This chapter aims to assist contract directors to plan for and implement an effective process when considering modifying the project assets or the services of an existing project in the service delivery phase. Any such change initiated by the government party is referred to as a State-initiated modification.
As Partnerships Victoria projects are long-term service-focused projects, it is not uncommon for a changing service requirements to trigger a State-initiated modification. For example, continued growth and changing health service requirements led to expansions (via modification) of the Casey Community Hospital, with the addition of a special care nursery (2010), a 30-bed subacute redevelopment (2014) and 128 multi-day beds in 2017.
The focus of any proposed modification must be on its ability to meet changing service requirements. This chapter details a range of issues a contract director should consider if they are considering a modification to the project assets or services. It also provides a set of principles and tools to support the modification process.
Key contract management tasks during a modification process include the:
• the government party clearly specifying the change in service requirements sought and clearly articulating any other requirements that may impact how the private party responds to the request;
• the private party responding and developing a proposal for the modification;
• confirming design requirements (if applicable), including that the proposed design can meet the government party's service requirements;
• undertaking independent review;
• confirming value for money (following the contractual processes, if required);
• confirming funding arrangements;
• assessing the impact on existing services (interface issues); and
• documenting the modification.
Most State-initiated modifications will be managed under the change management framework in the project deed. However, depending on the nature and extent of a significant modification (or augmentation), these may need to be managed under the under the Market-led proposals guidelines or, in Partnerships Victoria projects procured after 2017, under the augmentation schedule in the project deed.