Non-Price processes may, on rare occasions, become necessary when the project is so dependent on externalities, scope uncertainty or undimensionable risk that it is unworkable for any measure of price competition. In such processes, as illustrated in Table 3, the Owner loses the benefit of competition and is fully exposed to the requirement to contribute, manage and negotiate the TOC with resources and capability consistent with those of the NOPs. In the non-price selection process, the majority of material TOC elements are negotiated outside of competition and resolution is dependent on the expertise and negotiating skills of the Owner.
In non-price selection, Proponents are usually shortlisted as part of an EOI process involving interviews, project appreciation scenarios or roleplaying and other non-price criteria. The shortlisted Proponents may then compete in further workshops and presentations involving non-price issues.
Sometimes they will be requested to comment or critique the Owner's budget and risk allowances and/or provide benchmark data from similar projects from their corporate portfolio. This does not constitute price competition. Any benchmarking or Proponent critique of the Business Case budget is not likely to be useful where there are too many unknowns at the commencement of TOC development. Market testing work packages does not represent a competitive selection process as it does not include a competition on both the Project Solution and productivity or quantities.
Generally, Proponents will be requested to offer their fee percentage and rates for people or other equipment. It is important that Fee percentages are not over-weighted in evaluation, because this is can to lead to gaming on the Fee and then recovery of the corporate profit targets through TOC negotiation and/or the project solution.
The Owner's Commercial Advisor, Owner's Estimator and the development of an OCT provide a proxy for competition in assessing the Proponent's Proposal.
Owners should be aware that a single Proponent may hold the view that the Owner has no alternative but to conclude and accept the TOC developed and execute the PAA (and this risk is heightened when the Owner engages the same single Proponent to concurrently undertake early works). The Guide recommends Owners retain the second Proponent during negotiation with the Preferred Proponent and ensure this is made clear in the probity arrangements and RFP instructions.