In the intricate world of Public-Private Partnerships (PPPs), the Public Sector Comparator (PSC) stands as a critical analytical tool, providing governments with a hypothetical, risk-adjusted benchmark against which to evaluate the true value for money offered by a proposed PPP project. By meticulously estimating the whole-life cost of delivering the same infrastructure or service through traditional public procurement, the PSC enables a robust, "like-for-like" comparison that accounts for all relevant costs, including the often-overlooked cost of risks retained by the public sector. This comprehensive training course is designed to equip public sector officials, financial analysts, and PPP practitioners with the essential theoretical knowledge and practical skills required to construct, interpret, and critically apply the PSC methodology, ensuring transparent and fiscally responsible decision-making in the complex realm of PPP project evaluation. Without a thorough understanding of Public Sector Comparator (PSC) Fundamentals for PPP Evaluation, governments risk making suboptimal procurement choices, failing to accurately assess project costs, and potentially undermining the financial integrity of their infrastructure programs, underscoring the vital need for specialized expertise in this critical domain.

Duration: 10 Days

Target Audience

• Public Sector PPP Unit Members
• Government Financial Analysts and Economists
• Project Managers in public agencies
• PPP Legal and Technical Advisors
• Auditors and Oversight Body Personnel
• Infrastructure Planners and Policymakers
• Consultants specializing in PPP advisory services
• Professionals involved in public investment appraisal
• Postgraduate Students in public finance or infrastructure development
• Anyone involved in the financial evaluation of public projects

Objectives

• Understand the fundamental concept and purpose of the Public Sector Comparator (PSC).
• Learn about the components and structure of a comprehensive PSC model.
• Acquire skills in identifying and estimating all relevant costs for the PSC.
• Comprehend techniques for identifying, assessing, and valuing risks for PSC adjustments.
• Explore strategies for constructing the "raw" PSC for a given project.
• Understand the importance of adjusting the PSC for competitive neutrality.
• Gain insights into applying the appropriate discount rate for PSC calculations.
• Develop a practical understanding of comparing the PSC with PPP bids for Value for Money (VfM).
• Master sensitivity and scenario analysis for robust PSC conclusions.
• Acquire skills in utilizing spreadsheet software for PSC modeling.
• Learn to apply international best practices and guidelines for PSC development.
• Comprehend techniques for documenting and communicating PSC findings effectively.
• Explore strategies for managing data requirements and assumptions for the PSC.
• Understand the importance of PSC as a dynamic tool throughout the project lifecycle.
• Develop the ability to critically evaluate and challenge PSC analyses.

Course Content

Module 1: Introduction to the Public Sector Comparator (PSC)

• Defining the PSC and its role in PPP project evaluation.
• The purpose of the PSC: a benchmark for Value for Money (VfM).
• Historical context and evolution of the PSC methodology.
• Differentiating the PSC from traditional cost-benefit analysis.
• Overview of countries that utilize the PSC.

Module 2: Principles of "Like-for-Like" Comparison

• Ensuring comparability between the PPP option and the PSC.
• Defining the scope of services and output specifications for both options.
• Matching quality, reliability, and service levels.
• Addressing differences in project timing and implementation.
• Importance of a consistent basis for comparison.

Module 3: Components of the Raw PSC

• Definition of the "raw" PSC.
• Capital expenditure (CAPEX) estimation for public delivery.
• Operating and maintenance (O&M) costs for public delivery.
• Lifecycle costs and their inclusion in the PSC.
• Other direct costs associated with public delivery.

Module 4: Estimating Capital Costs for the PSC

• Methodologies for estimating construction costs for public projects.
• Land acquisition costs and associated expenses.
• Design and supervision costs.
• Contingencies and allowances for cost overruns.
• Data sources for capital cost estimation.

Module 5: Estimating Operating and Maintenance Costs for the PSC

• Identifying all O&M activities over the project lifecycle.
• Estimating routine maintenance, periodic maintenance, and major rehabilitation costs.
• Staffing and administrative costs for public operation.
• Energy, utilities, and other consumables.
• Benchmarking O&M costs from similar public projects.

Module 6: Risk Identification and Valuation for the PSC

• Identifying risks typically retained by the public sector in traditional procurement.
• Types of risks: construction, operational, financial, political, legal, demand.
• Methodologies for valuing retained risks (e.g., expected value, risk premium).
• Quantifying the cost of risk for inclusion in the PSC.
• Developing a risk register for the PSC.

