PwC insights on the role of Value for Money (VfM) analysis and how it can help articulate the value of public-private partnerships (P3s) for delivering infrastructure projects in the US.

1. Investing in transportation
The role of value for money analysis
May 2015
At a glance
PwC assessed the role of
Value for Money (VfM)
analysis in delivering
transportation projects
and considered its
potential for greater use
in the US.
VfM analysis helps
governments compare
traditional delivery
methods with public-
private partnerships.
Public-private
partnerships can reduce
the potential for cost
overruns and they have
earned a reputation
for delivering projects
on time.

2. 2
The value of VfM analysis
Any capital-intense transportation
project requires rigorous planning
and analysis and can benefit from a
thorough appraisal. When articulating
the value of delivery model options,
from traditional methods such
as design-build (DB) and design-
bid-build (DBB) to public-private
partnerships (P3s), a comprehensive
Value for Money (VfM) analysis
may be beneficial. As transportation
agencies around the country deal
with the reality of limited budgets and
rising debt levels, P3s could represent
the future for many transportation
infrastructure projects. To articulate
the value of a P3 as compared with
more traditional means of project
delivery, a considered, transparent
appraisal process such as VfM may
be employed. If a P3 is selected,
the analysis can demonstrate to
stakeholders that the arrangement
was selected because it provides clear
benefits that outweigh the associated
costs or risks of private-sector
participation.
This report is the second in a three-
part PwC study of how countries
outside the US use transportation
investment frameworks to allocate
scarce public funds to the highest
priority projects. Here, we examine
key issues relating to the use of VfM
analysis for transportation projects and
how international jurisdictions, and
also those in the US, have sought to
address them.
Research questions explored
• What are the objectives of a
VfM analysis and how are the
results used?
• Who undertakes the public-
sector comparator (PSC) and
VfM analyses?
• At what point in the planning
process are the analyses performed?
• To what extent do the analyses
incorporate considerations that are
not quantifiable, but are important
for public decision making?
Before examining the specific benefits,
risks, and processes of VfM analysis,
it is useful to summarize the current
use of P3s in delivering transportation
projects in the US and abroad.
Transportation investment frameworks
Transportation agencies around the country are dealing with limited budgets and
rising debt levels. PwC studies shows that a comprehensive Value for Money (VfM)
analysis may help articulate the value that a public-private partnership (P3)
could provide when compared to more traditional means of project delivery.
The University of Melbourne conducted a study
of 42 traditional procurement projects and 25
P3s and concluded that P3s provide far greater
cost certainty.

3. 3
P3s in the
transportation sector
A P3 is a contractual arrangement
between a public agency and
a consortium of private-sector
companies that results in greater
private participation in the delivery
of an infrastructure project. In such
arrangements, the private consortium
may design, build, finance, operate,
and/or maintain a transportation
asset, such as a road, mass-transit
system, bus and light rail system, port
infrastructure, or parking facility,
for a contracted period. Consortium
members may raise debt and provide
equity to directly invest in the project,
with the consortium’s revenue derived
from user fees, ancillary revenues and/or
payments provided by the public agency.
Recent efforts by President Obama
and Congress to encourage private
investment in public infrastructure
aim to raise awareness that P3s are a
viable solution to restoring America’s
fraying transportation infrastructure,
as they carry a reputation for
introducing efficiencies and reliability
into a project’s delivery. Under a P3
arrangement, not only can the private
consortium provide expertise and
sorely needed capital, but also share
the risks with the public sector, with
each party taking on the ones it is most
capable of managing (see Figure 1).
P3s also have earned a strong
reputation for the ability to deliver
projects on time and reduce the
potential for cost overruns that can
afflict many multiyear transportation
projects. This is because schedule
performance becomes critical when
the private sector is also responsible
for financing the project. The
assertion that P3 arrangements may
provide incentives for improved
cost and schedule performance is
also supported by a University of
Melbourne study. The study looked at
42 traditional procurement projects
and 25 P3s and concluded that P3s
provide far greater cost certainty.
The researchers found that once the
contract had been signed, P3s had
an average cost escalation of just 4%,
while traditional procurement projects
had a much higher average cost
escalation of 18%.1
Factors in the procurement decision
Traditionalprocurement
Publicprivatepartnerships
Efficient risk allocation
Procurement time
Total lifecycle cost
Transaction costs
Price and delivery certainty
Project tax burden
Accelerated construction
Government involvement in operations
Figure 1. Factors affecting the procurement decision
Source: PwC analysis

