Using Should Cost Models to understand whole life costs

Having a clear understanding of the whole life costs and risks of delivering a project or programme is best achieved by producing a Should Cost Model (SCM). A SCM provides a forecast of what a project or programme 'should' cost over its whole life, including both the build phase and the expected design life.

All projects and programmes should produce a SCM. The level of investment in producing a SCM will vary with the complexity and significance of the procurement. For major works projects and programmes a SCM will be more detailed and, while the level of detail will evolve, they should be produced during the planning and preparation stage to support the DMA.

The SCM will drive a better understanding of the whole life costs and risks associated with different options and scenarios. This will inform engagement with bidders and the appropriate commercial strategy including methods to incentivise the supply chain to focus on whole life cost. It will drive more realistic budgets by providing greater understanding of the impact of risk and uncertainty on both cost and schedule. The SCM should also be linked to the whole life carbon assessment (see chapter 3).