During the service delivery phase, there are a number of change events that may provide opportunities for the government party to encourage private party innovation in service delivery, including:
• reviewable services processes (as detailed in Chapter 14), which present an opportunity for the contract director not just to seek an updated price for these services, but to seek innovations from the private party. Service providers should be encouraged not only to provide a price using the current methods of delivering these services, but to look at innovative ways to provide the service for the State, potentially providing a less expensive or superior quality service for the State. An example of this is provided by a security service review undertaken by an operational Partnerships Victoria project. The government party used the reviewable services mechanism to request different service provision options. In response, the private party proposed a new approach to staff rostering that provided better service to facility users during the peak periods, while using the same number of staff hours. This simple innovation provided the government party with better service delivery during the peak period and provided better value for money for the project; and
• refinancing and change of ownership/control processes (as detailed in Chapters 15 and 16). As both of these events usually require State consent, they can also present opportunities for the government party to benefit from private party innovation associated with how the service delivery is financed. If the private party introduces an innovative method to finance the project debt and/or equity, the State is typically obliged to consider and assess any new structure - which may provide benefits such as less expensive service delivery, or potentially reducing risk for the State. Typically, Partnerships Victoria projects will have a refinancing gain-sharing mechanism to ensure that any gains from the refinancing be shared between the State and the private party. An example of this was provided by a private party project sponsor that approached the State seeking to restructure ownership of a number of projects with an injection of funds from overseas institutional investors. While this was a new approach to funding the projects, as the projects were in a mature steady-operating state, there was no additional risk or costs to the government party. On this basis, the government party provided its consent. This approach however had other benefits, including providing opportunities for new investors to participate in the Australian PPP market, and enabling the project sponsor to sell down its holdings in mature projects to less risk-averse investors, potentially enabling the sponsor to invest in future projects.