Activity

Description of risk

Risk borne by Contractor

Risk borne by Authority

Comments/Actions to be taken to minimise risk

F.  Operational Services

(Where Contractor delivers the operational services. Otherwise the Risk Matrix will need to reflect a Council / Contractor inter-face agreement

Void management

•  reduced unitary charge associated with failure to meet target standards

•  loss of rent on properties whilst vacant

•  loss of nominations and cost of alternative accommodation

•  excessive void turnover is a Compensation Event

•  payment and performance mechanism provides appropriate and deterrent deductions for non-availability

•  potential for Council step-in

Tenancy management (repair and maintenance)

•  reduced unitary charge associated with failure to meet Initial and Full Standard

•  loss of rental income from inability to make dwellings available for letting

•  Contractor / Sub-Contractor repairs monitoring and effective service response

Tenancy Management (tenant)

•  reduced Unitary Charge associated with failure to meet performance standards

•  retention of some risk and cost for absence of tenancy agreements and/or inconsistent tenancy arrangements

•  Risk sharing arrangement - as appropriate

•  Authority provision of tenant data,  tenancy agreements and accompanying analysis through Data Room

•  Bidder due diligence

•  Setting out and review of risk ownership and potential liability in respect of essential internal works to tenant /  leasehold dwellings during procurement

•  Council and Bidders to agree allocation of risk on value for money basis i.e. Contractor or shared risk

Refurbishment works disrepair litigation and statutory nuisance notices

•  Contractor takes disrepair / litigation / compensation costs risk from after Year 3 or where property / dwelling brought up to Availability Standard earlier

•  Council takes disrepair / litigation / compensation costs risk for Years 1-3 except where property / dwelling brought up to Availability Standard earlier

•  Risk sharing arrangement

•  Setting out and review of risk ownership and potential liability in respect of essential internal works to tenant /  leasehold dwellings during procurement

•  Council and Bidders to agree allocation of risk on value for money basis

•  Council / contractor co-operation

•  Contractor duty to mitigate Council risk in Years 1-3

Contractor does not collect all legally recoverable monies owed by lessees

•  requirement to make up short fall to Council in "guaranteed recoveries"

•  Bidders should undertake risk allocation and make their own assessment of risk pricing between bidder and sub-contractors for collection / payment of leasehold costs

•  Contractor's debt recovery procedures reflect best practice

Statutory restrictions on service charges recoverable from lessees

•  costs in excess of statutory cap not provided for in Unitary Charge

•  costs when failed to comply with Sections 19 and 20 LTA 1985

•  costs arising from defective Section 125 notice information provided by Contractor

•  pre-contract actions resulting in irrecoverability

•  costs in excess of statutory cap provided for in Unitary Charge

Lack of sound iinsulation

•  New-build - any successful claim for lack of sound insulation

•  Refurbished dwellings only - any successful claim for lack of sound insulation

•  Council to ensure appropriate Terms and Condition of Tenancy exist to minimise noise nuisance e.g. no laminate flooring

Repairs and maintenance service failure

•  reduced unitary charge associated with failure to meet target standards

•  Pass through of risk to sub-contractor

Grounds maintenance and other common services failure

•  reduced unitary charge associated with failure to meet target standards

•  Pass through of risk to sub-contractor

Right to Buy/Right to manage

•  adjustment to Unitary Charge to reflect savings from reduction in dwelling numbers

•  increased costs due to incorrect appointment of variable and semi variable costs

•  loss of rental income (offset by capital receipt)

•  marginal costs to be covered

•  payment of compensation for fixed costs throughout contract period

•  Covered by Dwelling Numbers and Tenure Change procedure and mechanism

•  Contractor placed in a no better no worse position

Industrial action

•  reduced unitary charge associated with failure to meet target standards

•  post remedial period

•  potential Relief Event where industry wide

•  investing the extension of business interruption insurance

Vandalism (damage to accommodation) (including by tenants, leaseholders and third parties)

•  cost of repair/making good unless Authority risk or Authority Related Party

•  risks external to dwellings and properties retained by Authority on value for money grounds

•  cost of repair/making good where Authority Related Party

•  Risk sharing arrangement where appropriate reflecting who is best placed to manage risk on value for money basis

•  physical damage and business interruption insurance

Rent collection (failure to collect % rents due)

•  reduced unitary charge associated with failure to meet target standard

•  potential step-in when reaches threshold

•  loss of rental income

•  retention of risk and cost of delays in determining housing benefit applicant above a threshold

•  rent collection record confirmed as part of procurement due diligence

Changes in Authority service requirements

•  potentially increased capital and/or unitary charge if design requirements are most costly

•  will be covered by the Change Control procedures in the Contract

Construction and Refurbishment Cost overruns

•  any cost in excess of budget

•  Pass through risk to sub-contractor

Sub-contractor default

•  cost in excess of budget if alternative supply is more costly

•  risk of not recovering full losses from the defaulting sub-contractor

•  potential termination if termination thresholds exceeded

TUPE (as applicable)

•  any costs in excess of budget

•  Council warranties

•  Contractor's risk should be minimised through due diligence

Tenant satisfaction

•  weighted reduction of unitary charge associated with failure to meet repairs and maintenance performance standard

•  Integrated and responsive service

•  Involving, listening to and communicating with tenants

Statutory and policy rehousing

•  the costs of such rehousing