Unless the project assets remain with the private party, the incumbent service provider must ensure the project assets meet the government party's handover conditions at contract expiry. The contract director must understand the contractual rights with regard to the condition of the project assets and site at the end of the contract term, and any provisions governing hand-back arrangements.
To ensure these contractual obligations are met, an independent assessor is usually appointed to inspect the project assets. Depending on the condition of the project assets, the assessor may notify the government party and the incumbent private party service subcontractor of any works required to be carried out to meet the handover conditions and a program and the expected cost of carrying out the works.
Understanding these contractual provisions enables the contract director to plan for assessment of assets and completion of any required works program to ensure that the project assets' condition at the end of term meets contractual requirements.
Where there the contract is extended, some of the assets may be close to the end of their service life at the end of the contract term, and accordingly the contract director or end of service project manager must consider:
• additional costs and risks that may be incurred by the private party over the extension period (and the overall increase in service payments);
• the cost of any other additions, upgrades or modifications;
• indexation of the existing service payment model over the extension period; and
• any modifications required for the performance regime.