Where an Authority considers that the cost of a proposed change is likely to be above the limit set in the Low Value Change category, the Authority may want to consider the MVC category. This brings into play some further steps that are required to be followed.
The MVC category also brings into the equation whether or not the Authority, through the Change Notice, requires Project Co to provide ongoing maintenance services or lifecycle replacement. This in effect gives the Authority the option to pay for only the capital expenditure, for the capital expenditure plus ongoing maintenance costs or for the capital plus maintenance and also for future lifecycle replacement.
In terms of lifecycle replacement, an Authority should be careful to consider the length of time left in the contract term and assess whether or not replacement of an item is likely to be required within that timeframe. For example, if there were only eight years left in the contract term and the asset being replaced had an expected lifespan of 12 years, there would be no point in paying Project Co for lifecycle replacement costs during that remaining period as there would be very low likelihood of the asset needing to be replaced until after Project Co had ceased to be part of the project.
Only amendments that are required to the Project Agreement are to be made as a result of a High Value Change, while no changes are to be made to the Project Documents as a result of a Medium Value Change unless the parties otherwise agree.