West Berkshire CouncilI n t e g r a t e d W a s t eM a n a g e m e n t C o n t r a c tI n f o r m a t i o n P a c k

We must all reduce theamount of waste weproduce, and recycleas much as we can, forthe wellbeing ofeveryone, today andfor the future.

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March 2004

Contents

1 Introduction 11.1 Background 11.2 The Local Authority 11.3 Key issues for West Berkshire Waste Management 21.4 The Council's Corporate Priorities 21.5 Sustainable Development 3

2 The West Berkshire Integrated Waste Management Project2.1 Introduction 42.2 Why do we Need to Change? 42.3 A Vision for the Future 42.4 Delivering the Vision 5

3 Existing Waste Management Arrangements 63.1 Historic Waste Arisings 63.2 Recycling & Composting 73.3 Waste Management Services 93.4 Waste Facilities & Contract Arrangements 103.5 Waste Facilities 113.6 Municipal Waste Composition 11

4 Future Waste Management Issues 124.1 Waste Growth 124.2 The Legislative Drivers 124.3 Views of the Public 134.4 Geography & Demographics 144.5 Site Availability 14

5 Financial and Contractual 155.1 Payment & Performance Mechanism 155.2 Risk Allocation 155.3 Affordability & Compliance with FRS5 155.4 Use of Standardised Contract 15

6 Procurement Process 166.1 Introduction 166.2 Core Team 166.3 Project Steering Group 17

6.4 Decision Making Process 176.5 External Advisors 176.6 Procurement Schedule 176.7 Pre-qualification Questionnaire 18

7 Outline Service Specification 197.1 Service Objectives 197.2 Targets 207.3 Scope of the Services 20

8 Legal Notices 21

Appendices

Appendix I Strategic Waste Management Policies 22

Appendix II Post Contract Risks 241 Design Risks 242 Construction Risks 253 Planning Risks 274 Operational Risks 285 Residual Value Risks 316 Financial Risks 327 Performance Risks 328 Demand Risks 339 Technology & Obsolescence Risks 3310 Regulatory Risks 3411 Taxation Risks 3512 Insurance Risks 35

List of Tables & FiguresTable 3.1.1 Waste Arisings 6Table 3.1.2 Municipal Waste Arisings 6Table 3.2.1 Recycling in 2003/04 8Table 3.4.1 Current Contract Arrangements with Time Frames 10Table 3.4.2 Additional Operational Arrangements 10Table 4.2.1 Recycling & Composting Standards for West Berkshire 12Table 4.2.2 Estimated Tonnages of Biodegradable Waste to be Diverted

from Landfill by West Berkshire Council (based on theNational Average Biodegradable content of 60%) 13

Figure 1 The Project Team 16

1. Introduction

1.1 Background

In 2000, an initial draft Municipal Waste Management Strategy was developed by West BerkshireCouncil that identified and analysed a number of future waste management options for the District.Following consultation and Member approval in January 2001, a waste management option based on'Maximising Recycling and Composting' was identified as the best practicable way forward for WestBerkshire.

The Government subsequently published new guidance in March 2001, which detailed the content andstructure of Local Authority strategies. Within this guidance, statutory targets for recycling andcomposting household waste were published. The Strategy was subsequently updated and theMunicipal Waste Management Strategy for West Berkshire 2002-2022 now meets the requirements ofthis guidance and sets out the strategic framework for the management of municipal waste in the districtover the next 20 years.

In June 2003 the Council secured financial support of £23.74 million Private Finance Initiative (PFI)credits to deliver the long-term objectives of the Waste Strategy. The basis of the PFI is to deliver along-term integrated contract which will include a range of waste collection, recycling, composting,waste treatment and disposal and cleansing services, necessary to deliver the Council's wastemanagement needs in the medium to long term.

To date the Council has undertaken the following work towards procuring the PFI contract: engagement of specialist external advisors for technical, legal and financial issues a project governance structure for Council Officers and Members a project structure, that will assist an efficient decision making and cost effective

procurement process investigation into suitable and available land for waste activities

West Berkshire is to hold an Industry Day to present this project on the 21st April 2004. If you wish toattend please contact: Andrew Deacon, Waste Services, West Berkshire Council, Faraday Road,Newbury, Berkshire RG14 2AF Tel: 01635 519312, email: xxxxxxxx@xxxxxxxxx.xxx.uk.

1.2 The Local Authority

West Berkshire Council is a Unitary Authority created in April 1998 and has responsibilities for wastecollection and waste disposal and as a principal litter authority.

West Berkshire accounts for over half (56%) of the County of Berkshire, encompassing 70,484 hectares(272 square miles.). 74% of the district lies within the North Wessex Downs Area of Outstanding NaturalBeauty, and borders the counties of Oxfordshire, Wiltshire and Hampshire with Reading BoroughCouncil and Wokingham District Council to the east.

The main centres of population are in Hungerford to the west, Newbury and Thatcham in the centre,and Tilehurst and Theale to the east. The district is predominantly rural with the population splitapproximately 2:1 between urban and rural. The 2001 census stated that West Berkshire had a

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population of 144,483 and included 59,583 domestic properties. Predictions are that West Berkshire'spopulation will increase to 151,982 by 2006 and 155,587 by 2016, with the greatest growth being in theNewbury and Thatcham areas (9.6%). The east of the district is expected to experience a slight fall inpopulation during the period to 2006.

1.3 Key Issues for West Berkshire Waste Management

Due to new legislative requirements local authorities can no longer rely on landfill as a main solution forthe management of waste. In tune with Government policies, West Berkshire's Municipal WasteManagement Strategy (2002 - 2022) was developed and a preferred solution for the management ofwaste was selected that was built upon sustainability principles of minimising waste and maximisingcomposting and recycling.

Local landfill sites are nearing capacity and limited opportunities exist in Berkshire for the futuredevelopment of suitable landfill sites. Transportation of waste to distant landfill sites will beenvironmentally detrimental.

In addition, West Berkshire Council is committed to integrating services to deliver increased efficiency,service improvements and Best Value. Currently there are separate contracts for the following services:

Refuse Collection, Street Cleansing and Litter Collection Services Kerbside Recycling Collection and Paper and Card Banks Servicing

Pinchington Lane Civic Amenity Site Management of the Paices Hill Green Waste and Recycling Centre

Waste Disposal Services Abandoned Vehicles

Composting of Green Waste Fridges and Freezers Contract

Cans and Plastics (excluding Paices Hill) Glass collection Textiles collection

Tyres Oil

Asbestos Special Waste

PFI credits have been awarded to West Berkshire to enable development of the facilities needed toachieve maximised recycling and composting which will be achieved through an integrated wastemanagement service.

1.4 The Council's Corporate Priorities

West Berkshire Council fully supports the implementation of an integrated waste management strategythat aims to maximise recycling and composting. On 25th October 2001 the Executive supported boththe preferred waste management option to maximise recycling and composting, and therecommendation of an integrated waste contract. Feedback from a public information leaflet in May2002 endorsed this Member decision.

The Waste Strategy supports a number of West Berkshire Council's Strategic Priorities and the aims of

the Community Plan for sustainable development and the protection of the environment.

The Municipal Waste Management Strategy is underpinned by West Berkshire Council's StrategicWaste Management Policies (SWMPs), in Appendix 1.

