Reviewing and re-contracting the cost of reviewable services is undertaken to ensure that service costs paid by the government party over the life of the project are competitive, and continue to provide value for money during the project term. The review enables the private party's subcontractors to adjust their service costs based on a range of cost factors, such as movements in the wage price index. It also allows the government party to ensure the agreed rates reflect the actual costs of service provision. For example, if there have been technological innovations during the previous reviewable services term, the service review provides the private party with an opportunity to introduce innovations that may improve the service and/or lower the cost of services for the benefit of both the private party and government party.
The contract director also has the opportunity to review the service specifications and performance regime with a view to identifying any changes that could improve value for money for the government party. For example, services specifications and/or KPIs can be clarified, and abatement levels could be more closely aligned with service impacts to potentially enable a reduced service cost. For the contract director, a key consideration in applying the reviewable services regime, is how it can be used to incentivise the private party to provide future innovations and/or efficiencies for the government party. While the reviewable services regime provides an opportunity to clarify or align services specifications and/or KPIs, the review process should not be regarded as a mechanism for general changes to the scope of services under the project deed. The appropriate mechanism for making changes to the scope of services is via the State-initiated modification regime (see Chapter 13).