3.1. Qualitative Analysis
The purpose of the qualitative assessment is to subjectively test whether the objectives, service requirement and proposed structure of the project are likely to provide the private sector with sufficient scope to give the public entity and the end users value. The HM Treasury VfM assessment guide lists a few factors that need to be considered while undertaking the qualitative analysis:
1. Viability: assessing whether there are any efficiency, accountability or equity issues which demand that services are provided by the Government directly rather than through a PPP project. It also considers the extent to which the service requirements can be adequately captured in a contract based approach, with a clear specification in output terms for the PPP to transfer risk effectively to the appropriate parties.
2. Desirability: determining the relative benefits provided through different procurement routes, such as incentives and risk transfer in PPPs vis-à-vis the Government's lower cost of borrowing in conventional procurement. This requires an upfront consideration of the relative advantages and disadvantages associated with a long-term contractual relationship between the public and private sector, and the strength of the mechanisms that could be used to ensure that different benefits are realised.
| 3. Achievability: gauging the level of likely market interest, the skills and capacity of the private sector, their appetite for risk, any lender constraints and whether the procuring Authority has sufficient capability to manage the complex processes involved. |
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The analysis must incorporate a broad discussion of the qualitative assessment of the project's value, with reference to each of the value drivers. As a minimum, all of the issues identified should be addressed as part of this analysis. A useful tool for summarising the qualitative assessment is to adopt a scoring mechanism against each of the value drivers.