The Contract will have been priced on the basis of an assumption about the timing of planning and will deal extensively with the consequences of delay in securing a Satisfactory Planning Permission. This will include a process for re-setting the Unitary Charge if planning consent is obtained later than anticipated but before a specified longstop date to cater for an adjustment in the timing of and quantum of the Capital Expenditure. The general principle will be to ensure the Contractor is compensated sufficiently to sustain the robustness of its finances but not to guarantee the Contractor is no worse of as a result of the planning delay. However the specific provisions can vary a lot from Contract to Contract so the Contract Manager must be familiar with the details and process relevant to his/her Contract. These may include the need to revisit foreign exchange hedging arrangements put in place at close.
From a contract management perspective the key issue arising from this process is that resetting the Unitary Charge involves amending the financial model. Therefore it will be necessary to ensure the right model is used from the outset (see Section 7) and that the Authority is in a position to assess whether the changes made are reasonable and the increase in the Unitary Charge fairly reflects the contractual position. Unless the relevant skills are available within the Authority's Finance Department25 the Contract Manager may need to use external financial advisory input to provide the assurance that the changes to the model are reasonable and that any new foreign exchange hedging arrangements are appropriate and represent value for money for the Authority.
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25 Authorities should not overlook the skills available in the Finance Departments of partner authorities if they are involved in a joint working project.