1.5 Sustainable Development

West Berkshire Council's Sustainable Development Policy, states that the Council will encourage andsupport a sustainable community through a range of social, economic and environmental measures,including:

reducing the consumption of raw materials and the production of waste using water and other natural resources efficiently and with care promoting an awareness of sustainable development in West Berkshire and

encouraging actions individually and with others in the future to encourage a betterquality of life

continuing to involve people in planning and decision making in West Berkshire and toconsult with people at the right time and increase access to Area Forums

West Berkshire Council is keen to ensure that the principles of sustainable development are taken intoaccount in the delivery of its waste service.

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2. The West Berkshire Integrated WasteManagement Project

2.1 Introduction

The Council seeks an Integrated Waste Management Contract that will include all waste activitiesnecessary to deliver its waste strategy. It is anticipated that the existing waste contracts indicated intable 3.4.1 will be phased into the integrated contract. It is the Council's intention to award the entirecontract to a single bidder, however the Council reserves the right to award the contract in whole or inpart and reserves the right to award elements separately. The Council reserves the right to let theprovision of disposal and/or treatment separately and to enter into an agreement with the preferredbidder/appointed contractor to commence provision of the kerbside recycling service prior to thecommencement of the full PFI contract. The Council reserves the right not to award this contract or anypart of this contract.

2.2 Why do we Need to Change?

The Council faces six main drivers, which have encouraged the review of our waste managementsystems. These drivers are:

National and local standards for recycling National standards for the recovery of value from waste The Landfill Directive Rises in the rate of landfill tax Government policy on waste minimisation and Long standing corporate commitment towards 'improving environmental resource

management'

2.3 A Vision for the Future

West Berkshire Council's vision is for an integrated waste management contract that will enablemaximised recycling and composting. Regardless of the methods chosen to manage the wasteproduced in West Berkshire, waste education programmes are to be further developed as a priority withthe aim of reducing waste arisings, maximising recycling and composting and reducing the quantity ofbiodegradable waste to landfill.

The concept of an Ecology Village / Resource Park is considered to be important in achieving theCouncil's objectives through education and encouraging a higher recycling participation rate. TheCouncil will be looking to the private sector to propose their own innovative solutions to the Council'sobjectives.

In line with West Berkshire's Strategic Waste Management Policies, the Council's vision is for:

more sustainable waste management within West Berkshire fuller understanding of sustainable waste management issues and practices throughout

the Community

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full and interactive dialogue with all members of the community on waste managementissues

the reduction and re-use of waste by residents the reduction and re-use of waste within the Waste Management Service development of practical initiatives to support waste segregation at source for both

households and businesses reduction of waste to landfill management of waste in adherence to the proximity principle deliverance of Governmental performance standards for waste management continuous and demonstrable improvement in the quality, sustainability and efficiency of

the waste management services increased recovery of value from waste.

2.4 Delivering the Vision

The Integrated Waste Management Contract will need to be flexible and deliver continually improvingwaste management solution programme for West Berkshire. The Council envisages that this mayinclude:

public education programme, awareness raising and the promotion of sustainable wastepractices

development of the concept of an Ecology Village / Resource Park to promote publicawareness of waste issues and participation in waste minimisation and recyclinginitiatives developed by the contractor

maximising recycling and recovery of waste increasing composting services to local residents efficient collection, transport and haulage of waste management of waste close to source local use of recyclates a local depot a service that ensures the street environment is clean, well maintained and safe

The Council has completed a financial evaluation to determine the likely costs of the Reference Project.A comparison of the costs of procuring the project by a traditional route, the Public Sector Comparator,with the PFI Reference Project, has demonstrated that the chosen route offers Best Value to theCouncil.

2000/01 2001/02 2002/03 2003/04

Total Household Waste(including streetcleansing)

78,924 tonnes 80,104 tonnes 81,210 tonnes 78,792 tonnes

% Composted 11.4% 1.3% 1.8% 4.8%

% Recycled 10.5% 10.8% 12.2%

%Disposed of to landfill 88.6% 88.2% 87.4% 83%

Trade Waste 1,012 tonnes 2,300 tonnes 1,705 tonnes 1,181 tonnes

Waste Category 2003/04 Tonnage

Refuse Collection 50,202Street Sweepings 2,400Civic Amenity Residual Waste 12,604Recycleables 9,636Composting 3,805Asbestos 10Inert 103TOTAL Household Waste 78,792Trade Waste 1,181

3. Existing Waste Management Arrangements

3.1 Historic Waste Arisings

Pro rata1 in 2003/04 West Berkshire generated an estimated 79,973 tonnes of municipal waste. Of thisamount an estimated 78,792 tonnes was household waste. Of the household waste generated 12.2%was recycled, 4.8% was composted and 83% was landfilled. These figures can be compared to the last3 years of waste arisings.

The Source of the waste generated in 2003/04 is outlined in the table below (again this data is pro rata).

Approximately 1,000 vehicles are disposed of per annum through West Berkshire's abandoned vehicleservice.

1 The 2003/04 data is based upon data from and including April 2003 to December 2003 as data for January, Februaryand March 2004 has not yet been collected.

Table 3.1.1 Waste Arisings

Table 3.1.2 Municipal Waste Arisings

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3.2 Recycling and Composting

West Berkshire Council has an active waste minimisation and recycling programme. This includes:

Waste awareness campaigns that have occurred in West Berkshire since 1999:

1.Compost Awareness Week2.Green Waste Separation Trial for Composting3.Real Nappy Campaign4.Waste Awareness Talks5.Rethink Rubbish In West Berkshire Newsletter

Waste initiatives that have occurred in West Berkshire since 1999:

1.Maintenance and improvement of Bring Bank recycling centres 2.Maintenance and improvement of CA Site and Green Waste and Recycling Centre

including improved signage3.Maintenance and improvement of kerbside recycling collection4.Trial green waste segregation scheme5.Community Furniture Project6.Introduction of Community Re>Paint Scheme

In West Berkshire materials for recycling and composting are currently collected through 'Bring Banks',Civic Amenity Site, a Green Waste and Recycling Centre, and a Kerbside Recycling Collection Service.

Civic Amenity Site

There is one civic amenity site in West Berkshire at Pinchington Lane in Newbury. The Civic AmenitySite receives the following recyclables: paper, cardboard, plastic, cans, glass, textiles, white goods,metal, engine oil, car batteries, and tyres. The site also collects asbestos, bulky items, householdwaste, DIY waste and white goods and suitable trade waste. There is also currently a trial collectionscheme to pilot work required in the WEEE (Waste Electrical Electronic Equipment) Directive.

The site also has a trial scheme for the separation of green waste. This has increased the recycling rateat the site from 11% (2002/03) to 25% (03/04). The Council also operates an annual Christmas treerecycling scheme for composting. Approximately 3,000 Christmas trees were collected through thisscheme in January 2002.

The Pinchington Lane Site is owned by a third party and the Council has no legal interest in this land.

West Berkshire Council has a joint agreement with its neighbouring Local Authority, Reading BoroughCouncil, that enables West Berkshire residents to use the Island Road Civic Amenity Site in Reading.The materials collected at this site include: green garden waste, scrap metal, wood, furniture andappliances, cardboard and paper, vehicle batteries, engine oil, chemicals and paint, textiles, glassbottles and jars, food and drink cans, plastic bottles and asbestos. It is estimated that 7% of the site'susage corresponds to West Berkshire's residents, therefore the Authority contributes to a proportion ofthe site's running costs and receives an apportionment of the site's overall recycling performance.

