The costing analysis of the PSC must make full account for all the risks that the project might transfer to the private sector. In a conventionally procured solution, the agency may be bearing not just the risks associated with delivering the infrastructure, such as time overruns, but also all the risks that might affect the operating costs over the longer term. These may include changes in demand for the services, asset maintenance, utilities, wages, technological obsolescence and residual value. All these elements must be included in the comparator if a fair evaluation is to be made.
Guidance on the development of the PSC is provided in Attachment D.