In assessing the feasibility of the use of a P3 the following criteria must be satisfied;
• Capital project of a sufficient size and complexity (greater than $100 million).
• Provision of the capital asset can be defined in a performance or output specification.
• There are significant associated ongoing operation, maintenance and/or service requirements.
• The long term operation or service needs can be clearly defined in a performance or output specification.
• The performance requirements must be relatively stable throughout the duration of the contract or changes need to be predictable upfront.
• Payment (and/or revenue) can be tied to performance.
• A fair, accountable and transparent selection process can be used.
• It can be demonstrated that the P3 approach is likely to offer greater value for money to the Government or SIO compared to other forms of procurement.
In addition the P3 approach should satisfy the following criteria:
• The private sector has the expertise to deliver.
• There is sufficient interest in the private sector to compete for the project (minimum of 3 qualified proponents desirable).
• The bundling of design, build and operate will likely result in an expedited completion of the capital asset, and will likely result in innovation, reduced cost and reduced duplication in the assumption of risk.
• On-time/on-budget delivery and protection against scope creep is important.
• The nature of the assets and services are capable of being costed on a whole of life, long term basis. Investments with a time horizon of 5-10 years is unlikely to benefit from a P3 approach.
• Risk allocation can be clearly determined.
• Competitive private sector financing can be obtained, and the cost of private sector financing will be offset by delivery and/or user savings.
The use of a P3 will be unsuccessful where;
• Accountability in public service could not be met, as in most forms of frontline service delivery.
• Private sector investment is not available or cannot be obtained at an acceptable cost.
• The transaction costs of pursuing the P3 are disproportionate compared to the value of the investment.
• The fast pace of technological change make it too difficult to establish long term requirements, such as Information Technology.
• High levels of systems integration make risk allocation difficult.
• The form of the capital asset will be chosen through a design competition.
• There are substantial regulatory or legal restrictions on the provision of the service.
• There is insufficient support within the department (and SIO) to champion and resource the P3 procurement.