11.10 Areas that are within the direct control of the participant are the simplest to identify and compare between competing bids. These tend to be the areas that the participants are most comfortable discussing but NHS bodies should note that these are only one part of the cost to the NHS body. These include the following:
• funders' and advisers' fees
• construction costs
• design
• facilities management costs
• project company set up and running costs
• contingencies
• sources of income
• project timetable
• funding strategy, costs, payment profiles, required ratios and returns to funds
• equipment costs.
11.11 The most important issue here is for the NHS body to understand fully the details behind what the participant has included in the costings. Joint working between the NHS body and its technical and financial advisory teams is essential.
11.12 Another area of concern here is the level and nature of contingencies. Clearly all bids will include contingencies which may be separately identified or not. The important issue for bid evaluation purposes is to establish which costs the contingency is included to cover. It is expected that prices in bids will be fixed and that the risk that assumptions are wrong should remain with participants.
11.13 NHS bodies should also have a thorough understanding of assumptions made in bids which may directly affect the comparability of bids and they will need to ensure that they are able to compare bids on a consistent basis. Assumptions in this category include:
• interest rates
• inflation rates
• timing of payments
• taxation.
These are discussed below.