4.2 Following the Programme Level assessment, the Stage 2 assessment aims to confirm that the procurement route identified is the most appropriate procurement route for an individual project. Typically this stage is linked to the OBC process.
4.3 The Project Level assessment seeks to verify that the assumptions, upon which the Stage 1 decision was based, remain supportable in the market conditions which prevail prior to advertising the project. The OBC itself should confirm both the preferred option (e.g. location, scope, affordability) and the preferred / selected procurement route. This should be endorsed by the relevant stakeholders through an appropriate governance process.
4.4 The Stage 2 Project Level review further expands upon the qualitative and quantitative assessment undertaken at Stage 1, and where applicable, facilitates the review and refinement of the initial Programme Level VfM for an individual project.
4.5 It enables Procuring Authorities, Agencies and Directorates to consider and, if applicable, switch to conventional procurement if that would provide improved VfM and a better fit with the funding options compared to the initial conclusions from the Stage 1 Programme Level Assessment. In reverting to conventional procurement, Procuring Authorities, Agencies and Directorate would apply relevant guidance within the Scottish Procurement Manual.
4.6 This stage will give Procuring Authorities, Agencies and Directorates a better understanding of capability and capacity to take the project forward and deliver the following outcomes:-
Stage 2: Project level assessment outcomes:- • verify the decision to use the procurement route identified at the Programme Level, or if not identified at the time select the appropriate procurement route to progress to market. If applicable, indicate to Procuring Authorities, Agencies and Directorates that better VfM may be achieved through an alternative procurement route • ensure that the procurement only proceeds if it is affordable. It will provide improved cost estimates AND improve the evidence base in respect of cost information • where applicable test whether a revenue financed solution is marketable and attractive to bidders (market interest) • consider and verify expected risk sharing / allocation arrangements; • enable, if applicable, project re-scoping • help ensure an efficient bid process will be put in place • ensure the procurement team is adequately resourced and project governance is appropriate. • ensure that an appropriate and meaningful use has been identified for the distribution of surpluses. |
4.7 It should be noted that any differences in the conclusions at the Stage 2 Project Level Assessment compared to the Stage 1 Programme Level Assessment must be fully explained and documented by the project owners and sponsors.
4.8 Within this stage, unless already determined at a Programme Level, a quantitative VfM assessment using the Conventional Procurement Assessment Model (CPAM) and a Shadow Bid Affordability model should be undertaken. Before this work is undertaken advice should be sought from either SFT or the relevant Finance Business Partner (or equivalent).
4.9 If required, the CPAM developed for the procurement stage will reflect the same project timings, the specification and project risk allocation that bidders are pricing. It will be a key element of the audit trail of the project. The Shadow Bid Affordability Model will include risk pricing through Optimism Bias uplift and a bespoke project risk uplift as appropriate.