Mr. Gerard Cahillane:

In respect of the PPP projects, we conduct a risk workshop. Risk workshops are attended by officials from the sponsoring Departments and by legal, financial and technical experts. At this stage, we seek to identify all of the risks throughout the lifetime of the project, from planning stage to construction stage and in regard to facilities management and life-cycling to ensure that facilities will be handed back in a fit state after 25 years. At the end of a PPP project, there is a residual life requirement. For example, the roof would have to be good for 35 years, the plant and equipment would have to be good for ten years and the paint work would have to be good for five years. Possible risks at each stage are identified and the cost of fixing any problems that arise are quantified. We assign a probability to each of those risks and we develop a risk matrix. We then identify who is the best party to manage the risk. We only allocate risk to the private sector that it is best able to manage and we keep risks on the State side that we are best able to manage. For example, in the case of a school in which there are pupils, we would not pass on that risk to the private school but we do pass construction risk to the private sector. Once all of the risks have been quantified in a risk matrix, they are then translated into the contract and we ask the private sector to price in that regard as part of its bid for the facility.