Development of the business case represents a key aspect of the feasibility stage of the public private partnership process. The business case provides the analytical rigour that allows for effective government decision making and value for money procurement.
During the development of the business case, the agency undertakes a detailed analysis of the delivery options that may provide value for money.
The business case will include significant analysis of the risk and issues surrounding the project and will include the undertaking of significant studies to identify, quantify and where appropriate mitigate risks that the project may experience. This analysis may include the examination of environmental, planning and geotechnical matters as well as the allocation of risk to the party best able to manage it.
A detailed hypothetical financial model of the traditional delivery option (the reference project) is developed on a risk adjusted, whole of life basis. This model, known as the public sector comparator, becomes the benchmark against which value for money assessment is made.
A similar model, known at the partnership model, is developed to allow the government project team to better understand the private sector's key drivers and possible solutions to the project (ie: the likely private sector's delivery option). The partnership model is based upon the allocation of risk to the party best able to manage it.
The business case development supporting document provides the next level of detail on the steps required to complete the public private partnership business case as outlined in the framework document in stage 3.
This supporting document provides significant additional information on all aspects of business case development including:
• reference project
• output specification
• public sector comparator
• partnership model
• business case analysis including value analysis, sensitivity and scenario analysis, bankability etc.
It also provides information regarding the administration and outputs from the business case development stage of the public private partnership process.