3.1.1  The PSC and quantitative assessment

The PSC is the key management tool in the quantitative assessment of value for money during the tender process and the evaluation and comparison of RFP Responses. The RFP Responses will be assessed against the PSC to determine whether they offer value for money in respect of quantitative analysis.

However, it should be noted that the PSC is a quantitative benchmark with inherent limitations because it requires costs and revenues to be forecast over the life of the proposed contract period.

RFP Responses will be ranked according to their risk adjusted Net Present Cost ("NPC") relative to the Risk Adjusted PSC. Adjustments may be made to the NPC of individual RFP Response according to their preferred risk allocation.

As considered in the Risk Allocation and Standard Commercial Principles, all risks to the extent not explicitly taken by government will be borne by the private party. The financial impact of the risks taken by government (e.g. Retained Risk) should be added to each RFP Response to show the total project delivery cost.