London Underground is following a thorough process for a financial evaluation

13  Value for money depends on a wide range of factors. Analysis of the financial implications of different options is one factor. This financial analysis typically involves three elements:

■  the preparation of a Public Sector Comparator. A Public Sector Comparator is a benchmark against which value for money is assessed. It is typically a cost estimate based on the assumption that assets are acquired through conventional funding and that the procurer retains significant managerial responsibility and exposure to risk;

■  an evaluation of bids, which produces estimated costs of the private sector option;

■  and a comparison between the two sets of costs.

14  With three separate infrastructure contracts to procure, and the largest Comparator by value yet prepared by any public entity, the financial analysis in this case involves a large amount of complex information. The effectiveness of the process adopted to prepare and manage this information is therefore a key part of the overall reliability of the financial analysis.

15  We have found that London Underground has undertaken an exceptionally thorough process in preparing the capital and operating costs of the Comparators and the estimated costs of the bids. Figure 1 presents the process in graphic terms.