12.  Public sector comparator requirements

The Public Sector Comparator (PSC) is developed to a preliminary stage in the business case phase. It is developed in detail in the project development phase, and should be finalised prior to release of the Request for Proposal.

The PSC is to be approved by government at project approval or, at the latest, prior to the release of the Request for Proposal document. Any subsequent material changes must also be approved.

The Raw (non-risk adjusted) PSC figure (together with high level assumptions) is to be disclosed in the Request for Proposal unless there are justifiable reasons for non-disclosure. This is to enable bidders to clarify whether their concept of project scope is similar to that of government. The PSC will be subject to detailed analysis by the market and it must therefore have a robust development process.

The Risk Adjusted PSC (either in periodic cash flow or NPC form), excluding retained risk, is to be disclosed, following assessment on a project-by-project basis, as part of the value for money comparison in the project summary published post contract execution (refer to section 19 of these Requirements).

Roles in the development of the PSC

Agency

Primary responsibility for the construction and use of the PSC rests with the Procuring Agency, in particular the development of the output specification and Reference Project.

The construction of a PSC requires a high level of specialist skills that will generally require the engagement of external expert advisers. The PSC construction process should be methodical and rational through the proper and systematic recording of cost and risk material throughout the stages of PSC development. Specifically, the Procuring Agency should maintain adequate documented evidence to support all costings and calculations for the PSC approved by government. For a set of Frequently Asked Questions and Common Problems regarding the PSC please refer to Annexure 6.

PSC Quality Assurance Review¹⁵

Procuring Agencies are to conduct and document a quality assurance review workshop on the PSC. The workshop objective is to improve the quality of the PSC and reduce risk of error and inaccuracies by conducting a quality assurance review which cross-checks the PSC outputs against the inputs. The QA review is to ensure that outputs are an appropriate reflection of the inputs and assumptions. The QA review should be conducted prior to government approval of the PSC, which must be before the Request for Proposal is released to bidders. For guidance on the implementation of this review requirement please refer to Annexure 6.3.

Department of Treasury & Finance

DTF may be involved in assisting with the development of preliminary costing of the main PSC components. DTF will review the first preliminary PSC as part of the business case and will review the PSC when government approval is sought prior to the release of the Request for Proposal to bidders.

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¹⁵ PSC Quality Assurance Review requirement effective from January 2010.