During this stage, a government project team and steering committee will be formalised. The principal purpose of this stage is to investigate the options and prepare a business case by comparing the delivery of the required services using best practice traditional procurement processes with alternative private sector delivery.
Detailed analysis of the project during this stage presents the government with a detailed case upon which to make a decision to take the project to the private sector if it is likely to represent a value for money delivery option.
This includes the development of the public sector comparator model and a hypothetical partnership model. The public sector comparator model represents Government's best estimate as to the whole of life cost of delivery for the project via traditional delivery. The partnership model represents an estimate of the delivery option that the private sector is likely to adopt for the project. The partnership model forms a key piece of information by which government can determine the likelihood of value for money through public private partnership delivery. It is also used to assist in the interpretation and analysis of private sector bids at a later stage.
Fundamental to this stage is the identification of all risks confronting the project, and the allocation of those risks to the party (private or public) best able to manage those risks. The proposed risk allocation, and the service performance requirements, will form the basis of the contractual conditions government will specify in seeking to invite bids.
At the end of this stage, Cabinet will decide on the priority and affordability of the proposal, the preferred delivery model and allocate any necessary budget funding.