To ascertain this we would need to make a ‘gap analysis’ between the contract specifications and services as delivered. The AFC model procedure will benchmark the contractual obligations and measure actual service delivery over a test period to give an accurate view of service performance against contract.

The starting point is to have a clear understanding of the full extent of the scope and quality of the services which the SP is contracted to provide. AFC will make the initial review and assist you in structuring a regular review mechanism. Where variances are found or improvements are needed, the correct forum for discussion is your regular liaison meeting with the Project Company after which the formal variation procedure can be invoked as necessary. AFC will give support to you in implementing required changes.

There is no implied obligation, therefore you would only be obliged to tender when the contract comes up for renewal if you have previously agreed to do so. Before you decide to walk away you should carefully consider what happens on termination of your contract and what liabilities may continue to affect you in future. You also need to satisfy yourself and your shareholders that your reputation and standing in the marketplace will not be damaged by your walking away from this contract. AFC would counsel you in favour of making an objective and rigorous assessment of why you have been losing money on the contract before you decide not to bid. Assuming you are losing money mainly due to deductions resulting from defective performance, it is likely that the problems which have been causing this situation are curable. AFC will advise on a range of actions to enable you to restore compliant performance and avoid deductions in future.

The position may differ slightly from contract to contract, but the SP is generally obliged to self-monitor and submit the results to you in the form of a monthly report. In some cases you may be able to access data in real time and in every case you have a right to undertake your own monitoring and to challenge data provided by the SP. AFC can assist you in setting up a periodical review system and designing tools to analyse the results.

There are many forms of payment mechanism in use, some of which are extremely complex. It is therefore not unusual for mistakes to be made in data capture and the calculation of payments and deductions. AFC will review the help desk data input and management systems and audit the payment mechanism calculator to ensure it is compliant. AFC can also build a correctly calibrated calculation model for uploading to the CAFM system if required.

The contract will say when, where and how meetings should be held. Meetings can be prescribed for liaison, specific matters and as a first step in the process of resolving disputes. Ad hoc meetings can generally be requested by either party and may always be convened in emergency. Meetings are a good way of keeping in contact and maintaining positive relations with your contractors. They also offer an effective forum for tabling new ideas and discussing prospective changes.

It is important to make sure that your data is accurate and complete before registering your disagreement. A meeting should be called as soon as possible to compare the records and discuss the variance. If the relationship with your contractor is positive, it should be possible to reach agreement without resort to formal dispute resolution and may lead to improved future service provision. In other cases, AFC will be able to advise on the best way to reach a negotiated settlement.

Service changes need to be planned and implemented with careful regard to the contractual variations procedure. Minor changes may be agreed through the liaison process described earlier. AFC can assist with both planning and implementation.

Alterations to buildings and installation of new equipment are generally covered by the variations procedure which will require the contractor to plan and price for variations and the cost of funding them. You are not obliged to accept the contractor’s proposals and generally the SP would not be involved except where the variation will necessitate service changes. If the alteration relates to a repair or replacement of existing fabric or plant for which the contractor has taken responsibility, the contractor will generally be obliged to do the work in the most cost-effective way and may use either the existing SP or an outside contractor to achieve this. Commissioning work directly may invalidate existing guarantees and warranties. AFC will be able to guide you through this complex process.

Benchmarking is a process by which the cost of services priced by the contractor is subjected to a controlled comparison with the cost of equivalent services being provided by other contractors in a matching operational environment. The objective is to ascertain if the cost of services represents value for money and it is only effective where matching data is available. Benchmarking is potentially quicker and cheaper than market-testing and can provide a basis for re-negotiation of price and service scope. AFC can help you to get the best outcomes from benchmarking and market testing.

The re-tendering of certain services by market testing happens at intervals of 5 or 7 years during the operational period of the contract. The SPV is usually responsible for carrying out the process of inviting and evaluating tenders (including a tender from the existing SP) but must collaborate with you in scoping the service specification, formulating the tender documents and selecting the preferred bidder. Market testing offers Employers the opportunity to review their service needs and better align them with their market-facing commercial activities. AFC can work with you to manage the process to good effect.

If you can demonstrate without market testing that your services continue to provide best value, it is likely that your employer will be pleased to negotiate a renewal of your contract without incurring the cost and upheaval of a full market testing exercise. In addition to advising on the most effective strategy for achieving your objectives, AFC will assist you to provide suitable comparators to demonstrate value and implement any negotiated service changes.

Most standard PFI contracts include a right in certain circumstances for you to take over provision of services or arrange for another contractor to take them over at the SP’s expense. AFC will guide you on the timing and procedures for stepping in and out.

AFC can certainly help you to ascertain if there is scope within your contract to change your service delivery model providing you continue to meet the specification. If so, AFC can offer a number of ways in which you may be able to make your maintenance schedule more responsive to asset performance, whilst better managing the risk of breakdowns and avoiding wasted resources. AFC will be able to assist with implementation.

AFC is adept at reducing complex service specifications into an easy-to-follow template and applying relevant performance indicators, response and rectification times to the service failure and availability provisions of the corresponding payment mechanism. The outcome of this exercise may take many forms such as an executive summary, training course and/or a bespoke service manual depending upon your requirements and budget.

There could be many reasons why you are having to spend more on energy. A quick check of your project agreement will help AFC to determine who bears volume and price risk and other terms relating to management and consumption. Whilst AFC can do little about spot prices, there may be special purchasing arrangements which AFC can recommend if the cause is cost inflation. AFC would in any event recommend a full energy survey before advising on new or additional measures to provide better energy management and meet legal requirements for sustainability and carbon reduction.

There is no simple answer to this question. Assuming that you will be holding the lifecycle fund, your shareholders will be liable for any shortfalls and will benefit from any surplus remaining at the end of the contract term. Problems may arise from the fact that assets have to be renewed earlier than planned due to bad maintenance. AFC will be able to advise on procedures to minimise these risks and give comfort to your bank and your shareholders.