Public Sector Benchmark for PPP Schools Bundles 1, 2, 3, 4 and 5

The Public Service Benchmark is a key tool in the PPP procurement process and is prepared in accordance with published Government guidelines before the issue of a PPP tender. It is presented as a single monetary value that represents the full estimated cost to the Department of Education (taking income and risks into account) of delivering projects using “traditional” public sector procurement. The PSB only includes the costs, income and risks that the private sector will be invited to tender for in the PPP contract so as to ensure a like for like comparison between a traditional procurement with a PPP method of procurement. The PPP private partner is required to deliver and maintain to a defined standard a facility together with a range of services (such as cleaning and building maintenance) for 25 years post construction.

In the case of Department of Education related projects, the following components are included in the PSB:

-Capital Costs : Capital costs are the upfront costs of providing a capital asset for the project. This can mean either the costs associated with the construction of the capital asset or the cost of the conversion/refurbishment of an existing capital asset to meet the output specification.

-Operating, Maintenance and/or Lifecycle Costs : Operating, maintenance and lifecycle costs are the costs that are associated with the daily running of the capital asset. They relate directly to the operation, maintenance and upkeep of the asset and the provision of related services to meet the output specifications over the contract period.

-Risk Costs : Risk is inherent in the management of all projects and relates to the possibility that more than one outcome could occur at any given point and that these outcomes could impact, either positively or negatively, on the project in terms of overall cost, time or quality. In compiling the PSB, risk analysis is undertaken in order to identify and quantify risks and to consider how best to allocate them between the public and the private sector.

-Transferable risks are those risks for which the private sector will be asked to tender. These risks are included in the PSB so that a like with like comparison can be made between the highest ranking bid and the PSB. In PPP projects, risk transfer is one of the key means of securing value for money.

-Shared risks are those risks for which responsibility is shared between the Sponsoring Agency and the private sector partner; these risks are partly-retained and partly-transferred. The value for a shared risk included in the PSB is the proportion that will be transferred to the private sector partner.

The valuations used in the PSB represent the best estimate available, at the time of compilation, of all of the costs, income and risks associated with a given PPP project. To take full account of costs which occur at different points in time, the PSB is expressed in Net Present Value (NPV) terms. When the present values of all of the project cash flows are added together they are referred to as the Net Present Value (NPV) of the project. This is a “bottom line” figure for the overall cost of the project, discounted back to a specified Base Date. In the Value for Money Comparison, the NPV of the highest ranking bid is compared against the PSB on a VAT-exclusive basis. The difference between the PSB figure and the VFM headroom is the tender price.

In January 2018, we published the PSB for Schools Bundle 1, Schools Bundle 2 and Schools Bundle 3, followed by Schools Bundle 4 in December 2019. We have now updated the below table to include the PSB details for Schools Bundle 5.

Table 1. Final NPV ex-VAT Public Service Benchmark

	Schools PPP Bundle 1 €m	Schools PPP Bundle 2 €m	Schools PPP Bundle 3 €m	Schools PPP Bundle 4 €m	Schools PPP Bundle 5 €m

Public Sector Benchmark:
Capital Costs	55.5	91.4	76.9	61.2	81.9
Recurring Costs	47.1	79.8	73.1	72.0	92.1
Risk Costs	14.1	25.7	26.9	20.6	21.3
Special Needs Unit Addition	7.7
Total	124.4	196.9	176.9	153.8	195.3
Value for Money Headroom*	17.4	47.5	13.4	46.7	54.7
All figures are presented in net present value terms and are exclusive of VAT.

PSB (ex VAT) in NPV Terms : Bundle 1 €124.4m

PSB (ex VAT) in NPV Terms : Bundle 2 €196.9m

PSB (ex VAT) in NPV Terms : Bundle 3 €176.9m

PSB (ex VAT) in NPV Terms : Bundle 4 €153.8m

PSB (ex VAT) in NPV Terms : Bundle 5 €195.3m

22 January, 2022