4.1 The Treasury expects Departments to make three assessments of VFM for PPP schemes:
(a) At a programme level to determine whether private finance is appropriate and likely to represent good VFM across a sector;
(b) When scoping a project, to determine the right project specification and the right choice of procurement route, as part of the business case for the project; and
(c) During the tendering to ensure that the procurement approach remains the best option, especially in the light of competitive interest and market capacity.
4.2 It is also important to evaluate the VFM of PPP schemes once they are operational to ensure they are achieving the intended benefits, learn lessons and inform other procurement decisions. But there is no formal requirement for public authorities to do so.
4.3 Value for money is a relative concept. A project's VFM can only be assessed against a suitable comparator. This often involves hypothetical comparators, such as not doing the project (an absolute assessment), or other ways of achieving the project's intended outcomes (a counterfactual assessment). The VFM of a project can also be tested by comparing it to other similar projects (a relative assessment). The strongest assessments use all three comparisons.
4.4 The assessment of whether private finance will achieve VFM is only one of the questions that must be answered by a comprehensive business case. The National Audit Office has particularly argued for a reduced emphasis on cost modelling assessments of VFM because they can only contribute towards one of the questions that need to be answered (Figure 5).