The glossary contains explanations of terms used in this guide.1
| Commonly seen in payment mechanisms, where abatement refers to a reduction in a service payment due to underperformance relative to a specified key performance indicator (KPI). |
| A plan developed for the management of one or more infrastructure assets that combines multi-disciplinary management techniques, over the life cycle of the asset in the most cost effective manner to provide a specific level of service. |
| A document that sets out the rationale for a proposed project. It details what services the project will deliver, and provides analysis of the expected costs and benefits. A business case enables government to decide whether to support the project, before significant resources are spent on its development. |
| Cabinet includes a Cabinet committee, or other body or person exercising authority delegated by Cabinet. |
| A stage in the carrying out of works under a project deed when all of the commercial acceptance criteria have been met to the satisfaction of the independent reviewer (or sometimes the government party on social infrastructure projects). Commercial acceptance generally occurs when the works are deemed substantially complete (save for minor defects or omissions) and reasonably capable of being used for their intended purpose and after which the private party can begin performing the contracted services and the service payment begins to be paid. On linear infrastructure projects, this is usually the first stage of completion, and on social infrastructure projects this is usually the second stage of completion (after technical acceptance) - however this may differ between projects. |
| Commissioning refers to the proving processes involving the start-up of operations and delivery of the contracted services as specified in the project deed. |
| Construction phase (also called, among other things, development phase) | Project stage including design and construction (or implementation) from financial close through the commissioning process to commercial acceptance. |
| A document or set of documents developed by the government party, based on the contract management plan, to identify, understand and manage project risks over the life of the project. It provides detailed information for the contract management team on how to administer the contract over the life of the project. It needs to be regularly reviewed and updated. |
| The contract director has overall responsibility for managing the project, usually after commercial acceptance once steady-state operations has been achieved, and acts as the government party's agent in managing contractual arrangements between the government party and the private party during the service delivery phase. |
| Contract management incorporates all the activities required to identify, monitor and mitigate all risks over the life of the project deed to assist the government to achieve its project objectives and maximise value for money. |
| An initial high-level document that seeks to identify, understand and manage project risks and service improvement opportunities during the term of the project. The Partnerships Victoria Requirements (2016) mandates it to be developed by the government party (or the procuring agency if applicable) and signed off by both the responsible Minister and Treasurer within 60 days of financial close. |
| A contract management team, reporting to the contract director, will carry out many day-to-day contract management activities. |
| The services the private party is required to perform during the service delivery phase under a project deed. Contracted services may include building maintenance, cleaning, catering, pest control, logistics and portering. On a road project, it may often include operation of the relevant road. Unless a Partnerships Victoria project is fully outsourced to the private party (for example, both operations and maintenance of the relevant project assets), the contracted services are to be distinguished from the services, operations or functions provided by the government (or a separate entity) in relation to the project assets. |
| A specified period of time for a party to rectify/cure a default (that can be rectified or cured) before the government party has the right to enforce any remedies for default specified in the project deed. |
| The failure of a party to perform a contractual requirement or obligation, including failures to meet deadlines, to perform to a specified standard, to meet a loan repayment or to meet its obligations in relation to a materialised risk. |
| Department of Treasury and Finance, Victoria. |
| The legal principles known as estoppel arise in contracts where a party has: (a) made a representation (oral or by conduct) which is not included in the actual agreement; or (b) where after the agreement is signed, a party agrees not to exercise a discretion in a certain way. In such circumstances, the relevant party may be bound by that representation or action. For example, in the context of a Partnerships Victoria project, if the government party leads the private party to expect that the government party will not require the private party to achieve a particular contractual KPI, and the private party acts in reliance on this expectation, the government party may be unable to later abate payments for failure to meet the KPI. |
