Contracts typically require the replacement of plant and equipment with a like for like item. However, an Authority could consider amending that requirement through the Change Procedure. Changes could be instructed in advance of or at the time that an item of plant or equipment is being replaced either through the lifecycle programme, or as part of the handback process. These Changes can be implemented towards the end of a contract term or indeed at any point during the services period.
An Authority should consider the cost of any new plant or equipment being discounted where possible against the net amount that would ordinarily be included in the lifecycle model (see further Costs of the Change below).
The opportunity to utilise the Change Procedure should be seen as a positive one and should be approached in that context with the involvement of the various stakeholders referred to above.
While it might be better value for money in strictly financial terms if an item of plant or equipment was replaced when it was scheduled and modelled to be replaced rather than replacing it part way through its expected life, an Authority is entitled to instruct a Change to bring about the replacement of an item at any time should it decide to do so. The balance of carbon reduction opportunities in the pathway to NZ versus the financial cost of making an early Change may therefore need to be considered in the context of the potential to introduce alternative plant and equipment through the Change Procedure at an earlier stage.
The Change Procedure processes in PPP contracts can be complex, time consuming and, depending on value, may require a dedicated team to be assembled to manage the process: again early engagement and a clarity over goals, process and target costs and timescales are important from the outset.