Module 7: Adjusting the PSC for Retained Risks

• The concept of "risk adjustment" to the raw PSC.
• How to incorporate the quantified value of retained risks into the PSC.
• Examples of common retained risks and their valuation.
• Impact of risk adjustment on the final PSC value.
• Importance of realistic risk valuation.

Module 8: Adjusting the PSC for Competitive Neutrality

• Definition of competitive neutrality in PPPs.
• Identifying public sector advantages/disadvantages not present in the private sector.
• Adjustments for taxation, financing costs (e.g., lower public borrowing rates).
• Other competitive neutrality adjustments (e.g., regulatory costs, insurance).
• Ensuring a fair comparison between public and private options.

Module 9: Financial Modeling for PSC Construction

• Structuring a comprehensive PSC financial model in spreadsheet software.
• Building cash flow statements for the PSC.
• Incorporating all cost components, risk adjustments, and neutrality adjustments.
• Best practices for model transparency, auditability, and flexibility.
• Using formulas and functions for accurate calculations.

Module 10: Discounting and Net Present Value (NPV) for PSC

• The concept of time value of money and discounting.
• Selecting the appropriate discount rate for the PSC.
• Calculating the Net Present Value (NPV) of the PSC cash flows.
• Interpretation of the PSC NPV as the benchmark cost.
• Sensitivity of PSC to discount rate assumptions.

Module 11: Sensitivity Analysis and Scenario Planning for PSC

• Identifying key variables that influence the PSC (e.g., cost estimates, risk values).
• Performing sensitivity analysis on PSC components.
• Developing "best-case" and "worst-case" scenarios for the PSC.
• Stress testing the PSC model.
• Communicating the range of potential PSC outcomes.

Module 12: Comparing PSC with PPP Bids for VfM

• The final step in VfM assessment: comparing the risk-adjusted PSC with private sector bids.
• Calculating the VfM differential.
• Interpreting the results: when does a PPP offer VfM?
• Decision-making based on PSC comparison.
• Limitations of relying solely on quantitative PSC comparison.

Module 13: Qualitative Factors and the PSC

• Role of qualitative factors in the overall VfM assessment.
• Non-quantifiable benefits of PPPs (e.g., innovation, improved service quality, accelerated delivery).
• How qualitative factors can influence the final procurement decision, even with a higher PSC.
• Integrating qualitative and quantitative assessments.
• Case studies where qualitative factors played a significant role.

Module 14: Challenges and Criticisms of the PSC Methodology

• Data availability and reliability for PSC inputs.
• Subjectivity in risk valuation.
• Complexity of modeling and potential for manipulation.
• Difficulty in accounting for private sector innovation.
• Practical limitations in developing a robust PSC.

Module 15: Case Studies and Best Practices in PSC Application

• In-depth analysis of PSC development and application in various countries.
• Lessons learned from real-world PSC experiences.
• Evolution of PSC methodologies over time.
• Future trends in PSC and VfM assessment.
• Workshop: Hands-on exercise in building a simplified PSC model.

Training Approach

This course will be delivered by our skilled trainers who have vast knowledge and experience as expert professionals in the fields. The course is taught in English and through a mix of theory, practical activities, group discussion and case studies. Course manuals and additional training materials will be provided to the participants upon completion of the training.

Tailor-Made Course

This course can also be tailor-made to meet organization requirement. For further inquiries, please contact us on: Email: info@skillsforafrica.org, training@skillsforafrica.org Tel: +254 702 249 449

Training Venue

The training will be held at our Skills for Africa Training Institute Training Centre. We also offer training for a group at requested location all over the world. The course fee covers the course tuition, training materials, two break refreshments, and buffet lunch.

Visa application, travel expenses, airport transfers, dinners, accommodation, insurance, and other personal expenses are catered by the participant

Certification

Participants will be issued with Skills for Africa Training Institute certificate upon completion of this course.

Airport Pickup and Accommodation

Airport pickup and accommodation is arranged upon request. For booking contact our Training Coordinator through Email: info@skillsforafrica.org, training@skillsforafrica.org Tel: +254 702 249 449

Terms of Payment: Unless otherwise agreed between the two parties’ payment of the course fee should be done 7 working days before commencement of the training.