Using the Scenario, answer the following question about the actions taken when establishing the Economic Case within the Outline Business Case (OBC)

HOTSPOT

Using the Scenario, answer the following question about the actions taken when establishing the Economic Case within the Outline Business Case (OBC).

It is thought that funding for the new campus on the site of the Old Fire Station Headquarters could be achieved through a public private partnership (PPP). The size of the Pittville project is very similar to the recent PPP development of Marshgate High School, a school in a neighbouring part of the county.

Lines 1 to 5 in the table below consist of an assertion statement and a reason statement. For each line identify the appropriate option, from options A to E, that applies. Each option can be used once, more than once or not at all.

Answer: Let’s evaluate each assertion and reason to identify the appropriate options from A to E:

The assertion is that the PPP costs for Marshgate High are NOT relevant to estimating costs for the development of Pittville University. The reason given is that the Reference Project is used to provide an estimate of how much it will cost the public sector using procurement through conventional approaches. This reason does not logically support the assertion because using a reference project like Marshgate High could be relevant for cost estimation by comparison, so the option that applies here is B. True, BUT the reason does not explain the assertion.

The assertion is that the OBC must include the value for money assessment of the PPP schemes to support the Pittville University project details. The reason is that the procurement strategy for how the required services or works can best be procured should be determined in an Economic Appraisal. This reason supports the assertion because part of determining the procurement strategy involves assessing the value for money of different schemes, including PPP. Thus, the option here is A. True, AND the reason explains the assertion.

The assertion is that it would be appropriate for the PPP option to be carried forward to the shortlist, along with the ‘BAU/status quo’, do minimum and preferred option for the development of Pittville University. The reason is that any form of private project finance should be appraised using the Options Framework filter. This is a correct reason, as all financing options should be appraised to determine the best approach. Therefore, the option is A. True, AND the reason explains the assertion.

The assertion is that the data from the Marshgate High School project should be used to derive the optimism bias adjustment factor for the new Pittville University campus. The reason is that the Economic Appraisal should research accurate costings and review all contributory factors that could lead to cost and time over-runs. This reason supports the assertion because using data from similar projects can help in adjusting for optimism bias, which is part of ensuring accurate costing. Therefore, the correct option is

A. True, AND the reason explains the assertion.

The assertion is that the bespoke technology cabin planned for Pittville University should be considered as a non-standard building project for deriving the optimism bias adjustment factor. The reason given is that each project type should be considered as a separate project for the purpose of applying an optimism bias adjustment factor. This reason supports the assertion because if the technology cabin is indeed a non-standard project, it should be evaluated on its own to ensure the adjustment factor is accurately applied. The correct option is A. True, AND the reason explains the assertion.