4. Figure 2. Recent large transportation projects indicate significant cost efficiencies for projects delivered as P3s
Project Location Delivery
method
Owner’s
estimate
(USD)
Bid
(USD)
Percent below
owner’s
estimate
Successful
bidder
Presidio Parkway California ABP $471m $272m 42.3% Flatiron/Kiewit
I-595 Florida ABP $1.9bn $1.3bn 32.6% ACS/Dragados
Ohio River
Bridges: East
End Crossing
Kentucky ABP $987m $763m 22.7% Walsh
Ohio River
Bridges:
Downtown
Crossing
Indiana DB $950m $860m 9.5% Walsh
ABP = Availability-based Payment
DB = Design Build
Source: Creative Infrastructure Solutions
4 Transportation investment frameworks
Well established in the UK, Australia,
and other parts of the world, P3s in
transportation have been slow to
gain momentum in the US. Between
1985 and 2011, 821 P3 transportation
projects were funded worldwide,
of which only 70 were in the US,
according to Public Works Financing’s
International Major Projects Database.
In contrast, 265 were funded in
Europe, and 260 in Asia and Australia.
But now, more than 30 states have
adopted P3-enabling legislation,
demonstrating growing interest in
partnering with the private sector in
new ways to deliver transportation and
other public infrastructure projects.2
Moreover, there’s a growing appetite at
the federal level for private investment
in infrastructure and the use of
the P3 model. This is evidenced by
increased funding for such initiatives
as the Transportation Infrastructure
Finance and Innovation Act (TIFIA),
which supports the majority of P3
transportation projects in the US. The
Obama Administration also introduced
the GROW America Act into Congress
in mid-2014 and launched a Build
America Transportation Investment
Center within the US Department
of Transportation. And the Federal
Highway Administration (FHWA)
launched the P3-VALUE toolkit in
2013 that aims to foster a better
understanding of the analysis used
in comparing P3 alternatives with
traditional procurement. In other
sectors, Congress passed the Water
Resources Reform and Development
Act that includes a Water Infrastructure
Finance and Innovation Authority
(WIFIA) to provide credit assistance for
drinking water, wastewater and water
resources infrastructure projects. With
a growing number of P3 transportation
projects implemented in the US,
signs are beginning to emerge that P3
arrangements can be cost effective
for large-scale, complex projects,
particularly when P3 availability-
based payment structures are used,
and that P3s may deliver greater
cost efficiencies than DB methods
(see Figure 2).

5. Figure 3. Comparison of traditional procurement with public-private
partnership in delivering projects
Traditional procurement Public-private partnership
• Either performs the design work
in-house or contracts it to an
engineering design firm.
• Engages one or more construction
contractors through
competitive bidding.
• Retains the majority of the risk
associated with the project.
• Typically awards a single private-
sector contract to design, build,
finance, operate, and/or maintain
an asset.
• Transfers a portion of the risk to the
private sector.
• Typically remits payment when
services are delivered.
Source: PwC analysis
Addressing P3 challenges
There are many reasons for the
relatively small number of P3s in
the US, but one of the most critical
challenges has been the difficulty
in assessing the risks and benefits
of combining public and private
sector resources to deliver public
infrastructure in the face of fiscal and
ethics scrutiny.
To help overcome that obstacle, some
countries, including the UK, Canada,
and Australia, and a small number of
jurisdictions in the US have developed
and refined a VfM methodology
to evaluate various approaches to
delivering transportation projects
and help them make investment and
procurement decisions. VfM analysis
guides investment decision making, as
public officials weigh the roles of the
public and private sectors in delivering
a specific project and determine the
delivery method that is the most
efficient and offers the greatest value
(see Figure 3).
5

