The intention of the parties to a Partnerships Victoria project should be to enter into a project deed (and associated project contracts) that creates a long-term relationship, recognising that each party starts the project expecting that it will receive certain benefits from the project. This is not a 'partnership' in the strict legal sense, but rather it is a relationship in which the parties understand the importance to each other of project performance, but do not compromise their respective contractual rights and obligations. |
The government party should recognise the importance of the commonality of interest involved in a Partnerships Victoria project. The contractual risk transfer, output specification, services specifications and payment mechanism are important contributors to the common interest, as they align the private party's commercial interests with government's project objectives. Therefore, for the partnership to be successful, the government party must be careful to:
• enforce contractual compliance and penalty mechanisms for poor performance (or non-performance) to ensure the services specifications are maintained and contractual rights are not undermined or inadvertently waived; and
• avoid action that could result in project risk being assumed or transferred back to the government party. For example, during the construction phase, the government party should not normally approve any detailed drawings or designs. Rather, it should focus on providing comments on design packages submitted by the private party. Comments should focus on where it believes the designs are not consistent with those accepted by the government party at contract execution or they believe the design will impact adversely the delivery of contracted services or the government's ability to deliver services from the project assets. For guidance on monitoring construction performance and unintentional take-back of design risk during the construction phase see Chapter 10 of this guide, and the National PPP guidelines: commercial principles for social infrastructure, Chapter 10 and National PPP guidelines: commercial principles for economic infrastructure, Chapters 9 and 10 (as applicable) and the Partnerships Victoria standard project deed guidance notes.