4.2  Evaluate possible changes (Step 3)

The baseline contract has been designed to be a fair and equitable basis for contracting against the specified target application.  Section 4.1 of this paper helps to identify circumstances where it may be legitimate for contracting authorities to add or change certain provisions to the baseline drafting (however, the fact that certain assumptions in Table 2 do not apply to any given application does not automatically mean that it is appropriate to change the baseline drafting).

In most cases, the revised provisions set out in this paper will represent an increase in the risk allocated to the Contractor.  In order to maximise value for money, this should only be considered when the Authority reasonably believes that its project's risk profile is significantly higher in certain areas than that assumed by the baseline.

The Authority needs to be aware that in moving away from the baseline position, and compared to it, the likely effect will be to:

a)  increase negotiation time (and therefore cost); and

b)  increase the Contractor's risk premium (and therefore price).

The decision to move away from the baseline position should always therefore be based on value for money considerations (i.e. does the risk profile of the project justify the additional costs incurred through the allocation of more risk to the Contractor).