Tracking the cost information in the project can be complicated. It is important to input the data at key milestones points so cost changes can be analysed. The cost information for PPP projects is more complicated in that it includes an analysis of nominal capital costs and then also the NPV costs of the contract and risk valuations.
Recommended sources: business case, media release, budget documents, financial benchmarks and technical reports, the PSC (for PPP projects only).
Timing of data input: At budget approval, updated at contract signing and again at actual (commissioning).
Issue: For Traditional projects the budget approved Total Estimated Investment (TEI) relates to the capital costs for the project. It should include any risk allowance or contingency amounts identified. It should include any associated funding sources (e.g. revenue from land sales) used for the project. It should include any costs for early works agreements. It is NOT to include the recurrent costs or any project management costs if they are separately identified.
Issue: For PPP projects the tracking of costs can become complicated throughout the project as costs are referred to both in nominal capital costs and also net present values. At the start of the project the announced figure is usually an estimated nominal capital cost. The second measuring point is the Cabinet's budget approved capital figure which should be included as the nominal capital cost. At this point it should also be possible to determine the relevant total NPV project cost by referring to the Total Risk Adjusted PSC in the project business case.
Issue: For PPP projects the NPV at contract signing/financial close may also be accompanied by an equivalent capital cost which can be included. Or it may be possible to derive the capital cost component of the tenderer's bid to include in the table.