Variable

Description

Factors to consider

Initial CapEx

Expenditure incurred in procuring the asset. It does not cover expenditure required to maintain the asset

1.81 - 1.84

OB Pre

This represents the optimism bias between Outline Business Case and Contract signature. There is a demonstrated systematic tendency for project appraisers to be optimistic. The OB Pre is assumed to be the same for both procurement options. Accordingly for each conventional procurement OB pre input variable, the Spreadsheet will automatically generate an OB Pre input with the same value for the PFI option.

1.55 - 1.62 

Table A1.F 1

79 - 1.80

OB Post

This represents the optimism bias post contract signature and as such applies only to the conventional procurement option. Change notices which effect the cost of the PFI option are captured later under "flexibility"

1.55 - 1.61 1.

63 - 1.79

Lifecycle costs at each LC 
date

Life cycle intervals

The investment incurred, on an ongoing and/or periodic basis during the course of the contract period, to maintain the asset so that it remains fit for its intended purpose. The lifecycle interval for the PFI option is hard-wired as an annual cost

1.85 - 1.92

OpEx

•  Non Employment

•  Employment per person

•  Employee number

Represents the costs incurred by the authority in operating the asset and or running the services that are included within the scope. Expenditure which falls outside of the scope, for example, clinical staff costs, are excluded.

The Spreadsheet is hard-wired to ensure that the employment cost per person is equal for both the PFI and the conventional procurement option.

1.93 - 1.99

The cost per person will necessarily be an average from past schemes as it is not clear that the employment profile will be known at this early stage in the procurement.

Transaction costs

(Private sector & Public Sector)

Theses represent the costs incurred by (i) the private sector (hard-wired into the Spreadsheet) and (ii) the public sector, in reaching contractual agreement. The PFI costs have a minimum level of £750k as the relationship is not necessarily linear. This minimum level does not apply to the conventional procurement option.

1.105 - 1.107