In Partial Price selection, the extent to which the Project Proposal can be developed requires pre-consideration by the Owner of what should be achieved or tendered under competition, how the NOPs will be selected, and the process required to continue negotiations that will result in an acceptable Project Proposal. To pre-plan or map out in advance a partial price selection development process requires an understanding of the project and the Owner's objectives, a sound knowledge of likely risk issues to be encountered and a good grasp of the project areas that most affect time, scope and cost. Owners require sound and experienced judgement in determining the extent of price competition and in drafting the terms and instructions for a 'project development' process in a partial price RFP.
An awareness of project development activities and how contractors and designers approach them is also advantageous in adapting to changing circumstances during selection.
Having made a determination, the Owner should clearly instruct the Proponents on the objectives and requirement of the competitive phase of the partial price selection process, and the deliverables to be provided in a partial Project Proposal capable of acceptance.
The Guide suggests that generally it is neither possible nor effective to develop a full TOC in a Partial Price process and that instead partial price should be expected where prices for packages of work or services can be obtained. It cautions Owners against requiring Proponents to contractually commit to discrete price elements in an incomplete estimate. A cost estimate for an alliance project is a complex combination of interdependent and overlapping elements that are not well understood except by the experienced estimating practitioners who author them. Owners should ensure that gaming of estimates and shifting costs within a TOC to reduce partial prices or transfer risk does not take place.
Partial Price development should be focussed on a significant portion of cost elements (selected on a project-by-project basis as these material elements may be different for each project). The price or price components developed during the competitive phase should be treated as an offer from the NOPs and the final TOC offer from the Preferred Proponent must be consistent with this offer.
Whilst a full TOC estimate is unlikely to be developed, Owners should at least have the following agreed or finalised to the greatest extent possible in the partial Project Proposal:
• a concept or preliminary design solution for the preferred option and associated construction methods and schedule;
• a budget estimate (TOC budget) to deliver this solution;
• firm tenders on those price elements representing the most significant costs in a future TOC estimate.
• most contract terms in the PAA; and
• the commercial terms agreed, including the Risk or Reward regime that provides the mechanism by which the NOPs will be incentivised to align with the requirements in the Owner's VfM Statement.
The Owner's Estimator, and where developed, the OCT, will inform the Owner of the cost elements that constitute the key drivers for the overall TOC for inclusion in the binding tender and provide guidance during the final TOC negotiations. A recommended approach would be (where the project allows) in the order of 80% of cost elements by value, including those with the greatest influence on the final TOC.
The fee percentage should be agreed in a partial Price Proposal, keeping in mind that applying competition to only the Proponents' profit does not constitute effective competition; it is better to focus on the main scope and costs associated with the project solution.
Partial price competition allows the Owner and Proponent a period of time after the Preferred Proponent has been selected to address externalities, scope uncertainties and/or undimensionable risk issues collaboratively, using the most efficient resources and processes of the Owner with the NOP's. Prior to that point, other comments about full price apply.