Use of the inflation rate in the PSC

Value for money in Partnerships Victoria projects is determined, in part, by comparing the bid with the PSC. The financial evaluation centres on comparing the PSC with the costs to government of the payments reflected in each bid over the full contract term.

Inflation should be taken into account in constructing the PSC. Generally this should be done by applying the current long-term inflation forecast, as published by the Department of Treasury and Finance from time to time. The same rate is to be used in bid evaluation. Typically, the Government indicates in the Request for Proposal the general rate of inflation to be used in its bid evaluation. This allows for standardised comparisons both between bids and with the PSC.