H.6.7 Change management

During the lifecycle of a PPP project, it is likely that a number of changes will occur, requiring proper management. Changes may be contemplated at the time of procurement and provided for in the contract, or not contemplated during procurement but seen as desirable or necessary alterations to services or the contract. In either case, change events are both a source of risk and a potential opportunity to extract additional benefits from the project.

Good change management processes incorporate the following features:

• appropriate protocols are in place to manage change;

• appropriate staff have the authority to request and authorise changes;

• potential changes are assessed thoroughly by suitably experienced personnel, having consulted with all relevant stakeholders;

• changes are appropriately prioritised and their implementation is properly resourced;

• the implementation of changes is controlled and tested;

• changes are appropriately documented; and

• changes do not compromise value-for-money outcomes.

In a well-managed PPP project, particular care is taken during change processes to ensure that there is no unintentional take-back of risk allocated to the private party. Take-back can occur where the contract allocates risk associated with an aspect of a project (for example, design of the project facilities) to the private party, but the government party approves that aspect as part of the change process (for example, it approves designs for alterations to project facilities). Such an approval can result in the private party subsequently arguing that government has accepted the risk that that aspect of the project will be inadequate to enable the project to deliver the desired outputs.