2.30 The comparator included provisions for risk. Risks to which the project was exposed were assessed in a workshop attended by representatives from the Home Office's Radio Frequency and Communications Planning Unit, the Metropolitan Police, Sussex Police, Hampshire Police and Mason Communications. Risks were identified and quantified in terms of likelihood and impact and were valued at £170 million. We reviewed this analysis. We found some arithmetic errors and no tapering of operational cost risk over the roll-out and roll-in of the service. We also found the inclusion of a number of relatively minor risks that may remain with PITO in the PFI deal, but which had not been included in the cost of the deal when comparing it against the comparator. Amending the analysis to account for these issues resulted in a reduction of the net present cost of risk to £150 million.
2.31 PITO was advised that, in major projects, the inclusion of separate estimates for contingency and risk is a regular practice. Therefore, Mason Communications included in the comparator a contingency allowing for unforeseen requirements equal to five per cent of all input costs (net present cost £70 million). There was, through the inclusion of this contingency, a possibility of double-counting some elements of risk, particularly in the light of specific risk allowances for underestimated capital and operational costs. However, any such assessment is necessarily subjective and PITO considers it could just as easily have under-estimated the eventual cost of risk.