The Owner's Comparative TOC ('OCT') is the Owner's best estimate of the Actual Outturn Cost (AOC) of the project. The Owner may consider whether it is worthwhile for its project to prepare and progressively update its own TOC to compare to the TOC developed by the NOPs. The OCT would progressively develop from approved Business Case to final agreement of the TOC and execution of the PAA. The OCT has the potential to deliver VfM for government and introduce more robust costing of an alliance project. The mechanism may deliver some of the benefits of Public Sector Comparator under PPPs, such as requiring the Owner to robustly challenge and quantify risks and other requirements.
The purpose of the OCT is several fold:
it prepares the Owner to evaluate the Proponents' competitive TOCs effectively and expeditiously, and negotiate the TOC as an informed Owner;
it is a mechanism that ensures the Owner develops a detailed understanding of the commercial aspects of the alliance project; and
it becomes part of the prudent project controls that the Owner uses to monitor outturn costs throughout the project (including during the alliance development phase).
The OCT will be informed by the Owner's emerging knowledge of the project as the procurement process progresses and details are provided by the Proponents. In particular, the OCT will be adjusted to reflect the Proponents' design solution and construction methodology together with their risk assessment and TOC estimate.
Owners can find guidance regarding the preparation of the OCT (including level of accuracy, pricing methodology and risk assessment) in Guidance Note No 5.59 In simple terms, the Owner would prepare the OCT to a level commensurate with the TOC being prepared by the Proponents.
Given that the OCT is likely to be informed by the competitive Project Proposals submitted by the Proponents, it is not appropriate that it be disclosed to the Proponents at any stage.
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59 Refer to Guidance Note No 5, Developing the TOC in alliance contracting, Department of Infrastructure and Regional Development, Commonwealth of Australia, March 2011.