The PSC is used to establish a benchmark for comparison purposes. However, the PSC alone does not allow an estimation of potential P3 costs/benefits when deciding which procurement alternative to pursue.
As part of the detailed P3 Analysis, the Shadow Bid is developed to estimate the costs to deliver the project as a P3 and to identify areas where expected benefits could occur. This Shadow Bid is developed by modelling the project as if it were delivered as a P3. The Shadow Bid should cover the same time period and the same scope as the PSC.
The Shadow Bid is used:
• As part of the VFM assessment of the P3 in a comparison of the PSC to determine the best procurement alternative; and
• As a benchmark to assess the RFP submissions in the procurement phase.
The detailed Shadow Bid should be prepared with assistance and expert input from professional advisors, where appropriate. Where advisors are engaged to provide input, they may not participate in any role on a proponent team.
The competitive multi-stage/low price proposal approach eliminates the need for a Shadow Bid at financial submission and evaluation. The competitive pricing will indicate the true market price for the project. A Shadow Bid may have some value when qualitative criteria are used depending on the price/quality weighting.