6. The UK government defines VfM as
the optimum combination of whole
lifecycle costs and quality (or fitness
for purpose) of the good or service
to meet the user’s requirement. A
similar definition is also provided
by the Commonwealth of Virginia’s
Office of Transportation Public-Private
Partnerships: “The procurement of a
[Public-Private Transportation Act]
PPTA project represents VfM when—
relative to a traditional project delivery
method—it delivers the optimum
combination of net life cycle costs and
quality that will meet the objectives of
the project and the commonwealth.”3
The analysis process adopted in several
jurisdictions in the US, as well as
overseas, is designed to compare each
project delivery method to determine
which is likely to deliver this optimal
combination over the project’s entire
lifetime, from procurement to long-
term operation and maintenance.
Government investment decisions
are traditionally focused on financial
and economic considerations, but a
VfM approach takes a much broader
perspective and accounts for both
quantitative and qualitative factors.
While a VfM analysis is often used
in evaluating potential P3 projects,
it can be applied to other types of
procurement decisions, such as
selecting between a DBB and a DB
delivery method for a publicly financed
project. It can also be used to assess
P3 projects delivered in other sectors,
such as health, education, and energy.
Figure 4. VfM analysis measures relative financial benefit
6Develop SBM*
Develop PSC*
Compare PSC
with SBM to
determine option
with greater VfM
Receive actual
P3 bids
Compare PSC
with actual bids
to determine
option with
greater VfM
• When bids are
first received
• During bidder
selection
• Prior to closing
the deal
*Note: The public sector comparator (PSC) and the shadow bid model (SBM) are constructed—typically before bids are received—to estimate the
costs of a project to determine if it would be better undertaken by the public or the private sector.
Source: PwC analysis, based on interviews in the UK, Australia, and Canada

7. 7
A closer look at VfM
Using private-sector skills and
capital in a P3 arrangement can add
layers of complexity to a project’s
development and implementation.
Therefore, a comprehensive evaluation
can give the community confidence
that a P3 arrangement was chosen
because it provides clear benefits that
outweigh the associated costs or risks
of involving the private sector—or
conversely, to support the decision to
use another delivery method. Public
acceptance is critical for any public
infrastructure project, but potentially
more so for the private companies
involved in a P3 arrangement as
investors and contractors may not earn
a return on investment until the project
is operational.
Conducting a VfM analysis
VfM analysis is used to assess projects
in transportation and other capital-
intensive sectors. The two key
quantitative elements are the public-
sector comparator (PSC) and the
shadow bid model (SBM). The PSC
represents the whole lifecycle, risk-
adjusted cost estimate for a project
if it were delivered and financed by
the public sector. Depending on the
agency, a DBB or DB delivery method
may be used in determining the cost
structure of the PSC. Calculated
before bids are received and subject to
updating throughout the procurement
process, the PSC uses financial and
statistical modeling techniques to
estimate project cost and provides
the benchmark for measuring VfM
(see Figure 4 on page 6). The SBM
represents the risk-adjusted cost
estimate to the government for the
same project delivered by the private
sector, which could be responsible for
the design, construction, financing,
operation, and/or maintenance of
the asset. Like the PSC, the SBM is
constructed before bids are received,
using financial and statistical
modeling. It acts as a “proxy bid,”
providing an estimate of the bids likely
to be received from private consortia
if the project were structured as a P3.
After the actual bids are submitted, the
SBM is no longer used because the bids
can be compared to the PSC to assess
whether there is value in proceeding
with a P3 arrangement.
Although VfM can be a lengthy process and its accuracy is dependent
upon the quality and reliability of the data inputs, using a transparent
modeling process, agreed inputs, and sensitivity analyses can result in a
key investment tool for transportation decision makers.

