The shadow bid model will provide an indicative unitary charge which will be used as a proxy for the expected annual cost of a privately financed procurement. In addition to capital, lifecycle and FM costs, the shadow bid model should also reflect the market cost of finance, bid development and delivery costs, management and insurance overheads and market returns.
Any surpluses arising under an NPD option should be risk adjusted to reflect their likelihood of occurring and taken into account in the VfM assessment.
Both the CPAM and the shadow bid models should be updated and compared throughout the procurement process. The cash flows from these models are discounted to allow comparison on a NPV basis. The comparison of these results will allow the Procuring Authority to ensure that the preferred procurement route continues to offer Value for Money.