To use the PSC appropriately in the evaluation process, adjustments are made to both the total PSC, and the bid valuations where necessary. This enables 'like-for-like' comparisons of all bids.
Once adjustments are made, the PSC is compared to the net present cost (NPC) of the bids received. The NPC of the private sector bids is compared to the PSC in order to assist in determining whether the project, if conducted under a Partnerships Victoria structure, would deliver value for money-that is, if the NPC of the bids is less than the PSC.
A preliminary PSC was developed in March 2003 (investment evaluation report) and again in September 2003 (business case) before the commencement of the procurement process. The final PSC was completed in April 2005 at contract close.
Figure 4D below provides a breakdown of the PSC at key stages of the RWH planning and procurement process stages.
Figure 4D Breakdown of PSC at key planning and procurement stages
| Date | Stage | Raw PSC $M | Transferred risk $M | Competitive neutrality $M | PSC(a) $M |
| Sep-03 | Business case | 234.69 | 21.77 | 27.11 | 283.57 |
| Mar-04 | Project brief | 291.13 | 20.62 | 17.13 | 328.88 |
| Oct-04 | Bid evaluation | 312.75 | 26.21 | 17.75 | 356.71 |
| Jun-05 | Financial close | 313.01 | 26.10 | 17.75 | 356.86 |
(a) The state's estimates of retained risk have been excluded from these figures due to commercial sensitivity.
Source: Victorian Auditor-General's Office analysis of DHS information.
Changes to the PSC were discussed, documented and endorsed at the steering committee and the Treasurer's approval was given for the adjustments.