11.2.3  Raw cost estimates

The raw cost estimates for the PSC based on the reference project have been provided in consultation with the Procuring Agency. The terms of reference for this work were to:

•  estimate each cost in accordance with the scope of the project detailing assumptions used for each cost category and the breakdown of the costs in each cost category. These raw costs are to exclude contingencies, any risk component and contractor rates of return;

•  provide the cost estimates in Australian dollars as at an agreed date and in real dollars;

•  provide details on inflation/indexation estimates of costs for each cost category over the project term;

•  estimate the 'S' curve (i.e. the timing of construction costs over the construction period) for each cost category (monthly S curves during the construction period, and yearly for the operating period);

•  detail the assumptions regarding the payment terms of the contractor (i.e. are there any holding costs included in the raw estimates?);

•  detail foreign exchange assumptions;

•  provide clear insurance assumptions, including defined scope of insurance (specialist advice may be required);

•  estimate the replacement cost of capital items and when they occur over the project term;

•  detail and separate out the costs relating to competitive neutrality; and

•  ensure that the costs provided correlate with the scope of the reference project and that any changes to the reference project are reflected in amended cost estimates.