The CPAM should reflect a deliverable public sector procurement route and as such should be based on realistic assumptions around capital funding availability. Where public funds are available within existing budgets to allow the construction of the project, no additional finance costs need be included. However where this is not the case, the cost of sourcing alternative capital, e.g. through PWLB borrowing, should be taken into account.
Financing costs in the CPAM will include, as applicable:
• Public Works Loan Board finance costs incurred directly related to a project where applicable, (which can be factored in via the discount rate);
• Any other finance costs associated with sources of capital available to the Procuring Authority.
The inclusion of these costs is appropriate when they reflect the ultimate cash flow consequences of the Procuring Authority, even if some costs are non cash in nature. By including these costs, a more like for like comparison is achieved and the true cost of public sector procurement is identified.