16.2.1 Simple valuation method
Guidance notes - Simple valuation method |
Please note that the percentage of risk as a proportion of the total PSC in the simple and advanced evaluation technique worked examples below are for illustrative purposes only, and each project will have different risk proportions. |
Simple valuation technique (example)
The results using the simple valuation technique are detailed in Table 16-2.
Table 16-2: Risk-adjusted project cost (simple valuation method)
NPC | % of risk-adjusted PSC | |
Total non-risk-adjusted project cost (incl. Competitive Neutrality but excl. GST) | 335.8 | 72 |
11.1 | 2 | |
119.4 | 26 | |
Total risk-adjusted project costs (excl. GST) | 466.3 | 100 |
Table 16-2 shows that Retained Risk represents two per cent of the total risk-adjusted PSC. This comprises regulatory risk and maintenance risk relating to patient areas which were allocated as a Retained Risk to government.
The majority of risks are transferred and represent 26 per cent of the risk-adjusted PSC, with total project risk estimated to be 28 per cent of the total cost of the project. The major Transferred Risks are risk of construction cost overrun, the risk of time overrun and the risk of technical obsolescence which represent 25 per cent, 12 per cent and 9 per cent respectively of total Transferred Risk.