Factor

Risk Allocation

Payments to the Project Company which are fixed irrespective of the level of demand, including where future under-utilisation by the Government is not compensated through a reduction in the Services Fee payable exposure the Project Company to variability in profits as demand changes.

More likely to be Project Company risk

Payments which increase, or decrease relative to the level of demand, e.g. through the use of 'mothballing' or under-capacity adjustments.

More likely to be government risk

Where demand and use have a significant impact on the wear and tear and condition of facilities and the Project Company is not compensated for such use.  For example, where additional use might incur increased, or earlier than forecast maintenance costs, additional security, cleaning and waste removal costs to comply with the performance regime and greater help desk resource requirements, due to higher numbers of users.  If such costs are borne by the Project Company, through the Payment Mechanism, this will have an impact on its profits.  

More likely to be Project Company risk

Where government requires the provision of a fixed capacity and any under-estimation in capacity requires government modifications, or alternate provision.

More likely to be government risk