As set out throughout this Playbook, contracting authorities should consider the outcomes they are trying to achieve and identify wider value drivers beyond speed, cost and quality. This is known as value-based procurement. Value-based procurement should be adopted at an organisational level and driven through a portfolio approach to projects and programmes.
There should be a consistent approach running through policy intent, project selection, approval, initiation and into procurement, evaluation criteria, contracts, delivery and operations. The Project Scorecard will help projects to do this by providing a tool to capture clear outcomes at the outset, aligned to government's strategic priorities, that can be referred to throughout the project lifecycle.
Evaluation - and evaluation criteria - should focus on value over cost. Value for money is defined as securing the best mix of quality and effectiveness for the least outlay over the life of a project or programme. It is not about minimising initial capital costs.
When considering 'outlay' the key factor is whole life cost, not lowest purchase price. Whole life cost takes into account the total cost over the life of an asset, including capital, maintenance, management, operation and exit, and can be very different from the initial price. Paying more for higher quality may be justified if the whole life cost is advantageous. Contracting authorities should determine whether increased benefits justify higher costs. Affordability will always be a key factor.
"Evaluation - and evaluation criteria - should focus on value over cost."
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Contracting authorities should evaluate bids for public works projects and programmes by determining the most economically advantageous tender (MEAT) based on their published award criteria.