Design, construction and commissioning risk

Design, construction and commissioning risk is the risk that the design, construction or commissioning of the facility (or certain elements of those processes) is carried out in a way that results in adverse consequences on cost and/or service delivery.

Specific examples of design, construction and commissioning risk are:

•  the risk that the facility as constructed is unsuitable for the delivery of both the contracted services and the core services provided by government;

•  the cost of complying with environmental and planning conditions and ensuring that construction and commissioning of the project does not inadvertently cause environmental harm;

•  the risk of defects arising in the facility; and

•  the risk of delays to the completion of construction.

These risks are particularly salient in relation to the facility's fitness for purpose. To minimise a government's exposure to such risks (except where the Procuring Agency has statutory responsibility for design and operating standards), the Procuring Agency should avoid heavily specifying or formally endorsing a design.  However, the private party does not necessarily have unencumbered design freedom, particularly where a government's facility guidelines exist (e.g. hospitals).

Design, construction and commissioning risk should generally be allocated to the private party. This includes the requirement to complete and commission the facility to the required standards and by the required dates.

In certain cases government may consider accepting certain aspects of design, construction and commissioning risk by granting relief to, or compensating, the private party with respect to certain events.