Qualitative VFM analysis typically involves sense-checking the rationale for using PPP-that is, asking whether a proposed project is of a type likely to be suitable for private financing; as well as whether the conditions that are necessary to achieve value for money are in place, as described in Farquharson et al, [#95, pages 42-43]. This often takes place at a relatively early stage of PPP development-as such, qualitative VFM analysis may overlap with the 'PPP Screening' process described in Section 3.1.2: Screening for PPP Potential above-but may be repeated throughout the project development process.
Some jurisdictions have clearly-defined criteria for this analysis. For example:
• The UK Treasury has defined criteria for assessing suitability, and unsuitability, for a Private Finance Initiative (PFI-the UK's PPP model). Suitability criteria include the long-term, predictable need for the service; the ability to allocate risk effectively-including through performance-related payments and ensuring sufficient private capital at risk; the likely ability of the private sector party to manage risk and take responsibility for delivery; presence of stable and adequate policy and institutions; and a competitive bidding market. "Unsuitability" criteria include projects that are either too small or too complicated; sectors where needs are likely to change or there is a risk of obsolescence (for example, PFI projects are no longer used in the ICT sector in the UK); or where the contracting authority is inadequately skilled to manage PPP [#293]
• In France, "preliminary analysis" of a PPP includes checking against several criteria under three categories: PPP relevance-for example, appropriateness of an integrated, whole-of-life approach to managing a project; commercial attractiveness; and the potential for optimal risk allocation [#293]
• In the Commonwealth of Virginia, USA, assessment of a potential PPP at "high level" and detailed screening stages also considers proposed road projects against specific criteria to determine if the project is delivered under the Public-Private Transportation Act (PPTA)-that is, as a PPP. These criteria include whether a project is sufficiently complex to benefit from private sector innovation; whether a PPP can achieve appropriate risk transfer; and the degree of stakeholder support. The extent to which a project can generate revenues from tolls is also taken into consideration when assessing possible PPP structures. [#293]
The EPEC Guide to Guidance also includes a list of key conditions that should be met to have a higher probability of achieving Value for Money [#83, Chapter 1.2.4].