All PFPs are to be the subject of a comprehensive economic appraisal. This examines whether the project is worth doing, that is whether the social benefits of investing in the infrastructure exceed the social costs.
PFP procurement can potentially deliver both significant benefits in the quality of services and reductions in the cost of providing them.
Value for money from private sector involvement will be determined by evaluating the project's costs and benefits. Key quantitative tools in this evaluation will include the economic appraisal and the Public Sector Comparator (refer to section 7).
To ensure objective evaluation a range of technical, economic and social criteria will also be used, as outlined in the public interest evaluation (see Appendix 2).
The value for money drivers of PFPs include:
• Improved risk management: More rigorous risk evaluation and transfer to the private sector of those risks it is best able to manage, including those associated with providing specified services, asset ownership and whole-of-life asset management.
• Ownership and whole-of-life costing: Improved efficiency as design and construction become fully integrated up-front with operations and asset management.
• Single point of contact: Ongoing service delivery, operational, maintenance and refurbishment costs become a single party’s responsibility for the length of the contract period.
• Innovation: Wider opportunities and incentives for innovative solutions to deliver service requirements. Opportunities may include:
- Bundled services, through a package deal for all non-core services;
- Upgrades, of associated and complementary infrastructure; and
- Packaged information systems.
• Asset utilisation: Reducing costs to Government, as a sole user, through more efficient design to meet performance (i.e. service delivery) specifications and by creating complementary opportunities to generate revenue from use of the asset by others.
• Whole-of-Government outcomes: Contained within the objectives and strategies of the NSW Government’s Procurement Policy. These include non-asset and non-price related value-adding outcomes of wider interest to the Government, such as socio-economic and environmental outcomes.
These improved efficiencies and cost savings enable agencies to deliver better public services by allowing agencies to focus on the delivery of core services and use the savings generated to invest in the delivery of those core services.