Green Waste and Recycling Centre

A dedicated Green Waste & Recycling Centre is provided at Paices Hill, Aldermaston. The Centre,which is adjacent to the Hampshire border, provides through a partnership with Hampshire CountyCouncil, recycling facilities to the residents of West Berkshire and Hampshire. The materials collected atthe site are: green garden waste, paper, cardboard, mixed cans/plastics, textiles and glass (green, clearand brown).

The green waste collected on-site is currently sent to a composting plant and recycled into soilimprover. The recycled compost is available for purchase on-site.

The Paices Hill Site is owned and managed by West Berkshire Council.

Kerbside Recycling Collection Scheme

A Kerbside Recycling Collection Scheme has operated in West Berkshire since November 1996.Participation in the scheme is voluntary and is available to all households in the District. Recyclablematerial is collected on a fortnightly basis from two 35 litre boxes, one for glass, cans (ferrous and non-ferrous) and textiles, and one for paper and magazines. In 2002/3 over 5,800 tonnes of materials wererecovered through this scheme. In 2003 a participation survey was conducted. It was found that 44% ofhouseholds participated in the kerbside collection scheme. At the end of the current kerbside collectioncontract the Council has the option to buy the recycling boxes. All other assets involved in delivering thisservice, such as vehicles, belong to the current contractor.

Kerbside collection of recyclables is viewed by the Council as a key service.

Bring Banks

There are 13 bring bank recycling sites in West Berkshire, which cater for the collection of glass, cans,paper, textiles, and books.

The banks are concentrated in the Newbury/Thatcham area and in the east of the district. The largestsite being located in Calcot. There is an average of 1 recycling bank (site) per 12,000 head ofpopulation which equates to 1:4553 households. Although there is full coverage of the kerbsidecollection throughout the district, the number of recycling sites is low with some of the larger parishesbeing quite far away from the nearest bring bank sites.

Table 3.2.1 Recycling in 2003/04 (10 months data)Recycling Scheme 2003/04 TonnageKerbside Collection 5841Recycling Centres (Bring Banks) 1544Civic Amenity Site Recycling 3850TOTAL 11235

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3.3 Waste Management Services

Refuse Collection

Domestic refuse is collected weekly from approximately 58,000 properties in wheeled bins (120, 240,360, 1100 litre). The Council has the option to purchase the wheeled bins at the termination of thecurrent Refuse Collection Contract. Some 2,000 dwellings (flats, isolated properties and accommodationfor the elderly) are provided with plastic sacks which are distributed two times a year.

Disposal Arrangements

All residual household waste collected in the district is currently delivered directly to Hermitage FarmLandfill, which is located approximately four miles north of Newbury. This contract will expire at the endof June 2004. Under the new contract starting 1st July 2004 residual household waste will be disposedof at Sutton Courtenay landfill in South Oxfordshire.

Bulky Items

There is a collection service available to residents predominantly 'free of charge' for bulky householditems which is provided as part of the Refuse Collection, Street Cleansing and Litter Collection contract.This includes items such as furniture, fridges, freezers, washing machines, or other householdappliances. This service does not accept garden waste, fixtures or fittings, or DIY waste.

Clinical Waste

West Berkshire Council has a responsibility to arrange for the collection and disposal of clinical wastethat is classified as household waste. A separate weekly collection service is provided for householdclinical waste from selected properties (approximately 40 properties a week). All clinical waste ispresented for collection in securely tied clinical waste sacks, which are distributed by the contractor, andthe clinical waste is then transported to a clinical waste incinerator. Currently clinical waste collection isrun as part of the Refuse Collection, Street Cleansing and Litter Collection Services Contract.

Abandoned Vehicles

West Berkshire has responsibility for the majority of abandoned vehicles in the district. West Berkshirehas implemented a free of charge removal scheme for unwanted vehicles to discourage theabandonment of vehicles

Table 3.4.1 Current Contract Arrangements with Timeframes

Table 3.4.2 Additional Operational Arrangements

3.4 Waste Facilities and Contract Arrangements

Contract Term End

Refuse Collection, Street Cleansing & LitterCollection Contract(Biffa)

September 2006 2 extensions possible ofup to 2 years each

Waste Disposal Services Contract(WRG) July 2007 2 extensions of up to 2

years each

Kerbside Recycling Collection (includingcertain Paper and Card Banks) (Biffa) September 2003 Up to September 2005

Pinchington Lane CA Site (Biffa) September 1988 September 2008

Paices Hill Green Waste Service(Joint working arrangement with adjacent LocalAuthority)

31st March 2004 Extendable by agreement

Paices Hill Green Waste and Recycling CentreManagement. W&S Recycling April 2006 2 extensions of up to 1

year each

Fridges and Freezers(Weymouth and Sherbourne Recycling) September 2005 September 2007

Textiles - CA Site, Paices Hill and Bring Centre(The Clothing Warehouse) 31 March 2005 Periods of 6 months for

up to 2 years.

Green Waste Composting(Sheepdrove Organic Farm) September 2004

Trial scheme segregationof Green Waste fromPinchington Lane. Trialunder review.

Abandoned Vehicles(Rawlings) 31 March 2004 Six monthly increments

for a maximum of 2 years

Operational Agreement Term

Asbestos - CA Site (Biffa) As required

Special Waste - CA Site (Biffa) As required

Oil (Greenways Orcol) As required

Paper Bank (Sita, Sainsburys, Calcot) As required

Cans and Plastics at Paices Hill (Grundons) As required

Glass Collection (Berrymans and Thamesdown Glass) As required

Can and Plastics (exc Paices Hill), (Grundons & Kan a Can) As required

Textiles and books, Charity Banks - Oxford and Traid As required

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The Council would consider the possibility of including the collection of waste from schools within theDistrict in this contract. There are approximately 84 schools in the District which each operate devolvedbudgets under fair funding.

3.5 Waste Facilities

The Council owns the freehold of the Green Waste and Recycling Centre at Paices Hill, Aldermaston,and a small municipal depot at Pound Lane, Thatcham. The Civic Amenity site at Pinchington Lane,Newbury, and landfill sites at Hermitage and Sutton Courtenay are owned by third parties and theCouncil has no legal interest in these pieces of land.

The refuse collection vehicles, wheeled bins distributed after 27th September 2003, and kerbsiderecycling baskets are all owned by the incumbent contractor. The Council has the option to purchasewheeled bins distributed since 27th September 2003 and the kerbside recycling baskets distributedunder the current contract. The Council owns all the wheeled bins distributed prior to the 27thSeptember 2003.

3.6 Municipal Waste Composition

A household waste composition analysis was undertaken in 1998 and more recently in February 2002.From these analyses it appears that there are differences between West Berkshire's waste compositionand the typical composition for the UK. The content of paper and card, dense plastics, andmiscellaneous combustibles is significantly higher in West Berkshire in comparison to the nationalaverage, and the content of ferrous metals and fines is significantly less. Disposable nappies areclassified as miscellaneous combustibles but on their own comprise 3.4% of the total household wastestream, which is in line with the national average of 4%. The putrescible category is made up of kitchenwaste (12.9%) and green garden waste (10.3%). Due to the nature of household waste, variations inwaste composition are common - such variations can be seasonal, annual, and geographical.

West Berkshire Council will be undertaking further waste composition analysis. These analyses will beundertaken on a seasonal basis (four a year) for two years. It is expected that the first of thesecomposition analyses will be undertaken in April 2004. The composition analyses will be made availableto tenderers

4. Future Waste Management Issues

There are several key issues that will influence future waste management in West Berkshire. The keyitems are listed below:

Waste growth Legislation Views of the Public Geography and demographics Site availability

4.1 Waste Growth

Historically waste generation has been subject to growth. For West Berkshire's Municipal WasteManagement Strategy the growth in waste was predicted by the population change and housingdevelopment.

