1.7 The level of payments for the specified service is set out in the PFI contract. Payments may only then change in limited circumstances. Payments may change where they are linked to an inflation index or may be varied where the department requires a change in the service previously agreed in the contract. However, they cannot be increased as a result of an unforeseen increase in construction costs for which the consortium bears the risk, for example, increased costs for larger foundations due to poorer ground conditions than expected.
1.8 The consortium is therefore incentivised to estimate the full costs of construction, including allowances for risks when pricing the contract as it will not be able to recover unforeseen cost increases later by claiming them back from the department.