In all forms of PPP projects, the procuring Authority allocates the design and construction risks to the project company established to design, build finance and maintain the asset (Project Co) as it is best positioned to manage them and is thus willing to assume their responsibility without a high premium.
A major characteristic of PPP projects is the transfer of risk from the public sector to the private sector. Among the major risks allocated to the Project Co under all forms of PPP projects are:
> Design and construction risk, and
> Availability and performance risk, through the operation of payment mechanisms whose forms have developed over the years with considerable variation in Bespoke Contracts compared with Standard Form or NPD/hub contracts.
The transfer of design and construction risk is reflected in all of the forms of PPP Contracts to require the meeting of the defined Authority's Requirements (and relative, and usually more detailed contractor's proposals) as a condition of achieving practical completion and the availability date, thus triggering payment of the unitary charge. Both the Standard Form Contracts and the NPD/hub Contracts make it clear that the Authority's Requirements continue to be relevant during the operational period, particularly through the operation of the FM service level specification (FM SLS) that underpins the ongoing FM service.