions"). An obvious concern is what asset management strategy the contractor will use to comply with the handback provisions. The handback provisions, however, are but one factor that influences the asset management approach. Another is the contract term. By and large, the host nations set the term so that at least one major renovation of most or all of the components will be necessary. Concerns about the contractor deferring maintenance and repair for as long as possible are mitigated somewhat by the KPIs established and by the contractor's interest in keeping customers-the roadway's users-satisfied with the service level they receive. Otherwise, the viability of the contractor's commercial enterprise could be at stake.
| Example: Handover Provisions | |
| 15.13 Final Handover (a) The Parties must, if required by STATE, carry out joint inspections of the Motorway and Third Party Works at a mutually convenient time: (i) 3 years prior to the expiry of the Term; and (ii) 18 months prior to the expiry of the Term. (b) Following each inspection under clause 15.13(a), the Parties will seek to reach agreement on: (i) the maintenance and repair works required to achieve Final Handover; (ii) a programme for the carrying out of those works by the Company; and (iii) an estimate of the cost of carrying out those works. If the Parties fail to reach agreement on any of the matters referred to in this clause 15.13(b) within 20 Business Days after the date of the relevant joint inspection then STATE may refer the matters in dispute for resolution in accordance with clause 26. (c) The: (i) Company or the Trustee (as the case may be, having regarding to their respective obligations under the Deed) must carry out the works agreed or determined under clause 15.13(b) in accordance with the programme agreed or determined pursuant to clause 15.13(b); and (ii) Company must either: A. progressively deposit into an account opened by STATE in STATE'S name with an authorised deposit-taking institution (within the meaning of the Banking Act 1959 (Cth)) (the "Escrow Account") 40% of all revenue collected by the Toll Collection System during the last 3 years or 18 months of the Term (as the case may be) until such time as the balance of the Escrow Account equals or exceeds 40% of the total estimated cost of the works (as agreed or determined pursuant to clause 15.13(b)); or B. provide to STATE an unconditional undertaking which complies with the requirements of clause 13.1 for an amount equal to 40% of the estimated cost of the works (as agreed or determined pursuant to clause 1 5.13(b)), as security for the performance of such works and the Company's or Trustee's other obligations under this clause 15.13. (d) Subject to its rights to have recourse to the monies held in the Escrow Account, STATE must pay the balance held in the Escrow Account to the Company within 20 Business Days after the Date of Final Handover. (e) As conditions precedent to Final Handover: (i) there must be: A. no immediate repair work required to any part of the Motorway or the Third Party Works; and B. otherwise no Defects in the Motorway or the Third Party Works; (ii) the Company or the Trustee must transfer ownership to STATE or its nominee of all plant and equipment owned by them or in respect of which they have an option to acquire title and required for the O&M Work; and (iii) the Company must supply to STATE all spare parts and special tools necessary for the continued operation, maintenance and repair of the Motorway and the Third Party Works after the expiry of the Term for a period of 12 months. (f) During the final 3 months of the Term, the Company must train STATE (or other) personnel as nominated by STATE in all aspects of the operation, maintenance and repair of the Motorway and the Third Party Works to a level of competency that will allow those personnel to manage, operate, maintain and repair the Motorway and the Third Party Works so that the obligations specified in clause 15.1 can be fulfilled after the expiry of the Term. (g) It is a condition precedent to Final Handover that the training referred to in clause 15.13(f) be completed to the reasonable satisfaction of STATE. (h) For a period of 12 months after the expiry of the Term, the Company must ensure that it has competent and experienced personnel available to consult with STATE on any aspect of the operation, maintenance and repair of the Motorway and the maintenance and repair of the Third Party Works where required by STATE. (i) Within 60 Business Days after the expiry of the Term, STATE will make determinations as to "residual design life," as defined in section 10.3 of the Scope of Works and Technical Criteria, with respect to each: (i) Asset Element of the Motorway and the Third Party Works referred to in section 5.2 of the Scope of Works and Technical Criteria and, subject to clause 15.13 (i)(ii), each Asset Item forming part of that Asset Element; and (ii) Asset Item or Asset Sub-Item of the Motorway and the Third Party Works specified in Appendix 20 to the Scope of Works and Technical Criteria, as at the expiry of the Term, using methodology for the determination which is consistent with relevant industry practice at the time which may include using: (iii) any technology used at the time for the purpose of making such determinations; or (iv) records kept by the Company and the Trustee during the Term as required by the Scope of Works and Technical Criteria. (j) If STATE believes that the "residual design life" of an Asset Element, Asset Item or Asset Sub-Item or any part thereof is less than the "specified residual design life," as defined in section 10.2 of the Scope of Works and Technical Criteria for the relevant Asset Element, Asset Item or Asset Sub-Item, then STATE may give notice to this effect to the Trustee and the Company specifying: (i) the extent to which it believes the "residual design life" is less than the "specified residual design life;" and (ii) the cost of the measures necessary to ensure that the Asset Element, Asset Item or Asset Sub-Item or any part thereof have a "residual design life" at least equal to the "specified residual design life." (k) The Trustee and the Company may within: (i) a reasonable time of receipt of STATE'S notice under clause 15.13j); or (ii) in any event, 60 Business Days of receipt of STATE'S notice under clause 15.13(j), carry out all necessary work to ensure that the "residual design life" of the relevant Asset Element, Asset Item or Asset Sub-Item or part thereof is equal to the "specified residual design life" for the relevant Asset Element, Asset Item or Asset Sub-Item: (iii) within and at such time as may be required by STATE; (iv) in accordance with the requirements of any relevant Authority; (v) so as to minimise the impact on the use of the Motorway or the Third Party Works; and (vi) in a manner which causes as little inconvenience as possible to: A. users of the Motorway or the Third Party Works; B. users of any Service or access; and C. the adjacent community. (I) If neither the Trustee nor the Company carry out the work referred to in clause 15.13(k) within the time specified, subject to clause 15.13(o), the Company must pay STATE (without limiting the provisions of clause 12) the cost determined by STATE under clause 15.13(i)(ii) as a debt due and payable by the Company to STATE. (m) Compliance by the Trustee and the Company with clause 15.13(k) or by the Company with clause 15.13(1) is a condition precedent to Final Handover. (n) In this clause 15.13, the terms "Asset Element," "Asset Item" and "Asset Sub-Item" have the same meaning as in the Scope of Works and Technical Criteria. (o) Nothing in clause 15.13(1) will limit STATE'S rights against the Company or the Trustee, whether under this Deed or otherwise according to law in respect of any Defect.
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