The Authority should develop a contractual risk allocation matrix during the OBC preparation. The Authority should consider the risk transfer within the options appraisal when selecting the funding and procurement methods. The Authority may consider that it is appropriate to test early proposals with the market, using soft market sounding or deal testing to ensure that proposals are likely to be acceptable to bidders.
At the commencement of the procurement, the Authority should have firm ideas in relation to the arrangements to be used for the Payment Mechanism including the range of tonnages (from the Minimum to the Maximum Tonnage) for which it wants a pre-determined price through the Payment Mechanism. It should also determine a base case waste flow forecast to be used in the OBC modelling and to be provided to bidders at a later stage. Authorities are recommended to test the proposals as they are developed, including the use of market sounding at the OBC stage.