Section 1: Assessing VFM

Demonstrating VFM requires an increasingly detailed comparative qualitative and quantitative assessment at various stages of the Privatization approval process. This begins with an identification, at the First File, of the factors which may enable the Privatization project to provide adequate VFM management. Furthermore, at the Second File, a qualitative assessment of value shall be provided, with identification of the project's key drivers of value. For the Third File, a quantitative assessment shall be performed, comparing the net present value (NPV) of the cash flows of the public sector option (PSC) with that of the Privatization option. To support approval of the Privatization option, the analysis must demonstrate that the NPV of the preferred Privatization procurement approach is no worse than that of the public sector one. This comparative VFM assessment shall be updated at the Fourth File, based on the actual proposal of the preferred bidder.

This approach is summarized below.