5.3 Participants will normally examine the estimated capital value of schemes carefully before committing resources to the procurement. Different Participants will tend to target different sizes and types of schemes. There are three main reasons for this, namely:
5.4 Often low value capital schemes do not provide high returns for the project set up costs involved and contractors may believe that these schemes suit an alternative and cheaper procurement bid process such as design and build - where the bid costs involved will be relatively high in percentage terms and the rate of return not attractive.
5.5 Funders (normally banks) tend not to vary procurement costs, such as due diligence according to the size of the scheme. This stance tends to be reflected in the level of fees charged and/or the interest rates offered to participants.
5.6 Although capital value is often a key factor in influencing participant interest in a project there is evidence that specialist players are entering the market and targeting projects with a relatively low capital threshold. This is particularly relevant in the primary care facilities market where schemes are delivered through the use of a partnership arrangement with a third party developer. Typically PPP projects are suited for schemes with a capital value in excess of £20m.