Activity

Description of risk

Risk borne by Contractor

Risk borne by Authority

Comments/Actions to be taken to minimise risk

J. Finance and Potential Changes in Costs of Finance

Cost of finance

increases

•  cost of finance in excess of budget required to meet contractual commitments

•  Hedging arrangements put in place

Changes in taxation

•  increases in management and maintenance costs arising from changes to taxation

•  Contingency in financial model

Inflation

•  increase in costs outside agreed inflation indices

•  inflation risk-sharing agreement

•  increases in Unitary Charge as inflation increases

•  inflation risk-sharing agreement

•  inflation risk-sharing

•  benchmarking and market testing arrangements put in place

•  hedging arrangements put in place

Real cost increases in ongoing expenditure

•  increases due to deficiencies in original design or specification

•  increases following agreed benchmarking or market testing exercises

•  pass through risk to sub-contractor/ professional team

•  benchmarking and market testing arrangements put in place

Changes in welfare benefit or other legislation restricts income from asset

•  performance deductions against rent collection standard

•  reduction in revenue