1.121 The Spreadsheet allows Procuring Authorities to take account of additional VfM factors that they judge to be appropriate for particular projects (known in the Spreadsheet as "Indirect VfM Factors")12. These can have a positive or negative economic impact. If a value is imputed to any of these Indirect VfM Factors in the Spreadsheet, then that value must be explained and substantiated by the Procuring Authority.
1.122 For the purposes of the Spreadsheet, Procuring Authorities should seek to identify and value only those Indirect VfM Factors that are likely to arise differentially under one or other of the two procurement methods being assessed. Indirect VfM Factors that are common in nature and economic effect to both procurement methods can therefore, be ignored in the Spreadsheet.
1.123 The economic impact of the Indirect VfM Factors needs to be derived by the Procuring Authority. They are reflected by the Procuring Authority computing the monetary value of the costs or benefits that arise13. The Spreadsheet incorporates the economic impact of Indirect VfM Factors by adding their net present value (which might be positive or negative) as an Input Value to the net present value of the PFI Option. If the impact of a particular Indirect VfM Factor is likely to be protracted over a number of years (perhaps even lasting the whole of the Contract Period), then Procuring Authorities will need to estimate the present value of this benefit or cost stream when inputting a value into the Spreadsheet. The discount rate used should be consistent with that used for the remainder of the discounted cash flow analysis.
12 As set out in Chapter 19 of the Green Book
13 See Annex 2 The Green Book (www.hm-treasury.gov.uk/greenbook)