The parties acknowledge in the Project Deed that the Equipment will change from that identified in the Equipment List and as such, the Equipment List is indicative only. This is inevitable where Equipment Lists are often prepared years in advance of actual Equipment procurement. The Equipment List is not updated when changes are made to the Equipment that is procured. The purpose of the Equipment List from a legal perspective is as a reference point in order to determine Equipment Modifications post Financial Close.
Group 3 Equipment (and sometimes, some Group 2 Equipment) is often highly specialised Equipment that is relevant to the delivery of core services. Accordingly, the State selects that Equipment. If not managed appropriately by the State, selection and procurement of Group 3 Equipment are fertile grounds for Modifications and delay claims.
Group 2 and 3 Equipment is often the type of Equipment that the State will not want to select until late in the procurement process to ensure that it has the most up to date model at the Operational Commencement Date. However, this Equipment can often impact the design and construction of the asset. It is important that the parties agree the timing for the selection and procurement of this Equipment at Contract Close and that Project Co accepts that, provided the Equipment is selected and procured at the agreed times, it will not be entitled to make Claims for delay or Modification. Drafting to this effect is included in the SIPD. Subject to the Group 3 Limit, Project Co is responsible for the Purchase Cost of all Group 3 Equipment as well as the costs of ordering, delivery, relocation, transport, installation, connection, commissioning or testing of any items of Group 3 Equipment not included in the Group 3 Purchase Costs. If the Group 3 Equipment costs exceed the Group 3 Limit then the State may elect to either not purchase certain items or to proceed and pay for the excess.
An Equipment regime has not been included in the LIPD. As a general rule, there is minimal Equipment required so a separate process is not warranted. However, where there is a large amount of equipment to be procured (which are not fixtures) as part of the Project for which the State considers there should be robust State oversight of procurement and installation, a separate process may be warranted.
Transferred Equipment is Equipment in another asset that is transferred for use in the new asset. Most Equipment, particularly when the Equipment is a Maintained Asset, will be procured new as there is often limited (if any) value in transferring existing Equipment from a whole of life perspective. Equipment in an existing asset that is relatively new at Commercial Acceptance or expensive to replace may be transferred to the new asset. Where Transferred Equipment is contemplated, the definition of Transferred Equipment will need to be defined on a project specific basis and can include Group 1, Group 2 or Group 3 Equipment.
If the Transferred Equipment is intended to be a Maintained Asset then condition surveys will need to be done at Contract Close to determine the Anticipated Transfer Condition and then again at Commercial Acceptance to determine whether there are any deviations from the Anticipated Transfer Condition. Only a material change in the condition of an item of Transferred Equipment from the Anticipated Transfer Condition will be an Equipment Modification.