The Third File shall include indicative cost estimates for each phase of the project. The Work Team shall develop comprehensive cost estimates in current prices and in Saudi Riyals (SAR). Whether or not the estimates take into consideration the effects on macro-economic factors, the preparation of financial projections must show projected estimates, such as risk allocation predicted under the Privatization option, and the possibility of including inflation and exchange adjustments as part of the payment mechanism.
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 procurement.
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 a brownfield 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.
Note that if existing government assets, such as land, real property, equipment, etc., would be made available to a project company at no cost, the value of these assets is still a cost to the Kingdom of executing the project.
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 and these are to be borne by the private partner under the Privatization option.
The Third File shall identify costs associated with the operational phase of the project over the projected time frame. The cost of the contract itself shall be presented not as an estimated lump sum, but as annual costs over the projections period based on the categories of operational costs listed in the following paragraph. These costs include the following:
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; and
g) Other costs.
The cost to the government of administering and monitoring which might include salaries, training, payroll and benefit costs, and indirect support costs, such as accounting, human resources, and legal. Travel and other expenses may be applicable. Some functions may require specialized testing services (e.g., for water and wastewater), engineering inspections, or the retention of licensed or specialized consultants.
If there will be termination costs at contract expiry (e.g., at the end of the contract term, an asset will be purchased by the government from a private partner), an estimate of these costs shall be included, with supporting rationale.