14.4  Service fee for phased service commencement

(a)  Certain projects may require phased service commencement, particularly where the project involves the delivery of multiple facilities at different times (e.g. in the case of schools) or one facility in different stages.

(b)  In these circumstances, commencement of payment will occur either:

(i)  on Completion of all the facilities; or

(ii)  on Completion of each facility in the scheme (or each part of the facility) so that government pays for elements of the service as they come on stream.

Although the first option is intended to encourage the private party to complete all of the facilities as soon as possible, government may effectively be receiving a service (in the form of the completed facilities) for which it is not paying, unless it is proposing to transition into and use the facilities at the same time. This will generally come at a cost. Unless the time period between delivery of the first facility and the last facility is relatively short, this approach may not deliver value for money.  

The second approach can be adapted to provide greater incentive to the private party, with government withholding a percentage of the payment to be made for services delivered in relation to the completed facilities until all facilities (or all parts of a facility) reach Completion.