The table in figure 3 summarises the above points. It is in effect a cost-benefit analysis of PPPs relative to conventional procurement. In practice it will be very difficult or impossible to assign dollar values to all the elements; however, in weighing up the pros and cons it is useful to think in dollar terms, as that ensures that appropriate relative weightings are given to each of the elements:
Figure 3: Pros and Cons of PPPs
| Value for Money Criteria | Likely benefit of using PPP over alternative, in dollars |
Pros | Whole of life cost savings - ie, the combination of construction and ongoing operating and maintenance costs |
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Financing cost savings (during construction) |
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Greater user benefits |
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Likely to access additional revenue sources - creative ideas for extracting more value from the infrastructure, eg, property development or advertising, etc. |
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Greater cost certainty and therefore better decision-making by the public sector |
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Greater community benefits - ie, works undertaken for the benefit of the surrounding community |
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Cons | Tendering and contracting costs |
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Cost of contract variations - ie, the additional cost of changing contractual provisions above and beyond what it would cost if change was negotiated competitively |
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Contract enforcement - difficulties with contract enforcement and specification of performance dimensions |
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Net value-for-money of PPPs cf conventional procurement: |
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