8. 8
VfM in practice
By simply comparing the PSC and
SBM, government agencies can
sometimes decide early on whether
there may be value in delivering
their project as a P3. In the UK,
the VfM analysis process helps the
government select among traditional
delivery methods and various forms
of P3s, including the Private Finance
Initiative (PFI). In a PFI in the UK,
the government contracts to buy
services from the private sector on a
long-term basis, often 15 to 30 years.
Typically, the private sector assumes
responsibility for designing, building,
financing, operating, and maintaining
an asset, and in turn, it receives annual
payments from the government.
Despite a decline in popularity in
recent years, the UK still closed 25 PFI
deals with a total value of £2.3 billion
between March 2011–2012.5
As of March 2013, there were over
700 current PFI contracts in the UK,
with over 650 in operation, and a total
capital value of over £54 billion.6
Other countries, notably Canada and
Australia, follow a similar approach
to the UK in their VfM analysis
process. But there are a few important
differences. While the UK has strong
national leadership on developing
VfM analysis guidance, the provinces
in Canada and states in Australia have
taken a primary role. And unlike the
UK’s more streamlined, standardized
VfM analysis template, Canada and
Australia generally require customized
tools for each project. Importantly,
each jurisdiction has developed a
process that best meets its needs. The
US appears to be following a similar
path. While tools such as the P3-VALUE
toolkit foster an understanding of
the analysis process, several states
are adopting VfM analysis on a
case-by-case basis to support their
own particular investment decision-
making processes. This is often in the
absence of established regulations or
formalized templates to support the
analysis process.
Qualitative factors
Although financial and other data are a
central element of a VfM analysis, it isn’t
strictly a numbers exercise. To provide
a complete picture of the relative value
that the delivery methods may provide,
government agencies in other countries
also consider qualitative issues. For
example, the UK process places an
emphasis on such qualitative factors as
environmental and safety concerns and
Transportation investment frameworks
use of innovative design or technology.
The VfM analysis can examine a
variety of qualitative factors, such
as an innovative approach to reduce
carbon emissions, the use of more fuel-
efficient or electric vehicles, or effective
integration of rail transportation with
pedestrian, bicycle, and bus access.
In addition, a qualitative analysis
can consider the implications for the
agency of entering into a long term
contract such as a P3, and the potential
political and financial ramifications of
cancelling the project already procured,
if circumstances change.
While harder to measure, qualitative
factors can bring into play important
considerations. They can be especially
important in a VfM analysis when the
financial differences between a P3 and
public delivery are marginal or there
are concerns about the reliability of
quantitative factors.

9. 9
Risk assessment and
management
Rigorous risk assessment and
management are among the most
critical factors in calculating VfM.
Government agencies must compile
a comprehensive list of potential
technical and other risks across the
project lifecycle, decide how the risks
will be allocated among the project
partners if a P3 is being considered,
and develop a risk management plan
for risks remaining with the public
agency. Internal specialists, with input
from financial and technical advisors,
are typically responsible for assisting
with the risk assessment.
Once completed, a thorough VfM
analysis provides valuable information
that can improve the quality of
decision making in a number of ways.
It helps government decide how best
to allocate public funds and make
appropriate use of any available
private capital. In addition, it focuses
on the full lifecycle costs rather than
the individual parts of the project,
allowing for better integration and risk
mitigation between the project phases.
It can also help to confirm and clarify
the project scope, which is a key factor
in determining the project cost inputs.
It may also be used to assess scope
changes throughout the contract,
providing an audit trail and discipline
around proposed changes. Finally, it
provides consistency across all projects
and transparency about how the public
agency determines whether to deliver
the project under a P3 arrangement or
select a different approach.
But a VfM analysis isn’t simple
or inexpensive. It requires input
from financial and other technical
specialists, who are often external
advisors. It can be a costly and lengthy
exercise, and it requires continuous
review and assessment through to
financial close. Furthermore, the
accuracy of VfM analyses is dependent
upon the quality and reliability of the
data inputs. Critical inputs include the
discount rate that discounts the project
cash flows to provide a net present
value of delivery, the value of the
risks transferred to the private partner
under the SBM, and the value of any
revenues (such as tolls) included in
the analysis. To address concerns over
the impact that such critical inputs
often have on the analysis results, the
UK and other jurisdictions incorporate
a sensitivity analysis into the VfM
analysis process to illustrate a range
of potential outcomes for the project
under each delivery method.
Rigorous risk assessment and management are among the most critical
factors in calculating VfM.It is also critical for private investors
evaluating greenfield project investments and a similar, rigorous risk
assessment and management process can prove beneficial.