In the period between 1981 and 1998, 13,100 dwellings were built, which contributed to an increase inpopulation from 119,750 in 1981, to 143,400 in 1997, which is a rise of 19.7% (1.23% per annum). TheLondon Research Centre has predicted West Berkshire's population to rise to 151,982 in 2006 and155,587 in 2016.

The growth in population was predicted within the Strategy to slow to approximately 0.3% per annumfrom 1.23% per annum, but a similar reduction in the growth rate of household waste arisings is unlikelyin the short term due to a number of factors such as the trend towards smaller households and singleoccupancy (e.g. each household receives the same "junk mail" irrespective of the number of occupiers).

4.2 The Legislative Drivers

There are many national and European legislative drivers influencing the future management of wastewithin West Berkshire. The key legislative drivers include:

(a) Best Value Performance Indicators.

Authority 2003/04 Standard (%) 2005/06 Standard (%)

West Berkshire Council 20 30

Source: DETR, Guidance on Municipal Waste Management Strategies, March 2001

Table 4.2.1 Recycling and Composting Standards for West Berkshire

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(c ) Rises in the rate of landfill tax.

(d) The Waste Minimisation Act 1988 and Government policy on waste minimisation.

(e) The Waste and Emissions Trading Bill introducing a system of tradeable permits designed to reduce the amount of biodegradable waste going to landfill.

(f) The Household Waste Recycling Bill (which has received Royal Assent).

(g) The Waste Electrical and Electronic Equipment Directive.

4.3 Views of the Public

Public consultation is a key requirement identified in Municipal Waste Management Strategies and BestValue. This is essential in waste management development in West Berkshire. In 2000, West Berkshireundertook an information awareness exercise on the future waste management options for the District.This involved workshops, presentations and meetings with technical officers from nearby localauthorities, the waste management industry, Environment Agency, and Council Members.

In May 2002 a Waste Information Leaflet was produced and distributed to over 60,000 residential andcommercial properties within West Berkshire. The leaflets were also displayed in public libraries andCouncil offices throughout the district, as well as being distributed to local interest groups such as LA21and TV Energy.

The feedback from the Public Information leaflet provided by West Berkshire Council on the future ofwaste management in the district, proved invaluable, particularly regarding recycling and composting.The response endorsed the Council's option of maximising recycling and composting.

The Council is preparing a detailed communication plan, which identifies key stakeholder groups,project milestones and communication mechanisms.

(b) The Landfill Directive

Table 4.2.2 Estimated Tonnages of Biodegradable Waste to be Diverted fromLandfill by West Berkshire Council (based on the National Average Biodegradablecontent of 60%)

Target Growth rate of municipal waste (% / year)2% reducing to 0.5% after2010 2% 3% 4%Tonnes BMW to be diverted from landfill

To meet 2010 target 19,982 22,830 28,902 35,528To meet 2013 target 32,971 38,595 47,098 56,650To meet 2020 target 42,289 55,228 70,789 89,502

4.4 Geography and Demographics

The implications of West Berkshire's geography, demographics and socio-economic characteristics onwaste management are summarised below:

1. The historical trends and future projections of population growth and increases in householdnumbers, along with a trend towards smaller households and single occupancy, have importantimplications for future household waste arisings in West Berkshire.

2. A significant proportion of the population (67%) is resident within urban areas which means thatthe majority of household waste arisings are concentrated in a defined area.

3. The rural population within the district is spread out at low densities. Although the main roadnetwork in the district is relatively well developed, much of the district is served by narrowcountry lanes.

4. High car ownership rates (83% of households having a private car, and 47% of householdshaving two or more cars) suggest that gaining access to recycling centres and 'Bring' sitesshould not be a significant issue for West Berkshire residents. 'Bring' sites can be made moreaccessible if they are located on journey routes such as supermarket sites.

5. The nature of the housing stock is suitable for the promotion of home composting and thefurther development of the kerbside collection system.

6. The large number of properties with gardens in the district is likely to result in a high proportionof green waste during the growing season.

7. Unemployment in the district is low (unemployment rate averaging 0.7% in the district).Additional social benefits from the development of waste management infrastructure, in terms ofjob creation, may not be a critical area of importance for West Berkshire. With current contractsit is recognised that Contractors have difficulty in appointing staff due to the low unemployment

8. Seventy four percent of the district is designated as an Area of Outstanding Natural Beauty. Thepolicy on the AONB is to favour conservation of the natural beauty of the landscape, visualquality and amenity of the area. No major development, or development which would materiallyharm the landscape character, be unduly prominent or detract from important views of theAONB will be approved. Sites with development potential for waste management infrastructureare therefore limited.

4.5 Site Availability

West Berkshire Council undertook a survey of potential waste sites in the district. Further detailed workis being done on the sites arising from this exercise.

West Berkshire Council is keen to encourage competition and ensure a level playing field is available toall contractors. It will therefore complete necessary preliminary investigations on potential sites in thearea. A number of possible configurations of infrastructure provision exist and the Council does not wishto preclude any proposals at too early a stage

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5. Financial and Contractual

5.1 Payment and Performance Mechanism

The payment mechanism for the contract will be developed by the Council and issued as part of the ITN(Invitation to Negotiate) documentation. The objective of the payment mechanism will be to incentivisethe private sector to meet the requirements of the Council's Output Specification. The Council intends toutilise the standard payment mechanism contained within the 4Ps Waste Management ProcurementPack, and where appropriate, modify it to reflect local circumstances. It is envisaged that:

payment will reflect the extent to which the private sector meets the Output Specification payment will be subject to increases for indexation the Council will compensate the private sector for increases in the rate of landfill tax

(provided that performance targets are met) payment will be subject to deductions in the event of private sector performance below

contracted levels

5.2 Risk Allocation

West Berkshire Council is committed to the approach that risk should be allocated to those parties bestplaced to manage it and who are therefore committed to ensuring that the private sector has sufficientownership, responsibility and control of the service by the transfer of appropriate risk.

The Council has undertaken a detailed examination of the likely risks entailed in the service and hasincluded a Risk Matrix and indicative risk allocation at Appendix II.

5.3 Affordability and Compliance with FRS 5

The Council will assess the affordability of the project by comparing, on an annual basis, the availablerevenue financing resources with the PFI charges over the period of the contract. The sources ofrevenue funding will comprise the current and forecast waste management budgets and the additionalgovernment grant payable to the authority relating to the PFI credit (Notional Credit Approval) allocatedby DEFRA. The value of the NCA is in the region of £25 million and is subject to the eventual level ofcapital investment within the project (on a discounted basis), and subject to the contract complying withDEFRA requirements including off-balance treatment for the Council under FRS5. The Council intendsto issue an affordability guideline as part of the ITN documentation.

5.4 Use of Standardised Contract

The Office of Government Commerce standard contract will be used by West Berkshire Council for thiscontract. The standard contract will be tailored as appropriate to reflect project specific requirements(e.g. payment and performance system, planning and legislative risk) and waste specific contractguidance to be issued shortly as part of the 4Ps Management and Procurement Pack

6. Procurement Process

6.1 Introduction

The project reporting/ communications structure is described in the organisational chart below (figure 1.)

