19. In many instances, Changes will be driven by necessity, perhaps for operational reasons or because the MOD's requirement has changed to such an extent that the service being delivered is no longer required. In such cases, it will be difficult to manage the timing of a Change and the MOD may have little choice but to pursue a Change, even where preferential terms are not achievable. However, acquisition team members should be mindful of the potentially significant costs involved in Changes and should not pursue individual Changes where the costs involved are prohibitively expensive or disproportionate to the overall costs of the Change. Similarly, the benefits of employing external advisers, such as quantity surveyors to audit the costs of Changes, should be weighed against the cost of doing so.
20. One method of managing the costs of Change is to adopt a strategic approach to Change. For example, if a number of Changes are foreseeable within the short to medium term, then these should be bundled together to ensure that economies of scale can be achieved in the costs of processing the Change.
21. The exemplar drafting in Addendum 2 to MOD PAv1 allows the contractor to recover third party costs involved in the preparation of an estimate of the cost of a change (the "Estimate") (in relation to changes designated as Major Changes), where the MOD does not go ahead with the Change. This is in keeping with the SOPC 4 position and could generally be considered to be "on-market" for PFI projects in most sectors. MOD PFU is aware that some acquisition teams have achieved a better position on this point with their private sector partners, i.e. that no costs incurred in preparing the Estimate should be re-imbursed. This may be considered to be a best case scenario outcome, but is considered unlikely to be achievable in most instances. See paragraph 18 of Appendix B for further comment.
22. Further detail on costs of change, with particular reference to contractor's management fees, is set out below under "SPV Margin on Change" (paragraphs 50-56).