Design risk

Heavy rail Heavy rail

Description (What is the Risk)

The risk that the project has not been designed adequately for the purpose required.
Feasibility study.
Approval of designs.
Changes to design.

Risk Allocation (Who typically bears the risk)

Allocation: Public Private Shared
Rationale

Network Rail is wholly responsible for infrastructure upgrades, as the party with knowledge of the UK heavy rail network.

Mitigation Measures (What can be done to minimize the risk)

Network Rail will seek approval from the relevant Contracting Authority in relation to any infrastructure upgrades contemplated.

The design of the rolling stock is the responsibility of the Manufacturer. There will be a detailed design review process set out in the MSA. The Manufacturer will usually exclude liability for the risk of infrastructure upgrades being completed.

Government Support Arrangements (What other government measures may be needed to be taken)

There is no direct Government support, except insofar as the UK Government provides a direct grant to Network Rail, and subsidises the agreed works programme of Network Rail. The Government also has a statutory duty to ensure the provision of railway passenger services on the UK rail network.

Comparison with Emerging Market

In the UK's developed rail market, Network Rail has all historical information as to the maintenance of the rail infrastructure, rendering it difficult for other parties to take this risk.

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Description (What is the Risk)

The risk that the project has not been designed adequately for the purpose required.

Risk Allocation (Who typically bears the risk)

Allocation: Public Private Shared
Rationale

The Contracting Authority may retain some design risk in certain aspects of the existing system or related works, depending on how prescriptive the Contracting Authority is in the output specification.

The Private Partner will warrant that it has satisfied itself in relation to the existing assets and their condition at commencement of the concession period.

The Private Partner's ability to warrant the fitness for purpose of its design solution for rehabilitation works may be impacted by the condition of the existing assets, and the Contracting Authority will to that extent share in the design risk.

Mitigation Measures (What can be done to minimize the risk)

The Contracting Authority may wish to consider how prescriptive it should be in the output specification.

The Contracting Authority must provide reasonable access and opportunity for the Private Partner to survey condition of the existing assets.

Government Support Arrangements (What other government measures may be needed to be taken)

The Contracting Authority may be required to guarantee and proactively manage the maintenance of the existing systems that integrate with the project.

Comparison with Developed Market

Emerging market rail projects may be particularly dependent on availability of reliable traction power or fuel availability, which have implications for the Private Partner's ability to meet the reliability requirements in the output specification.

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