Before the project was tendered, a preliminary design was developed by the Procuring Authority. However, when the Project Company submitted its initial detailed design to the Procuring Authority, it was discovered that the planned expansion of another nearby expressway was not taken into consideration in the preliminary design. Consequently, to allow for this expansion, a change in the scope of the project design developed by the Procuring Authority was needed. This resulted in extra costs to the Procuring Authority, as it had to compensate the Project Company for the additional work. As a result, the project had to be delayed to allow time for the redesign and cost estimations.

The variation procedure is contractually defined and starts by either party sending a written notice ("Variation Notice") to the independent consultant describing the change in scope. In this case, it was the Procuring Authority that initiated the Variation Notice. The independent consultant then certifies that the proposed variation was in accordance with the minimum performance standards and specifications agreed at contract execution. The Project Company subsequently prepares a proposal setting out the necessary details and the additional cost estimates (with supporting particulars), including how the costs would be recovered. Should the variations cause a cost increase of 10% or more above the contract value, formal approval from the ICC is required. If the increased costs are below 10%, the Procuring Authority and Project Company can proceed with the agreed variation subject to notifying the ICC.

The variation in this project did require approval from the ICC as it was above 10% of the contract value. The cost of the variation was paid in a lump sum once the Project Company provided all supporting evidence to justify the cost increase.

The PPP Center has recognised the lessons learned from this variation and the identification of any adjacent and/ or competing projects has now been introduced to the PPP Center's project development and tender evaluation processes to mitigate the associated risks from the outset.