1.100 The Residual Cost represents the level of investment required at the end of the Contract Period to restore the facility or asset to the standard required to enable the delivery of high quality services. If regular and sufficient investment in Lifecycle Costs is undertaken, then the Residual Cost is assumed to be zero. Also where the Contract Period equals the estimated useful life of an asset, the Residual Cost is assumed to be zero under both procurement methods.
1.101 The Spreadsheet makes certain simplifying assumptions in determining the Residual Cost where investment in Lifecycle Costs is lower than that required under the PFI Option. Table 1.I sets out these assumptions.