Both the PSC and Shadow Bid will be based on a full life cycle cost analysis. All costs and expected benefits must be analyzed for each viable alternative. This methodology provides a total cost picture and includes both capital and operating expenditures.
The analysis should identify one-time costs of running the procurement, entering into contract(s) over the project life cycle, costs associated with monitoring the contract(s) over the project life cycle and resources required to liaise with contractors over the project life cycle. For the PSC, ongoing costs will include the costs to enter into multiple operating, maintenance and rehabilitation contracts over the life cycle of the project. For the Shadow Bid, one-time costs may include, but are not limited to financial and capital market consulting costs, costs of the Fairness Auditor and honoraria.
At this stage, the project definition should include pre-design studies such as the finalized functional design, preliminary design, project concept definition and/or schematic design. Detailed design should not be started. Definition of the technical and performance specifications should be underway.