The development of the public sector comparator is a specialist skill and is therefore likely to be undertaken by the Financial Adviser. The public sector comparator is a hypothetical model that estimates the risk-adjusted, whole of life cost to government of delivering the reference project via a traditional delivery method.
The public sector comparator represents the true financial cost (net of any revenues) to government of meeting the output specifications under a public procurement delivery method. As such, the public sector comparator :
• includes a full, whole of life, risk adjusted estimate of project cost
• is a key management tool during the procurement process, as it focuses attention on the output specification, risk allocation and development of a comprehensive estimate for the project
• provides a means of demonstrating likely value for money
• provides a consistent benchmark and bid evaluation tool
• encourages the private sector to put forward its most efficient bids.
The key attributes of the public sector comparator are:
• the model is presented in net present value terms. The net present value is based on the 'time value of money' concept and takes into account the effects of the timing of different cash flows over the project life by calculating the total, net amount of all cash flows in equivalent values
• the net present value analysis is conducted using nominal cash flows discounted at a nominal discount rate. The discount rates used must be developed in consultation with Queensland Treasury and the Department of Infrastructure and Planning
• it is costed over the life of the project
• it takes account of the risks identified in the forecasted cash flows.
The public sector comparator is comprised of two elements:
(i) Raw public sector comparator (base costing); and
(ii) Risk adjustments (transferable and retained risks).
The raw public sector comparator indicates the general order of magnitude of the non-risk adjusted capital and non-risk adjusted operating expenditure and will be released to shortlisted bidders with the other bid documents unless there are exceptional circumstances where the release will materially compromise the state's negotiating position.