As outlined in Chapter 2, both risk allocation and service delivery are the core of a Partnerships Victoria project.
Project deed appendices or schedules will usually set out the services to be delivered by the private party, the standards (or KPIs) for each service (including the quality, quantity, timing and location) and related abatement criteria. These standards should be as simple as possible, relevant to the government party's underlying service requirement, and readily measurable.
The services provided by the private party may be of a full service nature (e.g. a road project) or an availability nature (e.g. school facilities ready for use by the government party to provide teaching services to students), or may combine full service and availability type outputs (e.g. the Victorian Desalination Plant project).
The project deed will also set out the payment mechanism, outlining the payment levels for delivery of specific services and related arrangements for determining abatement calculations. Some payment mechanisms can be quite complex and it is critical that they are fully understood by the contract director. The contract director should consider the need for expert advice on the operation of the payment mechanism, and should institute quality assurance processes to ensure that payments are correctly calculated. In many projects, the calculation process can be made significantly more rigorous and efficient by using a spreadsheet model of the payment mechanism prepared by expert advisers.
At the conclusion of each specified payment period (usually monthly or quarterly), the private party will submit a claim for payment for the services delivered. The contract director will need to consider the self-reporting provided by the private party in accordance with the project deed (reinforced by government party audits) and direct monitoring by the contract management team and/or the government party end users to assess whether the private party has provided the services in accordance with the requirements of the project deed for which it has claimed payment.