Fig 1. Project TeamPFI Reporting Structure

With other Members and Council Officers, the project team sit within the following groups: Core Team Project Steering Group Waste Management Task Group External Advisory Group

6.2 Core Team

The role of the Core Team is to undertake the day to day management of the PFI Project and toproduce the main body of work. Members include:

Title Role within PFI

Bill Jennison Head of Countryside andEnvironment Project Director

Andrew Deacon Waste Services and PFI ProjectManager Project Manager

Jo Gread Contracts Solicitor Internal Legal AdvisorAndrew Davis Waste Project Officer Waste Project Officer

Amy Quinn Project Officer Technical Advisor - seconded(Entec)

John North Financial Consultant Internal Financial AdvisorJude Tuck Policy Executive Internal Policy Advisor

External TechnicalConsultants (Entec)

Senior Waste ProjectOfficer TBA

Legal Project OfficerJo Gread

John AshworthProject Sponsor

Bill JennisonProject Director

PFI Project ManagerAndrew Deacon

PFI Project Administrator - TBA

External LegalConsultants

Bevan Ashford

External FinancialConsultants

Ernst & Young

Waste Project OfficerAndrew Davis

Financial ProjectOfficer John North

Project OfficerAmy Quinn

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6.3 Project Steering Group

The Project Steering Group exists to provide a Corporate overview in the management of the PFIproject.

6.4 Decision Making Process

The Waste Management Task Group will be the key forum for engagement between the operational andstrategic dimensions of the governance process of the PFI. The Waste Management Task Group is apolitically balanced group of six Members tasked with considering all aspects of the future of wastemanagement in West Berkshire. The Constitution has been amended to improve the efficiency ofdecision-making by granting further delegated authority to named Officers and members.

6.5 External Advisors

6.6 Procurement Schedule

This is the project timetable.

John Ashworth Corporate Director (Environment & Public Protection)

Martin Cawte Head of Resources and Commissioning (S. 151 Officer)

David Holling Head of Legal and Electoral Services

Bill Jennison Head of Countryside and Environment

Consultancy Role

Ken Rigby Entec Technical Advisor

Phil Scott Entec Technical Advisor

Nigel Campbell Bevan Ashford Legal Advisor

Susie Smith Bevan Ashford Legal Advisor

Rob Winchester Ernst & Young Financial Advisor

Stephen Smith Ernst & Young Financial Advisor

Official Journal of the European Union (OJEU) noticedispatched 31 March 2004

Industry Day 21 April 2004Return of PQQ 2 June 2004Distribution of ISOP's documentation 9 July 2004Issue ITN 15 October 2004Return of ITN 20 January 2005Selection of preferred bidder 3 June 2005Contract Award 2 December 2005Contract Commencement 1 April 2006

6.7 Pre-qualification questionnaire

A copy of the PQQ is obtainable from Andrew Deacon, PFI Project Manager, Council Offices, FaradayRoad, Newbury, RG14 2AF. Alternatively the following email may be used: xxxxxxxx@xxxxxxxxx.xxx.uk.Instructions for completing and submitting the PQQ are contained in the PQQ.

An expression of interest is by completion and return of the pre-qualification questionnaire which mustbe received no later than 4pm on the 2nd of June 2004.

Requests for clarification on any matter within the OJEU, Information Pack and / or PQQ are to besubmitted to Andrew Deacon via email xxxxxxxx@xxxxxxxxx.xxx.uk. Responses to all clarificationquestions will be issued by 21 May 2004 to all providers who have requested a PQQ.

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7. Outline Service Specification

7.1 Service Objectives

7.1.1 The Council's overall objective is to develop an integrated and affordable waste managementservice, that fulfils its statutory requirements, meets local waste management policies and targetsand develops municipal waste as a resource, thereby maximising environmental, social andeconomic benefits.

7.1.2 Therefore, the Council wishes to:

enhance waste awareness within West Berkshire in a way that promotes social responsibilityfor the waste that the community generates and thereby promotes minimisation

reduce waste growth ensure that litter is collected and streets cleansed to a high standard in an efficient manner collect municipal waste and recyclable/compostable materials in an efficient and integrated

manner that facilitates recycling and composting and resource recovery increase the level of re-use significantly increase the level of recycling enhance the level of bio-treatment for organic wastes and facilitate the production and use of

compost and soil improvers derived from waste maximise resource potential from the residual waste stream minimise the landfilling of biodegradable waste build a platform within West Berkshire for the use of recyclates and secondary materials

derived from waste

7.1.3 The Council is seeking solutions for a sustainable resource-focused solution that represents theBest Practicable Environmental Option (BPEO). We expect that this will exceed the UK's statutoryrecycling performance standards under Best Value. We will aim to reduce the landfilling ofbiodegradable municipal waste.

7.1.4 The Council wants a customer and community focused service underpinned by the principles ofcontinual improvement. The Council has secured financial support for the scheme under the UKGovernment's Private Finance Initiative and it is one of the conditions of the provision of PFIcredits that challenging targets are met. Service solutions must retain sufficient flexibility torespond to future changes in recycling and composting performance standards or targets, and totake on board technology changes, therefore continuing to develop best practice.

7.1.5 Services are to be provided in a manner consistent with the strategic framework set out by theCouncil's Waste Local Plan, the Municipal Waste Management Strategy and the relevantrequirements for the management group of municipal waste required under UK and EUlegislation, directives, regulations and guidance. The Waste Local Plan for Berkshire is currentlyunder review. There will be initial stakeholder and community consultation in Spring 2004followed by two further consultation periods in October 2004 and February 2005. Formalsubmission of the new plan is expected to be in August 2005 and the current target for adoptionis December 2005.

7.2 Targets

7.2.1 The contract must achieve a reduction in the landfill of biodegradable municipal waste consistentwith the requirements of the EU Landfill Directive. Article 5 sets three progressive targets toreduce the amount of biodegradable waste sent to landfill stating that: by 2010 the volume of biodegradable municipal waste (BMW) must be reduced to

75% of the total BMW (by weight) produced in 1995 by 2013 the volume of BMW must be reduced to 50% of the total BMW (by weight)

produced in 1995 by 2020 the volume of BMW must be reduced to 35% of the total BMW (by weight)

produced in 1995

7.2.2 In order to meet DEFRA's conditions for the approval of PFI waste schemes, the Council is alsoseeking for the service to achieve a minimum of 54% recycling and composting rate for contractwaste by 2020.

7.3 Scope of the Services

The services should include: the collection of municipal waste within West Berkshire including the collection of segregated

recyclable and compostable materials. The service provider will be required to deliver allfacilities equipment and manpower required to deliver this service.

the collection of litter and provision of street cleansing within the district. The service providerwill be required to deliver all facilities equipment and manpower required to deliver thisservice.

the finance, design, build and operation of waste management facilities required forprovision of the service. This may include the acquisition of sites, and the obtaining, keepingand maintaining of all relevant planning consents, waste management licenses and anyother permits or consents relating to the service.

arranging for and making available facilities and disposal points for the reception, keeping,treatment and disposal of contract waste.

the provision, management and operation of civic amenity sites or the receipt, re-use,recycling, treatment and disposal of waste, fulfilling the Council's duties under theEnvironmental Protection Act 1990.

suitable provision at household recycling centres for the safe deposit of hazardoushousehold waste, and the provision of delivery points for hazardous household wastecollected by the Council or their agents.

the management and facilitation of storage, treatment, reprocessing, marketing, removal,transportation and disposal of waste, products and residues.

design and implementation of measures to educate and raise awareness of sustainablewaste practices.

the design, planning, delivery and operation/management of an educational and EcologyVillage Resource/Park within West Berkshire that is designed to enhance waste awarenesswithin the local community, promote waste minimisation and facilitate the local use ofrecyclates and secondary products derived from waste.

the delivery of a management information system to monitor performance, and manage andreport improvements.

the degassing, collection and disposal of the fridge and freezer units. the provision of bring sites for materials for recycling and green waste for composting. collection, treatment and disposal of vehicles within West Berkshire.

