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MULTI-JURISDICTIONAL GUIDE 2012/13
CONSTRUCTION AND PROJECTS

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PROJECT RISK ALLOCATION TABLE
Social
Infrastructure
PPP
Design
& Construct
Construct
Only
Project Risk State
Project
Company
Principal Contractor Principal Contractor
Site conditions: party who accepts overall responsibility for all site
conditions.


Environmental: party who accepts overall responsibility for
complying with all laws and other requirements for the protection
of the environment during construction. The principal will usually
take resonsibility for securing necessary environmental approvals
(including Town Planning Approval).

Native title claim or heritage: party who bears responsibility for
native title and providing relief in relation to discovery of artefacts.
Planning and other approvals: party who bears the responsibility
of developing appropriate submissions, obtaining and complying
with the planning approvals and obtaining and complying with all
necessary approvals associated with the works.
Principal usually takes the risk of early approvals required for
project inception (for example, particular planning approvals to
facilitate the project).

Design: party who is responsible for designing the structure to
meet the specications and the relevant t for purpose warranty.
Construction and commissioning (time): party who is responsible
for construction and commissioning of the structure within the
required time period.
Commissioning risk will depend on the nature of the project.

Construction and commissioning (quality): party who is
responsible for construction and commissioning of the works
to the standard required to satisfy the projects commissioning
requirements.

Insurances: party who will be required to place and maintain
construction insurances over the term of the project. The nature of
the insurances will be dependant on the contracting methodology
(for example, a construct only contract may exclude the requirement
to obtain professional indemnity insurance) and commercial views
about which party can procure the most economical insurance.

Taxation: the project company (in the case of PPPs) and the
contractor will generally be responsible for tax issues arising, but
many contracts contain change of law provisions which can shift
the risk of increased taxes to the principal.

Construction delay: the party who accepts the risk of construction
delay will generally be the project company (in a PPP project) or
the contractor. However, the principal will take the risk associated
with delays caused by it and may (less usual) take the risk
associated with some neutral events.

Force majeure: partys performance obligations will be suspended for
the duration of a force majeure event. Typically, there will be no cost
relief but there may be an extension of time for a force majeure event.

Reinstatement and repair: party who is responsible for reinstating
and repairing any loss or damage to the site, the works or the
structure over the duration of the term of the project (in respect
of PPPs) or for the duration of works (in respect of design and
construct and construct only).

Project Risks Specic to Social Infrastructure PPPs State
Project
Company
Principal Contractor Principal Contractor
Finance: party who will be responsible for sourcing and maintaining
debt and equity nancing over the duration of the project.
N/A N/A N/A N/A
Project Risk State
Project
Company
Principal Contractor Principal Contractor
Renancing: party who will bear the risk of any differences
between actual and forecast renancing outcomes subject to
renancing gain sharing provisioning.

N/A N/A N/A N/A

Maintenance and refurbishment: party who must maintain and
refurbish the structure as necessary to ensure it meets the t for
purpose warranty at all times.

N/A N/A N/A N/A
Performance monitoring and review: party who will be required
to monitor and self-report its performance against the services
specications.

N/A N/A N/A N/A
Compensable intervening events: party who will provide relief
for failure to deliver the services during the operating phase in
specic circumstances.

N/A N/A N/A N/A
Utility price and volume risk: party who will take utility services
price and volume risk over the operating phase of the project.
N/A N/A N/A N/A
Handover condition: at the end of the term of the project, project
company will be required to hand back the structure to the state
in no less than the specied condition for nil consideration.

N/A N/A N/A N/A
Facility demand risk: risk that the utilisation of the structure is less
than or greater than anticipated remains with the state.
On an economic infrastructure PPP this risk has typically been
borne by the private sector.

N/A N/A N/A N/A