10. 10
The UK experience
The UK’s experiences in incorporating
VfM analysis in the P3 investment
decision making process for its PFI
program—and its successor, the PF2
program—can provide useful insights
for other governments considering
their own process and deciding on
the best delivery approach for their
transportation projects.
Under the UK process, the public
agency or department responsible
for the transportation project
conducts the VfM analysis at three
key points—the program, project,
and procurement stages—to answer
questions about viability, desirability,
and achievability in assessing the
suitability of a P3 arrangement. Using
the same analytical tool throughout
the decision-making process provides
consistency and clarity to the public
sector, contractors, investors, and the
general public. As this is a continuous
and iterative process, the quantitative
data can be refined throughout the
stages of analysis.
The purpose of the VfM analysis at the
initial program stage is to identify
projects that may be suitable for P3
delivery. This early analysis produces
high-level estimates of costs, risks,
feasibility, and other issues that
are checked against evidence from
past projects and experiences for
reasonableness. If a project is deemed
appropriate for a P3, the procuring
authority produces an “investment
program” with estimated project
breakdowns and timing, which is
passed on to the project team.
The more detailed analyses at the
project level are intended to support
the business case for a P3. Assumptions
made during the program stage are
verified, and any remaining issues are
identified that could prevent a P3 from
succeeding, such as lack of market
interest. The end result is an “outline
business case” to be reviewed by
various government officials.
Transportation investment frameworks
Releasing the results of the VfM analysis to the public can provide the
kind of transparency that helps taxpayers and other stakeholders
understand why a private or public delivery method was chosen for a
particular transportation project.

11. 11
If a P3 is considered the preferred
option, the next step is the
procurement level assessment. The
goal is to ensure that value is still
achieved by a P3 at this point in the
process. The project team conducts a
continuous assessment to check that
market conditions, the competitive
landscape, and the proposed risk
allocation continue to support the
use of a P3. Bids are analyzed at the
procurement level, leading to the
selection of the preferred bidder.
The UK doesn’t compare actual bids to
the PSC, but jurisdictions in Australia
and Canada continue to compare bids
to the PSC until the project reaches
financial close.
In fact, the UK simplified its VfM
analysis so that the procuring authority
is not required to develop a detailed
PSC or SBM because of the high cost of
doing so and the potential limitations
of the available data. Instead, a
standard, simplified spreadsheet tool
is used for the quantitative aspects
of the VfM analysis. The spreadsheet
provides a model with set inputs and
formulas for calculating outputs such
as net present value and rates of return
(see Figure 5 above). VfM analysis
inputs include capital and operating
expenditures, optimism bias, lifecycle
costs, transaction costs, financing
costs, and tax factors. The supporting
tools are designed to help deliver
Figure 5. Inputs and outputs of quantitative VfM analysis in the UK
Inputs (variables)
• Timing
• Escalators
• Discount rate
• Capital & operating expenditures
• Optimism bias
• Lifecycle costs
• Transaction costs
• Third-party income
• Flexibility factors
• Indirect VfM factors
• Tax
• Financing costs
• User charges*
Outputs (calculations)
• Equity internal rate of return Rate of return on
investment for project equity capital investors.
• Project internal rate of return Return on
total project cash flow where cash flow equals
total income of private party accrued over the
life of the project less incurred costs by the
private party.
• Conventional Procurement (CP) net
present value costs Difference between cost
of present value cash inflows and present
value cash outflows for a CP.
• Private Finance Initiative net present value
Difference between cost of present value
cash inflows and present value cash outflows
for proposed PFI.*Note: User charges are an optional input and may vary based on type of project. Risks are not referenced as
an input as they often form part of the cost base. Consideration of how project risks are reflected in the inputs
is critical so that risks are not double counted in the analysis.
Source: UK HM Treasury VfM Assessment Guidance
Sensitivity analysis
• Assesses the effects of varying
key input values
(e.g. capital and operations costs,
discount rate).
• Tests the vulnerability of outputs
to changes in inputs.

