2.12 Departments need to consider the size of project funding required. The deal size will influence whether a funding competition is likely to generate interest from a significant number of credible bidders and whether the funding may be provided by a single provider or whether several providers will be necessary to raise all of the required funds. If the deal is considered too small it may not interest a wide range of funders. On the other hand, as the required funding increases, authorities may find that fewer institutions will be able to bid to provide all the funding and eventually there will be a limit above which it will only be possible to raise the funding under competitive conditions via a different approach. The aim here would not be to seek competing commitments for the entire funding requirement, but to obtain commitments to provide the funding within a group of banks.
2.13 As well as the size of the funding required, the split between capital expenditure and ongoing service payments will influence the decision whether to hold a funding competition. The potential that a funding competition may have to reduce a project's costs will increase as the proportion of capital expenditure to total expenditure increases. The reason for this is that significant capital expenditure in the early years of a project will tend to be funded by committed funders, whereas projects with lower or no early capital payments will largely be funded from ongoing revenue generated by the project itself which will support future commitments of finance.