The project must be able to demonstrate that, on a whole of life basis, the cost to the community of the project provided by the private sector is lower than for the equivalent project provided by the public sector. To ensure the analysis of the two alternatives is comparable there will need to be a proper accounting for quality of services, price, time frame, risk apportionment and certainty. Agencies should therefore develop an appropriate benchmark, or Public Sector Comparator (PSC), to provide an assessment of the project's cost effectiveness if wholly delivered by the public sector, against which private sector proposals can be compared.
As a benchmark, the PSC should be developed ahead of seeking to engage the private sector. In the majority of cases, previous project viability studies should provide the basic framework for the comparator, which, when finalised, is to be used as a stable reference benchmark. The comparator should not be changed or re-specified after engaging with the private sector unless there are fundamental changes in the nature of the project (eg a change in risk apportionment amongst the parties) after this time.