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8. Legal Notices

The Information Pack and PQQ have been prepared by West Berkshire Council for the purpose ofproviding an application procedure for Bidders interested in tendering for the waste management projectunder the UK Government's Private Finance Initiative (PFI), and to assist the Council in making its ownevaluation of the potential opportunity to enter into a contractual relationship for the provision of suchservices.

By receiving this Information Pack and PQQ, the Bidder agrees to keep confidential the informationcontained in the documents or made available in connection with any further enquiries. The InformationPack and PQQ may be made available to the Bidders' employees and professional advisors directlyinvolved in the appraisal of such information. The Information Pack and PQQ shall not, either in wholeor in part, be copied, reproduced, distributed or otherwise made available to any other party in anycircumstances without the prior written consent of the Council, nor may it be used for any other purposethan that for which it is intended.

The Information Pack is intended only as a preliminary background explanation of the Council'sactivities and plans and is not intended to form the basis of any decision on whether to enter into anycontractual relationship with the Council. The Information Pack does not purport to be all-inclusive, norto contain all of the information that a prospective Service Provider may require.

Neither the Council, its technical, financial or legal advisors or any other advisor (or the directors,officers, members, partners, employees, staff, agents or advisors of any such person):

Makes any representation or warranty (express or implied) as to the accuracy,reasonableness or completeness of the Information Pack. Any persons considering makinga decision to enter into contractual relationships with the Council following receipt of theInformation Pack should make their own investigations and their own independentassessment of West Berkshire and its requirements for services associated with the project,and should seek their own professional technical, financial and legal advice.

Accepts any responsibility for the information contained in this Information Pack or for itsfairness, accuracy or completeness. Nor shall any of them be liable for any loss or damage(other than in respect of fraudulent misrepresentation) arising as a result of reliance on suchinformation or any subsequent communication. Only the express terms of any writtenContract relating to the subject matter of this Information Pack, as and when it is executed,shall have any contractual effect in connection with the matters to which it relates.

Will be liable for any costs incurred by any Bidder responding to the PQQ, whether incurredby them directly or their advisors or sub-contractors.

The publication of this Information Pack in no way commits the Council to award any Contract under thePrivate Finance Initiative or pursuant to any tender process.

Appendix I: Strategic Waste Management Policies

SWMP 1 West Berkshire in partnership with parish councils, community groups and other Agencieswill seek to deliver a programme of awareness, promotion and publicity to encourage afuller understanding of sustainable waste management issues and practices throughout thecommunity.

SWMP 2 West Berkshire will seek to engage in a full and interactive dialogue with all members ofthe community on waste management issues within West Berkshire. In doing so theCouncil will endeavour to ensure that all opinions are duly expressed and fully consideredas part of any decision making process. The Council will ensure that the process of makingsuch decisions is open and fully transparent to all in West Berkshire.

SWMP 3 West Berkshire will enter in to and maintain meaningful dialogue with the EnvironmentAgency, nearby local authorities and other Agencies on the development of future wastemanagement solutions for West Berkshire to ensure that our strategy and plans are bothconsistent and pragmatic in a Regional context.

SWMP 4 West Berkshire in conjunction with the Environment Agency, other local authorities andother parties will encourage the reduction and re-use of waste. This will form an objectiveof a promotional and awareness programme focused on waste.

SWMP 5 West Berkshire shall establish a leading example within our community by examining howit purchases, uses and manages materials in the course of its normal activities. Theobjective of this work will be to identify ways of reducing consumption and preventingwaste production, using where practicable, environmentally superior materials andemploying more sustainable practices.

SWMP 6 West Berkshire will establish a programme of waste minimisation, re-use, recycling ofwaste materials in respect of its own functions and the services it provides.

SWMP 7 West Berkshire will establish a challenging series of targets for minimising the municipalwaste it collects from the community. The Council will seek to forge partnerships withparish councils and community groups with a view to establishing common aims and goalsin this respect.

SWMP 8 West Berkshire believes the first and most meaningful target for waste minimisation in theshort term, should be reducing waste growth in West Berkshire. Subsequent targets will beset following regular periodic review and should seek to achieve more significantreductions in waste generation.

SWMP 9 In consultation with the Environment Agency, nearby local authorities and other Agenciesand having regard to material planning considerations, West Berkshire will promote thedevelopment of new and existing facilities for waste transfer, recycling and compostingprovided that: these facilities are developed as part of an integrated network to deliver West

Berkshire's needs and contribute to Regional self sufficiency; the facilities are consistent with the aims and objectives of the waste management

strategy for West Berkshire; there is demonstrable need for the facility.

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SWMP 10 West Berkshire will develop practical initiatives to support waste segregation at source inthe household and encourage similar initiatives in business premises.

SWMP 11 West Berkshire in partnership with the Environment Agency, community groups and othersencourages recycling and composting at home and in the workplace.

SWMP 12 West Berkshire is committed to movement towards more sustainable waste managementpractices. It will seek to influence such change wherever it can and particularly through theexercise of its statutory functions.

SWMP 13 In respect of current Government guidance on sustainable development and wastemanagement, West Berkshire considers the progressive development of more sustainablewaste management practices to be a legitimate strategic goal to be achieved over theshort, medium and long term.

SWMP 14 Through the implementation of its waste management strategy and future contracts, WestBerkshire will seek to reduce progressively the amount and proportion of West Berkshire'smunicipal waste being disposed of to landfill. In so doing West Berkshire will seek to divertmunicipal waste towards more sustainable waste management practices which lie higher inthe waste management hierarchy.

SWMP 15 West Berkshire supports the proximity principle and the concept of regional self- sufficiencyin respect of waste management facilities. Wherever it is consistent with the bestpracticable environmental option available, West Berkshire will endeavour to ensure thatthe waste produced by our community is managed and dealt with within West Berkshire, orfailing this the Region, wherever this is possible.

SWMP 16 West Berkshire will not normally support the export or import of waste from the Region fortreatment or disposal unless circumstances demonstrably show that this is the bestpracticable environmental option.

SWMP 17 In working towards more sustainable waste management West Berkshire will seek throughthe implementation of its strategy, to deliver statutory Government performance standardsfor waste management.

SWMP 18 West Berkshire will seek to deliver continuous and demonstrable improvement in thequality, sustainability and efficiency of the waste management services it delivers.

SWMP 19 Through the implementation of future waste management contracts, West Berkshire willencourage its future contractors to be proactive and innovative in identifying areas fordelivering service improvement and achieving its core policies and goals.

SWMP 20 In line with Government targets for waste recovery, West Berkshire will look to recovermore value from waste as part of its waste management strategy over the medium to longterm. The Council will maintain a watching brief on the technologies available for thispurpose and seek to engage in partnerships with others where this can deliver the bestpracticable environmental option in a way which is consistent with best value.

Appendix II : Post Contract Risks

1. Design Risks

Risk Description

Risk Allocation

CouncilPrivateSector

ProviderShared

Failure to design to brief Failure to translate the needs ofthe Council into the design. �

Continuing development ofdesign

The detail of the design shouldbe developed within an agreedframework and timetable. Afailure to do so may lead toadditional design andconstruction costs.

�

Change in project content bythe Council

The Council may requirechanges to the overall servicespecification - additional designand construction costs may beincurred.

