Value For Money (VFM) Evaluation In PPP Projects: An Overview

"In PPP procurement the question of VFM has been given the utmost attention together with risk and risk management. VFM is considered to be a controversial issue in PPP projects. The VFM has to be explained with and built on a set of performance criteria to deliver service. VFM is built on economy, efficiency and effectiveness. The PPP approach offers the prospect of delivering the services required by public sector clients in a way that provides superior Value for Money than conventional procurement, because the PFI approach can give scope for innovation in how services are delivered, better management of the risk associated with projects, more effective exploitation of opportunities, and better management. The Public Sector Comparator (PSC) provides a quantitative analysis to support a qualitative judgement of the best procurement option, taking into account the risks of each procurement approach as a means of informing a wider VFM assessment. The VFM in this paper is undertaken as a holistic approach, it is multidimensional and builds on the economy, efficiency and effectiveness and considers Robustness, Affordability and Risk Transfer as the main features. These features will be detailed in the text. There is a clear need for the public sector to have an objective VFM appraisal for assessing PPP throughout the whole life cycle of the projects."