The Work Team shall, as part of the Third File, include indicative implementation cost estimates for each phase of the project, in current (nominal) prices and in Saudi Riyals (SAR), adjusted for inflation, as follows:
a) for local costs (Saudi costs) e.g., labor, materials manufactured in Saudi or procured from within the country, a general inflation rate (or appropriate indexation) shall be applied. Work Teams shall consult with the NCP to obtain forward estimates of inflation.
b) for non-local costs, for example specialized and technical equipment that is likely to be obtained from abroad, appropriate inflation factor should be applied to these e.g., if equipment is of US origin and relates to the oil and gas sector, then specialist US Producer Price Index by Industry: Drilling Oil and Gas Wells: Drilling Oil, Gas, Dry, or Service Wells, shall be used. These assumptions and sources of data should be clearly stated and referenced.
c) Work Teams shall consult with the NCP to obtain forward estimates of exchange rates where applicable.
For the construction/implementation phase, such costs may include, as applicable:
a) Project preparation and development costs, including staff costs and consultancy fees for project management, preliminary design, feasibility study, impact studies, consultant management, and legal and procurement support.
b) Land acquisition.
c) Construction.
d) Plant and equipment.
e) Fixtures and fittings.
f) Development costs.
g) Testing.
h) Training.
i) Contingency costs.
j) Other costs.
Note that for infrastructure asset which would be the subject of a Privatization and where existing government assets, such as land, real property, equipment, etc., would be made available to a project company, the value of these assets shall be considered as part of the PSC and the same value as that applicable under the Privatization option shall be used in both the PSC and the Privatization option VFM analysis.
Mitigation costs shall be identified if there will be a need to build mitigation measures into the project design, due to anticipated negative environmental or social impacts. If the private party is bearing the costs of these measures under the Privatization option, these costs should form part of both the PSC and the Privatization option VFM analysis. In the event that these costs are borne by the public sector, the costs associated with this should be set out as part of the Financial Case as described in the Part One of the Third Chapter of the Manual.
For the operational phase, costs may include, as applicable:
a) Staffing for project operation, maintenance, management, and support, to include indirect support, such as accounting, human resources, and legal, etc. Staffing costs also include training, payroll and benefit costs.
b) Material and supplies.
c) Utilities.
d) Facility, plant, and equipment repair, renovation, and replacement. Assumptions on repair, renovation, and replacement cycles should be clearly described, with supporting rationale.
e) Support contracts and insurance.
f) Indirect costs.
g) Other costs.