4.4.1  Direct capital costs

Direct capital costs are costs that can be specifically associated with the production of any services (e.g. the procurement of the required facilities and related equipment for a road construction project). This may involve construction of a new facility, or the acquisition of an existing asset, and typically includes:

•  costs incurred in designing the project;

•  raw materials;

•  payments to external providers (i.e. contract price);

•  costs of the public procurement process (including project development, documentation and contract management);

•  payments to external consultants and advisers regarding project construction (financial, legal, engineering, patronage, other); and

•  plant and equipment (e.g. machinery and core IT platforms).

Note that only the costs associated with implementing the Reference Project should be included in the PSC (i.e. only those costs that the bidder would incur as part of delivering the project). Some of the relevant costs and risks that are not included in the PSC are transaction costs and contract management issues.

Capital costs should reflect best available information and prevailing best practice.