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Rule 8:
Estimating the monetary value of a procurement

Explains the requirement on agencies to estimate the total monetary value of a procurement and what to consider when doing so.

  1. Each agency must estimate the total monetary value of a procurement to determine whether it meets or exceeds the relevant value threshold (set out in Rule 6 and Rule 7). Agencies must act in good faith and use good judgement to estimate the value of a procurement. Agencies must include the estimated monetary value in their business case or procurement plan. This estimate is referred to as the maximum total estimated value.
  2. Each agency must consider the total value over the whole-of-life of the contract/s when estimating the procurement’s maximum total estimated value, including any costs associated with the disposal of goods. The estimate must include the value of all of the contracts that may result from the procurement.
  3. The value is the total amount excluding GST.
  4. If an agency cannot estimate the maximum total estimated value of a procurement it must apply the Rules.
  5. When an agency calculates the maximum total estimated value of a procurement, it must include everything required for the full delivery of the goods, services or works. This includes the value of:
    1. options to purchase additional goods, services or works
    2. options to extend the term of the contract
    3. paying any premiums, fees or commissions to the supplier or a broker
    4. any related revenue streams a supplier receives
    5. any other form of remuneration or payment due to the supplier or to a third party or any interest payable.

Estimating the monetary value of a procurement

Even if the monetary value of a procurement is less than the value threshold (set out in Rule 6 and Rule 7), agencies are still expected to follow good procurement practice. This means applying the Principles and having regard to other good practice guidance.

It's better to be cautious. If your estimated value is getting close to the value threshold (eg services valued at $98,000), always consider using an open competitive process. After all, your calculation is only an estimate.

Example of revenue streams

An example of related revenue streams: a supplier receives tolls from a highway it has built.