Introduction

This appendix is designed to provide practitioners with an example of the practical workings of the Methodology outlined in the main body of this paper, based upon an actual hospital project4.  Details identifying the particular project have not been included (except where some of these details were used to inform the assessment of risks) because this example is provided primarily for illustrative purposes.  The information provided here should not be taken to reflect the actual decision-making, or actual results of the project team for any particular project, nor should it be taken to be a critique of any PPP hospital the project team, or project outcomes.

This appendix sets out the approach in determining an appropriate Discount Rate used in the assessment of complying proposals (hereafter referred to as the "PPP Discount Rate") for a PPP hospital project in New South Wales.  In considering this example practitioners should be aware that:

1.  A small change in assumptions for the project may give a considerably different result to the allocation of Systematic Risks discussed below.

2.  This is an example of a net cost project.  If the project were a Net Revenue Project, appropriate adjustments to the Methodology (as set out in Appendix F) would have to be made.

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4 This Appendix is based on work done by PricewaterhouseCoopers and NSW Health.  , This Appendix was prepared on the basis of various analyses prepared during 2003-04.