Box 1. 2 Generic Factors driving Value for Money

• The optimum allocation of risks between the various parties -requires that risks are allocated to the party, or parties, which are best placed to manage and minimise these risks over the relevant period;

• Focusing on the whole life costs of the asset rather than only the upfront costs involved;

• Integrated planning and design of the facilities-related services through an early assessment of whether the possible integration of asset and non-asset services (e.g. soft services) should deliver VfM benefits;

• The use of an outputs specification approach to describe the Authority's requirements which, amongst other things, allows potential bidders to develop innovative approaches to satisfying the service needs of the procuring authorities;

• A rigorously executed transfer of risks to the parties which are responsible for them, ensuring that the allocation of risks can be enforced and that the costs associated with these risk are actually borne by the parties in the manner originally allocated and agreed;

• Sufficient flexibility to ensure that any changes to the original specification or requirements of the procuring authority and the effects of changing technology or delivery methods, can be accommodated during the life of the project at reasonable cost to ensure overall VfM;

• Ensuring sufficient incentives within the procurement structure and the project contracts to ensure that assets and services are developed and delivered in a timely, efficient and effective manner, including both rewards and deductions as may be appropriate;

• The term of the contract should be determined with reference to the period over which the procuring authority can reasonably predict the requirement of the services being procured. This will require careful considerations of factors including: potential changes in end-use requirements; policy changes; design life of the asset; the number of major asset upgrades or refurbishments during the period of the contract; potential changes in the way services could be delivered (e.g. technical advancements); and the arrangements for the asset at expiry of the contract;

• There are sufficient skills and expertise in both the public and private sectors, and these are utilised effectively during the procurement process and subsequent delivery of the project; and

• Managing the scale and complexity of the procurement to ensure that procurement costs are not disproportionate to the underlying project(s).