| PFI Assurance Issue: | 5. Value for Money (VFM) …to provide assurance that the PFI contract will be (or continues to be) value for money (i.e. viable, desirable & achievable) where the project/programme VFM analysis is comprehensive, robust, accurate, valid, with inputs benchmarked, independently certified or obtained in competition, an appropriate allowance for risk, in accordance with relevant guidance. | |||||
| Commercial/Financial Assurance Guide Ref: | DE&S Finance Instruction: 06/08, "Through Life Financial Assurance": 1. Value for Money & 4. Estimates | |||||
| Relevant MOD policy/guidance used as measure for assurance: | Relevant external policy/guidance used as measure for assurance: | |||||
| • MOD PFU Guidance Note - Assessing Value for Money for PFI Projects • MOD PFU Guidance Note - MOD Standard Project Agreement v1 for PFI Projects • MOD PFU Guidance Note - VFM reviews • [MOD Guidance Note - Tips on using estimates, assumptions & cost inputs when analysing affordability & vfm of PFI projects]21 • JSP 507 | • HMT Value for Money Assessment Guidance, dated Nov 2006 • HMT Value for Money Quantitative Assessment Guide, dated Nov 2006 • HM Treasury: Standardisation of PFI contracts (SoPC) Version 4 • Value Testing HMT/PUK guidance • OGC Getting Value for Money from Construction Projects through Design • Operational Taskforce Note 1: Benchmarking and Market Testing Guidance • HM Treasury: The Green Book, [Appraisal and Evaluation in Central Government] • OGC Best Practice - VFM - Evaluation in Complex Procurement | |||||
| Evidence Required for each Procurement Phase | ||||||
| All phases: • COEIA/IA • Master Data Assumption List (MDAL) | ||||||
| Up to Initial Gate: | Up to Market Engagement: | Up to close dialogue and Preferred Bidder appointment: | Up to Main Gate: | Up to Contract Award: | Post Contract Award22: | |
| • Stage 1 & 2 qualitative & quantitative vfm assessments
| • Confirmation from acquisition team and its financial advisors23 that the proposed contract is VFM • Value testing & VFM Review mechanism in the Project Agreement • Benefits realisation plan | • Value testing (Benchmarking & Market Testing) & VFM Review reports • Project Evaluations, LFE reports and OGC Gateway 5 reports • Benefits tracking and evidence of benefits realisation | ||||
| • Stage 2 qualitative & quantitative vfm assessments • Plans for a funding | • Stage 3 qualitative & quantitative vfm assessments • Plans for a funding competition | • Stage 3 qualitative & quantitative vfm assessments • Plans for a funding competition | • Stage 3 qualitative & quantitative vfm assessments • Evidence of & results from funding competition | |||
__________________________________________________________________________________________
21 To be drafted.
22 The focus post contract award is assurance of ongoing vfm and continuous improvement. This may be demonstrated via benchmarking, market testing or vfm reviews.
23 External Assistance advisors letter of support addressed to MoD PFu must cover:
Whether the deal is appropriately structured to deliver the commercial outcome the MoD is seeking and that it is a realistic commercial position that represents value for money and is deliverable and financeable in the current PFI market;
Whether the commercial aspects of the project have reached an appropriate level of maturity to support the current phase of engagement with the market and identify significant areas outstanding where the MoD could be exposed to risk of increased cost or delay through lack of maturity; and
Whether the timetable proposed to deal close is realistic indicating key risks that may impact on the delivery of the timetable.