4.10 At Stage 2, Procuring Authorities, Agencies and Directorates who have undertaken Programme Level Investment reviews must refine the Stage 1 Qualitative Assessment and Quantitative Assessment to reflect the specific project in question. This update is undertaken during the Outline Business Case stage.
4.11 The Stage 2 assessment elements should be reflected in the Outline Business Case submitted to the relevant approval body.
4.12 Requirements noted in this guidance at the Stage 2 Project Level will be assessed in the KSR process (or equivalent).
| Stage 2: The Qualitative Assessment |
4.13 In relation to the decision to proceed with NPD, Procuring Authorities, Agencies and Directorates should reconfirm the:
• Viability
• Desirability
• Achievability
of the investment decision (refer to the requirements at Stage 1 and the detailed pro-forma at Appendix C). These were explained in detail in Section 3 - please refer to this part of the guidance.
4.14 Procuring Authorities, Agencies and Directorates will also need to assess at this stage whether there is any cause to believe that there could be market failure (lack of bidder competition), market abuse (inappropriate bidder behaviour and pricing at the preferred bidder phase) or that the project risk allocation will be undeliverable.
4.15 Appropriately structured market soundings should be undertaken. This process should cover:-
| Market sounding considerations • being aware of the range and number of projects vying for market interest; • being aware of any actual or emerging market capacity constraints within their • assessing formally the level of market interest in particular projects in the context • considering the case for managing the release of projects to the market particularly • seeking to actively promote a dynamic market by, for example, ensuring that barriers • considering the development and promotion of a long-term competitive marketplace across a market significant programme or new business area and avoiding creating market dominance. |
4.16 If it is determined prior to advertising the project that the benefits assumed for revenue financed procurement cannot be delivered by the market (for example due to market capacity) or the project is not considered affordable, then the investment route and project scope, timing and delivery should be reassessed and revised accordingly. If it is possible to achieve the benefits by delaying the launch of the project (for example if several similar projects have recently gone to the market), this should be considered by the Procuring Authority in conjunction with the SFT or SGHD PFCU.
4.17 To address this at Stage 2 Project Level Assessment, Procuring Authorities, Agencies and Directorates supported by their professional advisers, should develop a market consultation strategy and should undertake relevant market soundings and promotion with bidders, including consulting and information sharing with the SFT and other Directorates as appropriate (i.e. SGHD Capital and Facilities for NHSScotland Bodies).
| Stage 2: Quantitative Assessment |
4.18 At Stage 2, the quantitative evaluation should be updated so the following variables reflect the specific project and cost environment as follows:
• capital costs
• lifecycle cost
• revenue costs
• risks and Optimism Bias
• benefits appraisal (where this is likely to differ between options)
• transaction costs
4.19 This should be completed in accordance with the Green Book. It should be collated and reviewed by the Procuring Authority, Agency or Directorate. The variables should be verified by appropriate technical support.
4.20 Detailed quantitative VfM guidance is contained in Appendix J.