�

Change in design required byoperator

This is the risk that the operatorwill require changes to thedesign, leading to additionaldesign costs.

�

Change in design required dueto external influences

There is a risk that the designswill need to change due tolegislative or regulatory changes.Planning issues and constraintsmay also lead to designchanges.

�

Failure to build to design(including life expectancy)

Misinterpretation of design orfailure to build to agreedspecification during constructionmay lead to additional design,construction or operational costs.

�

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2. Construction Risks

Risk Description

Risk Allocation

CouncilPrivateSector

ProviderShared

Incorrect time estimateThe time taken to complete theconstruction phase may bedifferent from the estimated time.

�

Unforeseen ground/siteconditions on new sites

Unforeseen ground/siteconditions may lead to variationsin the estimated costs.

�

Delay in gaining access to sitesalready in Council's ownership

A delay in gaining access to thesites may put back the entireproject.

�

Delay in gaining access to sitesnot in Council's ownership

A delay in gaining access to thesites may put back the entireproject.

�

Availability of services/infrastructure etc. to provideservice

The unavailability of site andutilities. �

Theft of/damage toequipment/materials

Theft and/or damage toequipment and materials maylead to unforeseen costs in termsof replacing damaged items, anddelay.

�

Responsibility for maintainingsite safety

The Construction, Design andManagement (CDM) regulationsmust be complied with.

�

Third party claims

The risk refers to the costsassociated with third party claimsdue to loss of amenity andground subsidence on adjacentproperties.

�

"Compensation Events"

An event of this kind may delayor impede the performance of thecontract and cause additionalexpense.

�

"Relief Events"

An event of this kind may delayor impede the performance of thecontract and cause additionalexpense and lead to timeextension.

�

Force Majeure

In the event of Force Majeureadditional costs will be incurred.Facilities may also beunavailable.

�

Risk Description

Risk Allocation

CouncilPrivateSector

ProviderShared

Termination due to ForceMajeure

There is a risk that an event ofForce Majeure will mean theparties are no longer able toperform the contract

�

Main contractor default andsub-contractor cost for over-runs

In the case of main contractordefault, additional costs may beincurred in appointing areplacement, and may cause adelay.

�

Poor project management

There is a risk that poor projectmanagement will lead toadditional costs. For example, ifsub-contractors are not well co-ordinated, one sub-contractorcould be delayed because thework of another is incomplete.

�

Planning

Meeting the requirements ofplanning conditions may alsohave implications on projectcosts and timescales.

�

Contractor/sub-contractorindustrial action (relief event)

Industrial action may cause theconstruction to be delayed, aswell as incurring additionalmanagement costs.

�

Politically motivated protesteraction

Protester action against thedevelopment may incuradditional costs, such as securitycosts.

�

Protester action caused byactions of Private Sectoroperator

Protester action against thedevelopment may incuradditional costs, such as securitycosts.

�

Incorrect time and costestimates for commissioningnew plant

(i) The estimated cost ofcommissioning new plant may beincorrect, there may also bedelays leading to further costsincluding interest rates:

�

(ii) Delays caused by localauthorities. �

Archaeological, ground andecological issues

The construction/ developmentcould be delayed byarchaeological/ antiquities issues/contaminated land, ecologicalissues and drainage.

�

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3. Planning Risks

Risk Description

Risk Allocation

CouncilPrivateSector

ProviderShared

Availability and standard of sub-contractors

Sub-contracted out work may bedelayed due to availability of sub-contractors' resources or if belowthe required quality whereundertaken by sub-standardcontractors.

�

Sub-standard materialsThe materials used in theconstruction may not be ofsufficient/adequate quality.

�

Land acquisition cost riskThe risk that land costs forfacilities are higher or lower thanforecast.

�

Risk Description

Risk Allocation

CouncilPrivateSector

ProviderShared

Planning submission

Cost and submission of planningprocess up to initialdetermination by PlanningAuthority.

�

Appeal Cost of appeal or otherproceedings (above defined cap) �

Planning conditions (i) Cost of compliance withreasonable planning conditions. �

Planning conditions (ii)Cost of compliance withunreasonable planningconditions.

�

Planning determination Cost and timing of planningdetermination. �

Judicial Review Cost and timing of judicial review. �

4. Operational Risks

Risk Description

Risk Allocation

CouncilPrivateSector

ProviderShared

Disposal of surplus operationalplant and equipment at the startof PFI contract

Surplus operational plant andequipment may be expensive tode-commission and dispose of.

�

"Fitness for purpose" of anyoperational plant and equipmenttransferred from the Council toan incoming PFI contractor atthe start of a PFI contract

Existing operational plant andequipment transferred by theCouncil at the start of the PFIconcession might prove to beinoperable and expensive toreplace. Any incoming PFIcontractor would be allowed todo their own survey of thisequipment before electing to usethe equipment.

�

Latent defects in new buildLatent defects appear in thestructure of the new buildasset(s), which require repair.

�

Latent defects in existing build

Latent defects appear in thestructure of existing asset(s)which are transferred to theincoming operator.

�

Change in specificationimposed by procuring entity

There is a risk that, during theoperating phase of the project,the Council will require changesto the specification.

�

Performance of sub-contractors

Poor management of sub-contractors can lead to poor co-ordination, and under-performance by the contractors.This may create additional costsin the provision of services.

�

Default by contractor or sub-contractor

In the case of default by acontractor or sub-contractor,there may be a need to makeemergency provision. There mayalso be additional costs involvedin finding a replacement.

�

"Relief Events"

An event of this kind may delayor impede the performance of thecontract and cause additionalexpense.

�

Force Majeure

In the event of Force Majeureadditional costs will be incurred.Facilities may also beunavailable.

�

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Risk Description

Risk Allocation

CouncilPrivateSector

ProviderShared

Termination due to ForceMajeure

There is a risk that an event of ForceMajeure will mean the parties are nolonger able to perform the contract.

�

Obtaining and maintaininglicences and consents,including those issued bythe Environment Agency

There may be failure to obtain licencesand consents, many of which willrequire renewal on an annual basis.

�

Sub standard plantoperation

The assets may not operate asintended due to:- Sub standard maintenance- Sub standard materials- Sub standard quality of construction.

�

Responsibility formaintaining health andsafety, quality andenvironmental standards

Cost of compliance with relevanthealth and safety, quality andenvironmental standards may be morethan envisaged.

�

Increase/ gain ofrecyclate income

Recycling income may be greater thanexpected due to (i) the total volumes ofwaste presented for recycling beinggreater than projected; (ii) market pricefor processed recyclables being abovethat projected (all sites).

�

Reduction/loss ofrecyclate income- Recycling income maybe less than budget dueto:

(i) The total volumes of wastespresented for recycling being less thanthat projected (non-CA sites).

�

(ii) the composition of wastescontaining a lower proportion of thatrecyclates than that projected (non-CAsites).

�

(iii) market price for processedrecyclables being below that projected(all sites)

�

(iv) No markets secured for processedwaste �

(v) No markets available and waste isdisposed of. �

(vi) Lower market price due to quality ofprocessed recyclables. �

(vii) the total volumes of wastespresented for re-cycling being less thanthat projected (CA sites only).

�

(viii) The composition of wastescontaining a lower proportion ofrecyclates than that projected (CA sitesonly)

�

Risk Description

Risk Allocation

CouncilPrivateSector

ProviderShared

Trade waste income less thanprojected

Trade waste income may be lessthan expected due to:(i) Trade Waste volumes beingless than projected.

