Forum Topics PNV PNV Bull Case

Pinned straw:

Added 2 years ago

every $ counts..


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Parko5
Added 2 years ago

Why is it up to $2 million? Why don't they know the exact amount? Any ideas?

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mikebrisy
Added 2 years ago

@Parko5 the total cost is estimated as $4m, so the government commitment is 50% of the investment up to that limit.

I suspect the cost estimate has a healthy contingency, so the government has said, we’ll pay 50% of what it actually costs, but only to a maximum amount, because the government wants certainty on its commitment.

This scope probably can’t be managed as a lump sum fixed price. There will be contractors for the building and fit out, and then other suppliers for the specialist equipment, and maybe a mix of internal and external costs for installation and commissioning of equipment. The R&D Head will need to manage delivery of all the components to get the facility up and running out of their overall R&D budget.

So the level of detail makes perfect sense to me. That’s particularly because R&D facilities usually involve one-off, specialist elements, which can be hard to price, and so it’s better to take on the price risk as the owner/operator, rather than try to lay if off to a contractor. (I’m guessing here, but I do have first hand experience of starting up an R&D facility at the start of my career many moons ago, and some things have not changed!)


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