| The time where all documentation for a project has been executed by the relevant parties, and all conditions precedent have been satisfied or waived. At financial close, the borrower (generally the private party or a specifically purposed special purpose vehicle) may obtain the finance for the project as negotiated with its financier. |
| The Freedom of Information Act 1982. |
| Acts of God and other specified risks (for example, terrorism) that are beyond the control of the parties to a contract, and as a result of which a party is prevented from performing all or a material part of its obligations under a contract. |
| The department, agency or any other public sector entity sponsoring a Partnerships Victoria project. |
| A specified performance standard or benchmark that the government party is seeking for the private party to achieve or maintain during the service delivery phase. The private party's service payment is usually calculated by reference to the KPIs. |
| The designation of particular categories of risks (usually only on economic infrastructure PPP projects) which, if they materialise, will have a material adverse effect on the project and are to undergo a special process of assessment and allocation between the parties. |
| The National PPP policy and guidelines - Volume 3: Commercial principles for social infrastructure and Volume 7: Commercial principles for economic infrastructure. |
| The National PPP policy and guidelines - Volume 2: Practitioners' guide. |
| The output specification sets out the range of outcomes the government is seeking to achieve, including the contracted services that government is seeking to procure. In project deeds entered into after 2017, the output specification will be included in the project scope and delivery requirements (PSDR). |
| The payment mechanism puts into financial effect the allocation of risk and responsibility between the government party and the private party. The payment mechanism sets out how the service payment is calculated, including various components (e.g. availability component, services component, lifecycle component etc.) as well as abatement arrangements for poor performance against KPIs. |
| The Victorian government PPP policy framework that consists of the Partnerships Victoria Requirements 2016 and annexures (which include the Partnerships Victoria contract management guide) and the National PPP policy and guidelines <https://infrastructure.gov.au/infrastructure/ngpd>. |
| A public private partnership procured under the Partnerships Victoria framework. |
| Partnerships Victoria guidance materials provided for standard form project deeds introduced in 2017 to deliver either social infrastructure availability PPP projects or linear infrastructure availability PPP projects, available on the DTF website <http://www.dtf.vic.gov.au/Infrastructure-Delivery/Public-private-partnerships/Policy-guidelines-and-templates>. |
| The Victorian government requirements for Partnerships Victoria projects, contained in the Partnerships Victoria Requirements 2016 document <http://www.dtf.vic.gov.au/Publications/ |
| Public private partnership. |
| The private sector entity with which the government party directly contracts. Traditionally, the private party has been a special purpose vehicle created specifically for the purposes of the project. The private party is not limited to this form, and it can be set up under a number of structures, including a joint venture or a trust. Behind the contracting party, however, there may be a number of private sector interests, seeking to be represented through the contracting party. (See also special purpose vehicle.) |
| Under the guidance of a steering committee, the procurement team is responsible for the day-to-day management of the project until commercial acceptance. |
| The phase in which a Partnerships Victoria project is procured, usually through a number of stages, including: an invitation for expression of interest, a request for proposal, contract negotiation, contract execution and financial close. |
| In some Partnerships Victoria projects, a separate entity may act on behalf of the government party, during the procurement phase to procure the project and possibly for part or all of the construction phase. |
| Generally, the assets that the project company must design, manufacture, supply, construct, install, commission, complete and, in respect of which the contracted services are provided. Each project deed may refer to the project assets in a different way, for example, the facility or the relevant infrastructure. |
| The main project contract setting out the terms on which the private party carries out the project for the government party. |
| The project director has overall responsibility for delivery of the project through the procurement phase, and management of all members of the procurement team, including external advisers and consultants. The project director usually stays on the project during the construction phase. The project director role usually transitions to the contract director role once commercial acceptance has been achieved and the project is in steady-state operations. However, the transition between project director and contract director (where different people) occurs during construction phase to ensure a smooth transition. |
| Those risks which may cause actual project circumstances to differ from those assumed when forecasting project benefit and costs. |
| In project deeds entered into after 2017, the PSDR contains all project requirements for the construction phase and service delivery phase, including the output specification and the services specification. |
