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Sector: State Highway  |  Module 2: Work through the PPP process

Other issues related to contract management

Change of Scope

Change of scope is another important element in the contract management phase.  The approach to dealing with change of scope is typically incorporated in the concession agreements itself.

The key elements of how change of scope is dealt with in the Indian context (based on the model concession agreement) are as follows:

  • The concessionaire has to bear the cost for change in scope up to an aggregate pre-specified ceiling {for example,  0.25% of the total project cost in national highways (excluding the cost of change in scope of work)}. Any cost in excess of such a ceiling is reimbursed by the Sponsor.
  • The concessionaire is entitled to nullify a change in scope order if it causes cumulative costs relating to all change in scope orders in three preceding years to exceed a pre-specified ceiling (5% in case of roads) of the total project cost or if such a change in scope order exceeds a pre-specified ceiling (20%in case of roads) of the total project cost at any time during the concession period.

Other details on Change in Scope may be referred to in the specific chapter on the same in the model concession agreements.

 

   
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