Commercial surety

A normalised comparison of the original contract obligations versus the actual performance was calculated as shown in Equations 7 and 8. Symbols are as defined in Figure B.2.

Equation (7)

Where,

TimeF3 is the forecast completion time at Contract Signing

TimeFA is the Final Actual completion time

TimeA is the time of the Original Approval

Expressed as a percentage change, an ATC 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 (8)

Expressed as a percentage change, an ACA 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 cost over-run, from that originally envisaged,

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

ATC and ACC provide an indication of the surety of the commercial arrangements, and the protection the government has achieved from contractual gamesmanship in the procurement process.

They are clear indicators of the successful allocation of risk by the government, and of the structure supporting ongoing management of service delivery as envisaged at commercial close.

The eight indicators described by equations 1 to 8 were adopted in order to compare the performance of PPPs and Traditional arrangements in the delivery of major projects.