1.3  Value for money (VFM)

The importance of public infrastructure procurement being able to achieve VFM11 remains a critical consideration in business case development and the prioritisation of projects across all jurisdictions. While the money in VFM is associated with the costs of project delivery and operation, value in VFM is associated with measures of benefits including service delivery outcomes and user experiences.

In the PPP market, it appears that any general media criticisms associated with service and user experience in a few projects can outweigh the greater number of PPPs that have been delivered on-time and on-budget, and which operate successfully in meeting contracted Key Performance Indicators (KPIs).12

Public-Private Partnerships typically deliver projects within cost and time expectations, and the transfer of risks to the private sector are real. In many examples the public purse has been protected from cost overruns13 and the pressure to perform has PPP projects consistently being delivered on-time or early.

Current literature is inconclusive as to whether VFM is held over the long-term operational phase of PPP projects. This research considers whether the pricing received in the initial PPP transaction is maintained during the operational phase of the agreement.