4. Ensuring that all contracts provides flexibility provisions to manage future changes as the delivery of core services to the community evolve

Service providers were generally of the view that the PPP contractual arrangements should encompass a provision that "normalised" change and the rectifications of issues arising during the design and specification stages. A number of design or specification shortcomings in the operating facility were reported that arose in spite of best efforts by all parties (for example, acoustic treatment of walls that were not fit for purpose). Service providers expressed disappointment in such cases where they needed to engage with external professional advisers to make the case for rectification. It was felt that their "partner" (that is, a hugely experienced FM operator that was often a large company with similar contracts across many jurisdictions) would work with them collegially to achieve what would be a reasonable and well know FM service requirements.

Some service providers felt that the PPP model could be improved by reducing complexity and being prescriptive on matters that had a high chance of becoming out-of-date over 25 years. For example, catering standards, allocation of energy costs, green energy standards and cleaning standards that were based on assumptions that may or may not be relevant for 25 years. The question of how to evolve and avoid obsolescence has been a long-term issue for the PPP model, and the service providers in workshops were calling for a resolution by introducing flexibility as a 'business as usual' item in the contractual terms.

While these service providers acknowledged that such an issue of evolution, and dealing with resourcing implications, were common to both PPP and non-PPP projects, the PPP projects had an additional impediment. They thought the PPP contract was written from a risk allocation perspective rather than an operational perspective that focused on service delivery to service providers and their client community.

More generally, service providers felt that there should be a mature-minded process for changing the performance regime (including "resetting" the KPIs) based on emerging industry developments and experience. It was suggested that there is now sufficient history, 15 years of PPP social infrastructure projects, to make more use of price benchmarking in contracts and of recognising flexibility as a "risk', that needs to be managed and costed.

At a more detailed operational level, a few service providers also expressed the wish to make variations to an on-going job order easier to deal with. They sought understanding and flexibility in the FM protocols that were responsive to the professional experience of general staff (that is, coming from a non-works background). These service providers wished to avoid the 'red tape' and unreasonable financial trap experienced when initiating variations, which were more difficult than in non-PPP arrangements.

A few service providers expressed frustration at needing to commission discretionary small works and jobs through the FM operator. They pointed out not only the relatively long delay to getting the job done but also the extra cost. One school principal felt that he could buy $20,000 of works and equipment directly, but this would only stretch to $4,000 with the FM operator. While there was an acknowledgement of the FM operator using whole-of-life costings and had on-costs to pass on, there were nevertheless objections to this way of doing things.