Commercial commitment: Contract signing

A normalised comparison of contractual obligations versus the original expectations were computed as per Equations 5 and 6, symbols are as defined in Figure B.2.

Equation (5)

Where,

TimeF3 is the forecast completion time at the Contract Signing

TimeFA is the Final Actual completion time

TimeA is the time of the Original Approval

Expressed as a percentage change, a PTC result of:

•  Zero would indicate that a project was delivered as originally expected,

•  Values greater than zero mean that there has been some time delay, from that originally envisaged,

•  A value less than zero indicates time savings have been made.

Equation (6)

Expressed as a percentage change, a PCC result of:

•  Zero would indicate that a project was delivered as expected when the project details had been properly scrutinised by professional project and departmental staff,

•  Values greater than zero mean that there has been some time delay, from that originally envisaged,

•  Values less than zero indicate cost savings have been made.

Owing to the existence of greater knowledge about the project at contract signing, it would be expected that the accuracy of predictions based on Equations 5 and 6 would be greater (i.e. closer to zero) than for those computed on the basis of original data (Equations 1 and 2).

The indicators of contract signing outcomes, PTC and PCC, provide an indication of the expertise and general control governments have in terms of major procurement, and the commercial acumen of the personnel involved. Government should not commit to projects at this stage without a full understanding of all risks associated with a project, and without making commercial decisions to protect its position and achieve value for money outcomes. Thus, we can say:

•  If the PTC and PCC indicators are not statistically close to zero, it would indicate that there are deficiencies in the procurement process.