The procurement phase of a PPP may afford opportunities for the realisation of innovation in both the commercial development of the project in the procurement stage and through the allocation of risk between the parties. Such innovations may be achieved through:
1. The efficient integration of the combined strengths and specialist expertise of various counterparties through the procurement process, in turn providing opportunities for greater scope and value optimisation, and streamlining the procurement and delivery of the asset (for example, wrapping of integration risk).
2. The implementation of contractual mechanisms in the project deed that incentivise innovation and allow for increased flexibility in the construction, operation, management and eventual transfer of the asset.
3. The implementation of private sector corporate arrangements that seek to optimise regulatory, tax and accounting outcomes that may have a consequential reduction in costs for both the Project Company and the Responsible Agency.
4. The introduction of collaborative contracting arrangements in procurement and delivery with open and transparent information sharing to allow for innovative risk and cost allocation between the Responsible Agency and the Project Company which extends throughout the whole asset lifecycle, including through operations, upgrades and eventual handback.
5. The introduction of incentive structures within the project deed as well as across the interface packages to encourage the 'best for project' behaviour from equity participants, promote integration of the broader project, and enable a better ability to manage project issues and develop solutions to future challenges (such as major expansions or augmentations to the PPP).
6. Sustainability outcomes.