12. 12 Transportation investment frameworks
Releasing the results of a VfM analysis
to the public can provide the kind of
transparency that helps taxpayers
and other stakeholders understand
why a P3 or a public delivery method
was chosen. Such transparency is
particularly important in the US, where
the public’s opposition to private-sector
involvement in critical infrastructure
assets has derailed some proposed P3s.
The US experience
Already, several states in the US have
used evaluation methods on a project
basis that include some of the features
of the UK’s VfM analysis process.
Two examples are a major highway
project in Florida and a courthouse
in California.
The Florida Department of
Transportation conducted a VfM
analysis, relying primarily on a cost
comparison of two delivery methods,
for its $1.2 billion I-595 highway
project in Broward County. During
a pre-bidding analysis, the agency
considered the projected costs on
a net present value basis for both a
design-build-finance option and a
design-build-finance-operate-maintain
concession. Florida’s VfM analysis
determined that the latter offered
better value. After the contract close,
another VfM analysis was conducted to
assess whether the results of the pre-
bidding analysis remained accurate. It
found that the P3 concession appeared
to provide even greater value than
envisioned in the original analysis.8
Similarly, for a new $495 million
courthouse in Long Beach, California,
government officials retained outside
advisors to conduct VfM and risk
analyses to help decide between
a traditional state financing and
management approach and a P3
arrangement. The analyses for the
PSC and P3 were both undertaken
on a net present value basis. The
PSC considered the project as if it
were delivered via traditional state
DBB methods. In each case, the net
present value accounted for all of
the estimated costs and risks of the
two project delivery methods. The
financial analysis concluded that the
P3 would likely result in better value
for the money than traditional state
bond financing.9
These examples demonstrate that
VfM analysis in the US has been
conducted by the procuring agency
with the support of stakeholders and
advisors on a project-by-project basis.
This ad-hoc approach may result in
an agency “reinventing the wheel”
each time the analysis is conducted,
resulting in additional costs and
time to conduct the analysis and
overlooking any best practices or
quality and consistency throughout the
VfM analysis process and to be used by
officials without the requirement for
in-depth financial modeling expertise.
But recognizing that the analysis is a
dynamic process, the UK continues
to assess the effectiveness of current
tools and consider modifications,
particularly as projects are delivered
and consideration is given to the
value realized.
Once a project enters the construction
stage, the VfM analysis process doesn’t
end. The UK’s National Audit Office
may conduct an objective, independent
assessment of the VfM analysis
throughout the life of a project and
release the results in public reports.
The office may assess whether the
estimates and assumptions made
during the VfM analysis were accurate
and whether a P3 truly does offer the
best value.
For example, the audit office examined
a VfM analysis developed by the
Department for Transport and the
Office of Rail Regulation for procuring
rolling stock to increase rail capacity for
passengers in England and Wales. The
report concluded that it was too early
to assess whether or not the expected
value would be achieved, but criticized
the analysis for a variety of weaknesses
and a failure to take into account the
sensitivity of rail demand, economic
growth, and an economic downturn.7

13. 13
lessons learned from other projects.
The approach by FHWA to develop an
analytical toolkit and the approach in
Virginia to develop guidance on how
the Office of Transportation Public-
Private Partnerships will assess VfM
are important as they seek to provide a
level of consistency and transparency
across the analysis process, as well
as reduce the variability and cost of
conducting the analysis.
Lessons learned and
applied
Certainly, the experiences and lessons
learned from other countries are
valuable in determining how VfM
analysis may further support US
agencies as they engage with the
private sector to meet their growing
transportation needs. The lessons
learned provide a baseline for US
agencies to leverage as private-
sector participation in the delivery
of public infrastructure projects
gains momentum.
In the US, a comprehensive VfM
analysis can:
• Assist public officials in comparing
potential delivery methods,
including both P3s and more
traditional approaches such as DBB
and DB, based on an evaluation of
the long-term value. As a result,
they could gain a more thorough
understanding of the potential
benefits and risks of encouraging
the private sector to assume and
manage some of the key project
delivery risks.
• Provide a consistent approach,
whether developed at the national
or state level, to help streamline
the evaluation process across
projects, establish a minimum
standard of quality, and reduce
procurement and transaction costs.
If projects seeking federal funding
were required to complete a VfM
analysis, states and municipalities
would be encouraged to adopt
a rigorous analysis and provide
The experiences and lessons learned from other
countries are valuable in determining how VfM
analysis may further support US agencies as
they engage with the private sector to meet their
growing transportation needs.

