4.4.1 If there is doubt about whether a project is viable (for example it has yet to be defined, it is not clear that PFI is the most appropriate procurement route or interest from the market place is uncertain), initial advisory appointments should only cover the period up to the point when the procurer will have sufficient certainty and clarity to take a firm decision.
4.4.2 In these circumstances, payment may be on a fixed fee or hourly basis, or on an hourly basis with a price cap. It should be made clear, however, that if the project is to go further, the reappointment of advisers is not guaranteed and could, of course, be subject to a re-tendering exercise.
4.4.3 In the same way that under a PFI contract the service operator has its payments linked to quality of performance, so the same can be the case with advisers where they are able to influence or control the achievement of objectives. This can only be done by identifying clear outputs against deadlines which are agreed by all interested parties.
4.4.4 Where appropriate, proposed advisers should be requested to put forward alternative fee structures in deciding fees for each area of work they are planning to undertake, for example:
• hourly rates for individuals;
• fixed fee alternative for the work required (making sure there is no overlap with other advisers' tasks);
• fixed fees for each defined stage (agreed in advance within an overall budget);
• what proportion of each of the above they are prepared to be paid on a success fee basis and to what extent this would, if at all, affect the payments;
• if a success fee element is a possibility, a clear definition of the "success" involved (eg project getting to financial close, awarded contract generating x% better value for money etc); and
• if appropriate, regressive fee rates e.g. as agreed levels of fees are earned the charge-out rates (i.e. hourly/daily) are reduced by a set sum or percentage. Both the agreed levels and reductions may be bid as part of the competition.
4.4.5 Procurers will also need to be clear about the premium they may have to pay in the case of opting for any element of a success fee arrangement, and measure this against the risks of not pursuing with the project (see section 5.4).
4.4.6 Procurers should ensure that they gain intellectual property rights to any output at feasibility stage, so that any future advisory appointments gain full access to work done at earlier stages. Procures should also ensure they reach a clear understanding about expenses and disbursements, whether they are charged at cost or with profit, and what is to be reimbursed, e.g. travel, photocopying, couriers, out of hours secretarial support.