Appendix C - Risk Allocation Summary

Guidance note: The risk allocation summary set out in this Appendix C (Risk Allocation Summary) should be reviewed for each project to ensure consistency with the risk allocation that is proposed for a project.

The Risk Allocation Summary Table below summarises the risk allocation that the State is proposing for this Project.

This risk allocation summary is subject to change and a draft Project Deed will be provided to Shortlisted Respondents in the RFP.

Risk Allocation Summary Table

No.	Type of Risk	Description	Allocation
No.	Type of Risk	Description	State	Shared	Project Co
Land Acquisition and Planning Risk
1	Land acquisition	Risk associated with acquiring land identified at Contract Close as required for Project Co's design accepted by the State.	✓
		Risk associated with acquiring land as a result of design changes requested by the State after Contract Close.	✓
2	Additional land	Any additional land required by Project Co above the land made available by the State.			✓
3	Planning Approvals	Obtaining planning approvals for the Project in relation to land made available by the State.	✓
		Obtaining planning approvals for the Project in relation to any additional land required by Project Co.			✓
		Changes to planning approvals proposed by Project Co after Contract Close.			✓
4	Compliance with Planning Approvals	Obligation to comply with relevant planning approval conditions.			✓
Site Risks
5	Contamination Project Co encounters, disturbs or interferes with on the [#Site/#Sites/#Project Area] to the extent: ▪ of such encountering disturbance or interference; and ▪ required in accordance with Best Industry Practice.	Cost relating to the management and removal of such contamination on the [#Site/#Sites/#Project Area].	✓ (only where caused by the State)		✓ (other than where caused by the State)
6	Contamination required to be remediated as a consequence of any Approval	Cost relating to the management and removal of such contamination on the [#Site/#Sites/#Project Area].			✓
7	Contamination which the State directs Project Co to remediate or which is the subject of a Contamination Notice	Cost relating to the management and removal of such contamination on the [#Site/#Sites/#Project Area].	✓ (other than where Project Co is required to remediate that Contamination as set out in item 5 or 6 above)		✓ (only where Project Co is required to remediate that Contamination as set out in item 5 or 6 above)
8	Native Title Claims	Risk of cost and delay if native title claims are made in respect of the land made available by the State.	✓
		Risk of cost and delay if native title claims are made in respect of any additional land required by Project Co.			✓
9	Aboriginal heritage and artefacts	Risk of cost and delay resulting from discovery of items and aboriginal heritage and artefacts at the [#Site/#Sites/#Project Area].	✓
10	Environmental Risk	Risk of general site and environmental conditions (excluding those specifically identified).			✓
Design, Construction and Commissioning Risks
11	Force majeure	Risk of delay caused by force majeure events which prevent construction milestones being met.		✓
12	Design risk	Risk that the design development process cannot be completed on time or to budget or that the design does not meet the Project Scope and Delivery Requirements.			✓
13	Construction risk	Risk that construction cannot be completed on time or to budget.	✓ (only where caused by a State breach and specified relief events)		✓
14	Equipment [Risk allocation to be determined on a project-by-project basis]	Responsibility for the selection, procurement and maintenance of equipment.
15	Defects risk	Risk that defects are identified following completion of construction.			✓
16	Fitness for purpose (commissioning)	Risk that the [insert Project asset] is not fit for purpose or does not comply with contractual obligations.			✓
17	Commissioning	Risk that the [insert Project asset] cannot be commissioned in accordance with the agreed commissioning criteria.			✓
18	State-initiated modifications	If the State elects to make a significant variation to the [insert Project asset] or the services to be provided by Project Co.	✓
19	[Insert additional Project-specific risks. Examples from other Partnerships Victoria availability PPP projects have included: ▪ the impact of other State projects resulting in modification or delay; and ▪ risk of managing key interfaces.]
Operating Risks
20	Force majeure	Risk that force majeure events affect the operation or availability of the [insert Project asset].		✓
21	Asset management KPIs	Meeting required standards with respect to asset management Key Performance Indicators.			✓
22	Asset availability and maintenance	Making the [insert Project asset] available in accordance with availability requirements and levels.			✓
23	Meeting performance requirements	[Insert Project asset] performance does not meet the performance requirements.			✓
24	Maintenance costs	Risk that maintenance costs exceed budgeted costs over the Operating Phase.			✓
25	Operations costs (non-reviewable services)	Risk that operations costs exceed budgeted costs over the Operating Phase.			✓
26	Operations costs (reviewable services)	Risk that operations costs exceed budgeted cost over the Operating Phase.	✓		✓
27	Lifecycle costs	Risks associated with the replacement and refurbishment of the [insert Project asset] (including plant and finishes) over the Operating Phase.			✓
28	Changes in service levels	Changes in service levels impacting the maintenance and lifecycle of the [insert Project asset]:
		▪ within parameters specified in the Project Deed; and			✓
		▪ modification to service levels and service plan outside the agreed parameters.	✓
29	Utility price risk [Guidance note: The risk allocation is to be determined on a project-specific basis. For a fully outsourced project, volume risk is to be transferred to Project Co.]	Risk of change in the price of the utility inputs required by the [insert Project asset].	✓
30	Utility volume risk	Risk of change in the cost of utilities as a result of energy demand.	✓
31	Residual life and end of term handover	Satisfying the residual design life requirements for the [insert Project asset] at the end of the Operating Phase.			✓
32	[Insert additional Project-specific risks. Examples from other Partnerships Victoria availability PPP projects have included: ▪ franchisee interface risk during the Operating Phase; and ▪ risk that actual revenues generated by commercial opportunities differ from the Base Case Financial Model.
Accreditation
33	[Insert Project-specific risk allocation for obtaining and maintaining accreditations for construction and operation of the Project asset. Delete if not applicable for Project.]
Industrial Relations
34	Industrial relations risk	Risks of industrial action in respect of the Project (excluding those actions which directly affect Project Co and which directly results from an act or omission of the State).			✓
Change in Law or Policy Risks
35	General change in law	Risk of a general change in law during the Development Phase.			✓
		Risk of a general change in law during the Operating Phase.	✓
36	Project specific change in law	Risk of additional cost or delay resulting from changes in State policy or law which directly affect the [insert Project asset].	✓
Financing
37	Financing	Obtaining and maintaining private sector financing for the Project.			✓
38	Base interest rate risk	Base interest rate risk prior to Financial Close.	✓
		Base interest rate risk from Financial Close to first re-finance date.			✓
		Base interest rate risk from the first re-finance date.	✓
39	Refinancing	Risk of refinancing losses.			✓
		Risk of refinancing gains.		✓
40	Tax	Actual tax payable by Project Co differs from the base case financial model.			✓
41	Forex risk	Risk of forex movements (excluding agreed overseas sourced spare parts).			✓