14. greater consistency across the
project assessment and procurement
processes. A common VfM analysis
process would also make it easier
for federal transportation officials to
fairly evaluate project applications
because they would be based on a
similar methodology.
• Offer a valuable tool for use
throughout the various project
stages, providing consistency to the
public sector, contractors, investors,
and the community. Importantly,
it would indicate to the market
that governments acknowledge the
private sector’s role in delivering
public infrastructure projects
and are committed to adopting a
level of rigor, transparency, and
predictability in assessing how the
public and private sectors might work
together to address the country’s
growing transportation and public
infrastructure needs. This may help
to accelerate the development of a
sustainable pipeline of P3 projects
in the US to further encourage
private investment.
• Take into account the whole lifecycle
costs and other effects of a project
from early in its development,
allowing for more efficient delivery
and better management and
resolution of significant risks and
issues across the project phases.
This could help reduce maintenance
backlogs by providing agencies with
greater clarity on asset lifecycle costs.
• Incorporate both qualitative
and quantitative issues into the
evaluation and include a thorough
assessment of the project’s technical,
commercial, and financial risks.
• Encourage transparency about the
process of determining the delivery
method that can provide the greatest
value for a particular project and
deciding on the winning bid. It
may also help clarify the role of the
government and the private sector
in P3s and assist state and local
agencies in building the community
understanding and acceptance
that are crucial to the success of
such partnerships.
Concern over the reliability of
VfM analysis results has been well
documented in the UK and other
jurisdictions, particularly the impact
of critical inputs on analysis results.
However, by using a transparent
modeling process, agreed inputs, and
sensitivity analyses, the VfM analysis
process can provide a key tool in
investment decision making for policy
makers and transportation officials
at all levels of government who are
contemplating significant investments
in infrastructure projects.

15. Endnotes
1. Duffield, Colin, Report on the Performance of PPP Projects in Australia When Compared with a Representative Sample of Traditionally Procured
Infrastructure Projects, Melbourne Engineering Research Institute, the University of Melbourne, 2008.
2. Bosh, Courtney, “VFM: A useful tool for procurement authorities but not a deciding factor”, IntraAmericas. May 22, 2013.
3. Ibid.
4. United Kingdom National Audit Office, Lessons from PFI and Other Projects, 2011.
5. UK Private Finance Initiative Project, Summary data as of March 2012
https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/207369/summary_document_pfi_data_march_2012.pdf,
accessed October 15, 2014
6. Private Finance Initiative Projects, 2013 summary data, HM Treasury, December 2013,
https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/267590/PU1587_final.pdf, accessed October 15, 2014
7. UK National Audit Office Report, Increasing Passenger Rail Capacity.
8. Florida Department of Transportation I-595 Corridor Roadway Improvements Value for Money Analysis, 2009.
9. New Long Beach Courthouse: A Performance-Based Infrastructure Court Facility Project, Joint Legislative Budget Committee, June 9, 2008,
http://www.courts.ca.gov/documents/longbeach-suppreport.pdf, accessed September 8, 2014.

16. For a deeper discussion about
the role of VfM analysis in
supporting capital investment
decisions, please contact:
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PricewaterhouseCoopers International Limited, each member firm of which is a separate legal entity. This document is for general information purposes only, and
should not be used as a substitute for consultation with professional advisors. AT-14-0131.
www.pwc.com
Peter Raymond
Tel +1 703 918 1580
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Tel +1 713 356 5871
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Tel +1 703 918 3273
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