In a non-price competition process, the OE must be sufficiently experienced in construction estimation and sufficiently resourced to thoroughly review the NOPs' estimate and to provide realistic feedback to the Owner on the validity of the quantities, rates, prices and risk contingency included in the estimate. The Owner should be prepared to conduct hard commercial and technical negotiations with the NOPs to ensure the final TOC price represents a fair price for the works. This is discussed in more detail in Chapter 10.
This will require the OE to understand the design and delivery methodology and to review quantities, productivities and cost rates being used for each item of work to ensure these reflect current market conditions and best practice. This will require access to the quotations received by the NOPs to conduct the works (in some alliances these competitive quotations may constitute a large proportion of the price to the project). The OE then reviews the risk associated with the project and the allocation made for risk by the NOPs in the TOC to ensure this is consistent with the real project risks.
In this way, the OE effectively plays the role of a price competitor to the Proponent in a non- price selection process. For this reason the appointment of this OE is critical to achieving VfM in a non-price selection process. Owners seeking an exception to conduct this type of process should clearly articulate the appointment and processes associated with the OE position in their Business Case.
In many cases, there will be a difference in professional opinion between the OE and the Proponent about quantities, productivities, rates or risks. In this case, the Owner must consider both arguments presented and make a fair decision in the best interests of the project. In doing so, the Owner may seek additional specialist advice if required.
The Owner must understand that the development of a price for a transaction of the duration and complexity of a major capital works project is imprecise and the TOC offered by the Proponent will inevitably be different from the TOC estimated by the OE. Furthermore, the Owner must understand that there will need to be a negotiation which will conclude after the TOC has been fully developed and offered. This is discussed further in Chapter 10.