| The public sector comparator (PSC) represents the most efficient public procurement cost (including all capital and operating costs and share of overheads) after adjustments for competitive neutrality, retained risk and transferable risk (for definitions of these terms please refer to the public sector comparator technical note <https://infrastructure.gov.au infrastructure/ngpd/files/Volume-4-PSC-Guidance-Dec-2008-FA.pdf> to achieve the required service delivery outcomes. This is used as the benchmark for assessing the potential value for money of private party bids in Partnerships Victoria projects. |
| A change in the type, amount, pricing, tenor, terms for payment or repayment or hedging of financial accommodation. |
| Those elements of the contracted services which will be subject to a periodic benchmarking or market testing process. |
| Potential events, consequences, or a combination of these, and how they can affect the successful delivery of the benefits expected of the investment. Risk is often expressed in terms of a combination of the consequences of an event or a change in circumstances, and the associated likelihood of occurrence. |
| The allocation of responsibility for dealing with the consequences of a project risk to one of the parties to a contract, or agreeing to deal with the risk through a specified mechanism which may involve sharing the risk. |
| The determination of the likelihood of identified risks materialising and the magnitude of their consequences if they do materialise. |
| The process of identifying all the relevant risks. |
| The identification, assessment, allocation, mitigation and monitoring of risks. The aim is to reduce their variability and impact. |
| A method of presenting all possible significant risks likely to be encountered, the magnitude and likelihood of the risks occurring, their areas of impact, and the risk mitigation techniques to be employed. |
| The person in the government party responsible for the project, usually the Chief Executive Officer or a Deputy Secretary. The project director and then the contract director usually report to the senior responsible owner. |
| Service delivery phase (also called, among other things, the operational phase, operating phase or services phase) | Project phase in which the contracted services are delivered by the private party, usually commencing on commercial acceptance and ending on expiry or termination of the project deed. |
| The periodic payment made by the government party to the private party for performance of the contracted services and calculated in accordance with the payment mechanism. The service payment is usually only payable after commercial acceptance. Service payments are made periodically (usually quarterly or monthly) and the frequency of the service payment will be set out in the project deed. |
| The contractualised outcome of the output specification. It sets out the contracted services and the performance levels required for each of those contracted services, usually within the project deed schedules. In project deeds entered into after 2017, the services specification will typically be included in the PSDR. |
| In establishing a project consortium, the sponsor or sponsors typically establish the private party in the form of a special purpose vehicle (SPV) which contracts with the government party. The SPV is an entity created to act as the legal manifestation of a project consortium and only acts for the purposes of the project it was created for. The SPV itself has no historical financial or operating record which government can assess. |
| A change to the project assets and/or contracted services that are initiated by the government party. |
| The person formally nominated in the project deed to act on behalf of the State, to administer the project deed on behalf of the State, by exercising all rights, powers, authority and functions of the State. |
| The government party's election to assume all or some of the service delivery obligations of the private party under the project deed for a period of time. The circumstances where the government party may have the right under the project deed to exercise rights to step in may include a need to prevent or mitigate a serious risk (to the environment; public health; the safety of persons or property), guarantee continuity of an essential service, discharge a statutory duty or deal with a default by the private party under the project deed. |
| Technical completion (also called, among other things, technical acceptance, practical completion and provisional acceptance) | That stage in the carrying out of work under a project deed when all of the technical completion criteria have been met to the satisfaction of the State. The first stage of completion for projects (usually social infrastructure projects) where the government party requires a significant period of time to work with the private company to commission the asset after technical completion. |
| A balanced whole of life benefit measure that considers quality levels, performance standards, risk exposure, other policy or special interest measures, as well as price. |
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1 These explanations are not necessarily the same as definitions adopted in authoritative documents, such as accounting standards, or in other Partnerships Victoria guidance material, as the context in which the terms are used may differ in this document.