While the PSC establishes a benchmark for comparison purposes, the PSC alone does not allow an estimation of potential P3 costs/benefits.
As part of the feasibility analysis, a P3 financial model(s) is developed to estimate the potential costs and to identifying areas where expected benefits could occur. This Shadow Bid is developed by modeling the project as if it were delivered as a P3 procurement. A comparison between the PSC and Shadow Bid can identify areas where expected value for money could occur, and would be the basis for determining whether to proceed with a P3 delivery model.
The shadow bid can be used:
• As part of the value for money assessment of the P3 in a comparison of the PSC.
• As a benchmark to assess the RFP submissions in the procurement phase.
The competitive multi-stage/low price proposal approach eliminates the need for a shadow bid at financial submission and evaluation. The competitive pricing will indicate the true market price for the project. A shadow bid may have some value when qualitative criteria are used depending on the price/quality weighting, and must used if a best and final offer approach is adopted.