4.4.4  Direct operating costs

Direct operating costs are associated with the daily operation of the infrastructure and related services. These costs specifically refer to those services which will be provided directly by the private sector.

Direct operating costs typically include the following:

•  cost of inputs;

•  employees directly involved in the service provision:

wages and salaries;

employee entitlements;

superannuation;

employee insurance;

training and development;

annual leave, long-service leave, expected redundancy payments;

travel;

•  direct management costs; and

•  insurance.

The calculation should have regard to historical cost information, subject to discussion with industry practitioners to ascertain whether operating practice has changed (e.g. technology developments).

Section 7 (Calculating Transferred Risk) and Section 8 (Calculating Retained Risk) provide further discussion on the treatment of insurance.