2.21 One of the risks in running a funding competition is that the procurement process will be lengthened, delaying the realisation of project benefits. This is because the funding competition represents a separate procurement at the end of the main contractual negotiations where a third party, that has not previously been involved in the negotiations, is required to sign up to the project agreement. However, the Treasury building competition showed that this risk can be negated if the competition is planned in advance and the process is well managed. By running the funding competition at the same time that the project was receiving planning and listed building permission, financial close was reached only two weeks later than if there had been no competition.
2.22 If commercial contracts are fully developed in anticipation of a funding competition, the time taken to move from appointment of preferred bidder to financial close may ultimately be reduced. The reason is that extended triangular negotiations between the department, pre-appointed financiers and the contractor will be cut out. This puts a greater responsibility on a department and the preferred bidder to negotiate commercially acceptable contracts. The more standard contract terms are used the less due diligence is required.