As noted above, bidding for PPP projects is expensive. Often, the largest component of bid costs is design, which can account for 50-60% of the total (up from approximately 40% in 2005). Legal fees on the other hand have become less significant, dropping from 40% in 2005 to 10-12% currently.
The efficiency of the procurement process can significantly impact both the level of transaction costs to Government and the bid costs incurred by market participants. Although Participants are largely happy with Australian PPP processes, the most important issues that Participants raised in relation to inefficiencies in the procurement process for some projects included:
• inefficient resourcing associated with the stop/start nature of the Australian PPP market, due to a number of factors including the uncertainty and lack of a clear project pipeline, delayed communication of decisions and protracted procurement processes (a majority)
• excessive requirements for information and documentation (almost all)
• inconsistencies in and reduced quality of tender processes and documentation (a majority)
• delayed communication of decisions to market and inefficient decision making processes (a majority).
The key factors cited by Participants as driving these inefficiencies are:
• the skill and expertise of the Government team managing the procurement process (almost all)
• the Government's level of commitment to the project and the PPP procurement model (a majority).
These factors directly impact decision-making efficiency and the overall timeframes taken to complete procurement processes.