�

(ii)Trade Waste tariffs being lessthan projected. �

Incorrect estimated transportcost of providing specificservices under the contract:within market testing periods

The cost of providing theseservices may be different to theexpected, because ofunexpected changes in the costof equipment, labour, utilities,and other supplies

�

Incorrect estimated cost ofproviding specific servicesunder the contract: at point ofmarket testing

The cost of providing theseservices may be different to theexpected, because ofunexpected changes in the costof equipment, labour, utilities,and other supplies

�

Incorrect estimated cost ofmaintenance

The cost of building andengineering maintenance may bedifferent to the expected costs.

�

Increased estimate of NNDR Rate costs are higher or lowerthan forecast. �

Estimated cost of transferringthe employment of staff to newemployer is incorrect

The estimated cost of thetransfer of the employment ofstaff under TUPE may beincorrect. This includes the costof any legal appeals.

�

Estimated cost of restructuringthe workforce providing servicesunder the contract is incorrect

The estimated cost ofrestructuring the workforce at anytime during the operating phase,such as recruitment costs andredundancy payments, may beincorrect.

�

Public Liability (caused by PSP)Cost of third party claim fordeath, injury or other loss(caused by PSP).

�

Non-performance of servicesPayment will be made by thelocal authority only for servicesreceived.

�

Termination due to default bythe procuring entity

The risk that the procuring entitydefaults leading to contracttermination and compensation forthe private sector.

�

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Risk Description

Risk Allocation

CouncilPrivateSector

ProviderShared

Default by the operator leadingto step-in by financiers

The risk that the operator orindividual service providersdefault and financiers step-inleading to higher costs thanagreed in the contract

�

Termination due to default bythe operator

The risk that the operatordefaults and step-in rights areexercised by financiers but thatthey are unsuccessful leading tocontract termination.

�

Risk Description

Risk Allocation

CouncilPrivateSector

ProviderShared

Procuring entity no longerrequires sites at end of contract

The risk that the procuring entitywill not require the asset at theend of the contract period, andthat the operator may be facedwith decommissioning costs.

�

Decontamination of sites whichare transferred at the end of thePFI contract to either theCouncil or another incomingcontractor

Decontamination costs could besignificant. Allowance would bemade for any knowncontamination at the start of thePFI contract where sites hadbeen transferred from theCouncil to the incoming PFIcontractor.

�

Disposal of surplus operationalplant and equipment at the endof PFI contract if not requiredby the Council

Surplus operational plant andequipment may be expensive tode-commission and dispose of.

�

Disposal of surplus operationalplant and equipment at thebeginning of PFI contract if notrequired by the Council orContractor

Surplus operational plant andequipment may be expensive tode-commission and dispose of.

�

5. Residual Value Risks

Risk Description

Risk Allocation

CouncilPrivateSector

ProviderShared

Lifecycle replacement Plant and equipment replacement. �

Inflation Inflation above RPI. �

Change in structureThe contractor will continue toguarantee any performances as aresult of any change in structure.

�

Insurance The contractor provides all necessaryfor the operation. �

Financing risk of Interestrate Risk

The risk that financing cannot besecured on the terms used to pricethe contract.

�

Foreign exchange risk The risk that costs change due tomovements in foreign exchange rates. �

Risk Description

Risk Allocation

CouncilPrivateSector

ProviderShared

Failure to meetperformancestandards

There is a risk that operational andmaintenance services (O&M) will not providethe required quality of services. This may becostly to correct.

�

Availability offacilities

There is a risk that some or all of thefacilities will not be available for the use towhich they are intended. There may be costsinvolved in making the facility available.

�

Recycling targetsCA

Recycling targets set by the Council andGovernment legislation may not be met dueto: (i). Waste composition

�

(ii) Contractors' performance �

(iii) Public participation �

Recycling Targets (i) Failure to collect �

(ii) Failure to deliver according to deliveryregime �

(iii) Failure of technology �

(iv) Inadequate management �

6. Financial Risks

7. Performance Risks

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9. Technology and Obsolescence Risks

8. Demand Risks

Risk Description

Risk Allocation

CouncilPrivateSector

ProviderShared

Changes in the volume ofdemand for services at eachfacility

There is a risk that the volume ofdemand for waste services willchange. This may occur due todemographic factors or changesin the size of the catchment area,for example.

�

Changes in general wastecomposition

There is a risk that thecomposition of waste inputs willchange.

�

Risk Description

Risk Allocation

CouncilPrivateSector

ProviderShared

Unexpected changes intechnology

Unexpected changes intechnology may lead to a need tore-scale or re-configure theprovision of services.

�

Asset obsolescenceBuildings, plant and equipmentmay become obsolete during thecontract.

�

Risk Description

Risk Allocation

CouncilPrivateSector

ProviderShared

Legislative / regulatorychange: discriminatory

Where not foreseeable, a change inlocal authority specific legislation,taking effect during the constructionphase, leading to a change in therequirements and variations in costs.

�

Legislative / regulatorychange: waste industryspecific

Where not foreseeable, a change inwaste industry specific legislation,taking effect during the constructionphase, leading to a change in therequirements and variations in costs.

�

Legislative / regulatorychange: general

Where not foreseeable, a change innon-local authority specific legislation /regulations taking effect during theconstruction phase, leading to achange in the requirements andvariation in costs.

�

Environment AgencyInterpretation

Where not foreseeable, changes inEnvironment Agency's interpretation ofcurrent legislation to council.

�

Compliance with existingenvironmentalregulations/legislation

The facilities may fail to meet existingenvironment regulations/legislation dueto: - inadequate plant design - inadequate maintenance - use of sub-standard materials.

�

Compliance with newenvironmentalregulations/legislation

Where not foreseeable, the facilities, tothe extent discriminatory or specific,may fail to meet new environmentalregulations/legislation.

�

Legislative / regulatorychange having capitalcost consequences:Sector specific

Where not foreseeable, local authorityspecific changes to legislation /regulations may lead to additionalconstruction costs, and higher building,maintenance, equipment or labourcosts (eg. landfill directive).

�

10. Regulatory Risks

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11. Taxation Risks

12. Insurance Risks

Risk Description

Risk Allocation

CouncilPrivateSector

ProviderShared

Legislative / regulatorychange: compliancewith Best Valueobligations

Where not foreseeable, changes tolegislation / regulations in respect ofBest Value may lead to additionalconstruction costs, and higher building,maintenance, equipment or labour costs.

�

Legislative / regulatorychange: general

Where not foreseeable, non-localauthority specific changes to legislation /regulations may lead to additionalconstruction costs, and highermaintenance equipment or labour costs.

�

Risk Description

Risk Allocation

CouncilPrivateSector

ProviderShared

Changes in taxation The scope and level of corporate taxationwill effect the cost of providing services. �

Changes in the rateof VAT

Changes in the rate of VAT may increasethe costs of the project. �

Other changes inVAT

Changes in VAT legislation other thanchanges in the rate of VAT payable. �

Landfill tax Changes in the rate of landfill tax. �

Renewableobligation certificates

Changes in the basis of renewable energycertificates. �

Tradable LandfillAllowance

Changes in the basis of tradable landfillallowances. �

Risk Description

Risk Allocation

CouncilPrivateSector

ProviderShared

Uninsurability There is a risk that some insurances becomeuninsurable. �

Premiums There is a risk that insurance premiums increaseas a result of general market conditions. �

West Berkshire Council Countryside and EnvironmentFaraday RoadNewburyBerkshireRG14 2AF