The financial model developed in the procurement period will usually be included as part of the final Contract in the form of a hard copy print out of the model and an electronic version of the model. The paper copy is unlikely to be of much value to either the Authority or the Contractor but as with every part of the Contract it should be safely filed somewhere it can be retrieved if needed.
The electronic version of the financial model is more important as it provides a mechanism for:
• quantifying changes to the Unitary Charge which leave the Contractor no better and no worse off e.g. Authority Change, Qualifying Change in Law and Compensation Events;
• calculating a refinancing gain; and
• establishing the base case for market testing, benchmarking and insurance reviews.
Thus it is critical that the financial model is stored safely and that there is an agreed procedure for ensuring that the model remains functional as the parties' IT systems evolve over the term of the Contract. In the WIDP Contract (Schedule 19) the provisions relating to the custody of the financial model require the Contractor to provide the Authority with a copy of the financial model in an appropriate format within a specified period from financial close and then to provide an updated version whenever there is a change to the Base Case Financial Model under the terms of the Contract56.
The Contract Manager will need to ensure there are clear arrangements, recorded in the Contract Management Manual, for retaining the Authority's financial model. It is also important that if the Financial Model is copied onto the Authority's servers and the subsequently amended that this new version cannot be confused with the contractual base case model.
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56 The WIDP Contract also requires the Contractor to deliver 2 copies of the financial model to a custodian. The Contractor is responsible for the costs of the custodian.