01340345

Component

Recent high-profile public-private partnerships (P3s) have generated significant interest in utilizing novel contracting methods to reduce costs and transfer risks associated with transportation infrastructure. Determining that a P3 will outperform a traditional approach to construction, financing or maintenance is not easy, however. Uncertain costs and risks extend far into the future. Governments in the UK, Canada and Australia use similar approaches to assessing P3 projects to determine their overall expense relative to the overall expense of traditional procurement or management. These “Value for Money” (or VfM) approaches involve developing a Public Sector Comparator which estimates total public-sector project cost, and then comparing that to the P3 cost estimate. Setting a value for risks retained and for risks transferred between the public and private sectors is the largest challenge. Governments in the three countries do through risk-assessment processes and meetings. Countries differ in their approaches to Value for Money analyses: the UK does the analyses at three levels – the program, procurement and project levels – increasing its quantitative precision with each step. In Canada, Quebec and British Columbia include VFM analyses in the larger assessment of a project’s overall business case, integrating the process and doing it only once. In Australia, guidelines direct that VfM analyses be done only after the project is defined and proposals from contractors have been submitted. In all cases, the VfM process is laborious and requires skilled analysis to ensure accuracy. The US has limited experience with P3s and almost none with VfM.

01329018

11-4036

English

14p

2011

Transportation Research Board 90th Annual Meeting

DVD

Figures (3) ; References (14)

Cost estimating; Finance; Public private partnerships; Risk assessment; Transportation policy; Valuation

Value for money

Australia; Canada; United Kingdom

Finance; Highways; Public Transportation; I10: Economics and Administration

Transportation Research Board Annual Meeting 2011 Paper #11-4036

TRIS, TRB

Feb 17 2011 6:44PM