In the realm of Public-Private Partnerships (PPPs), Value for Money (VfM) Assessment is the cornerstone methodology for governments to objectively determine whether procuring public infrastructure and services through a PPP model offers superior overall value compared to traditional public procurement. This rigorous analytical process goes beyond simply comparing upfront costs, meticulously evaluating the long-term benefits, risks, and efficiencies transferred to the private sector over the entire project lifecycle, ensuring that public funds are utilized in the most economically advantageous way. This comprehensive training course is meticulously designed to equip public sector officials, financial advisors, project managers, and private sector participants with the theoretical foundations and practical skills to conduct robust VfM analyses, interpret their results, and make informed decisions that maximize public value and fiscal sustainability in PPP projects. Without a thorough understanding of Value for Money Assessment in PPP Projects, decision-makers risk suboptimal procurement choices, inefficient resource allocation, and a failure to achieve the full potential benefits of public-private collaboration, 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
• Private Sector Project Developers and Investors
• Financial Institutions involved in PPPs
• Auditors and Oversight Body Personnel
• Infrastructure Planners and Policymakers
• Consultants specializing in PPP advisory services
• Professionals seeking to enhance their expertise in PPP project appraisal

Objectives

• Understand the fundamental definition and principles of Value for Money (VfM) in PPPs.
• Learn about the various methodologies for conducting VfM assessments, including the Public Sector Comparator (PSC).
• Acquire skills in identifying and quantifying all relevant costs and revenues over a project's lifecycle.
• Comprehend techniques for identifying, assessing, and valuing risks for VfM analysis.
• Explore strategies for constructing and adjusting a Public Sector Comparator (PSC).
• Understand the importance of qualitative VfM assessment alongside quantitative analysis.
• Gain insights into financial modeling techniques used in VfM calculations.
• Develop a practical understanding of discount rates and Net Present Value (NPV) in VfM.
• Master sensitivity and scenario analysis for robust VfM conclusions.
• Acquire skills in interpreting VfM results and making procurement recommendations.
• Learn to apply international best practices and guidelines for VfM assessment.
• Comprehend techniques for managing the data requirements for VfM analysis.
• Explore strategies for communicating VfM findings to stakeholders effectively.
• Understand the importance of VfM as a continuous process throughout the PPP lifecycle.
• Develop the ability to critically evaluate and challenge VfM assessments.

Course Content

Module 1: Introduction to Value for Money (VfM) in PPPs

• Defining VfM in the context of public infrastructure and services.
• The rationale for VfM assessment: beyond lowest price.
• Core principles of VfM: whole-life cost, risk transfer, innovation, competition.
• VfM as a decision-making tool in procurement choice.
• Overview of the role of VfM in different national PPP frameworks.

Module 2: The VfM Assessment Framework and Lifecycle

• VfM as a continuous process from project inception to post-completion.
• Qualitative vs. Quantitative VfM assessment.
• Timing of VfM assessment in the PPP project cycle.
• Key stages where VfM analysis is critical.
• Linkages between VfM and other project appraisal criteria (e.g., affordability, bankability).

Module 3: Understanding the Public Sector Comparator (PSC)

• Definition and purpose of the Public Sector Comparator (PSC).
• The PSC as a hypothetical benchmark for traditional public delivery.
• Components of the PSC: raw PSC, competitive neutrality adjustment, retained risk adjustment.
• Principles of "like-for-like" comparison between PPP and PSC.
• Challenges and criticisms of PSC methodology.

Module 4: Cost Components for VfM Analysis

• Identifying and quantifying capital expenditure (CAPEX) for both options.
• Estimating operating and maintenance (O&M) costs over the project lifecycle.
• Lifecycle costs and their importance in VfM.
• Ancillary costs and other indirect costs.
• Data sources and assumptions for cost estimation.

Module 5: Revenue Streams and Third-Party Revenues

• User charges, tariffs, and availability payments in PPPs.
• Revenue streams in the PSC (e.g., government budget allocations).
• Third-party revenues (e.g., commercial activities, advertising).
• Forecasting revenue streams and demand modeling.
• Adjustments for inflation and currency fluctuations.

Module 6: Risk Identification and Quantification for VfM

• Comprehensive identification of project risks (construction, operational, financial, political, legal).
• Methodologies for assessing risk likelihood and impact.
• Valuing risks: direct costs, contingent liabilities, opportunity costs.
• Probabilistic approaches to risk quantification (e.g., Monte Carlo simulation - conceptual).
• Developing a detailed risk register for VfM analysis.

Module 7: Risk Allocation and Its Impact on VfM

• Principles of optimal risk allocation: allocating risk to the party best able to manage it.
• How risk transfer to the private sector drives VfM.
• Cost of risk retention by the public sector.
• Impact of risk allocation on project costs and private sector returns.
• Case studies illustrating effective and ineffective risk allocation.

Module 8: Financial Modeling for VfM Assessment

• Introduction to financial modeling principles in Excel.
• Structuring a robust financial model for VfM comparison.
• Cash flow projections for both PPP and PSC options.
• Incorporating costs, revenues, and risk adjustments into the model.
• Best practices for model transparency and auditability.

Module 9: Discounting and Net Present Value (NPV)

• The concept of time value of money.
• Selecting the appropriate discount rate for VfM analysis.
• Calculating Net Present Value (NPV) for both PPP and PSC.
• Interpretation of NPV results for VfM comparison.
• Sensitivity of VfM results to discount rate assumptions.

Module 10: Quantitative VfM Analysis: Adjustments to the PSC

• Adjusting the raw PSC for competitive neutrality (e.g., tax advantages, financing costs).
• Adjusting the PSC for retained risks (risks not transferred to the private sector).
• Comparing the risk-adjusted PSC with the expected cost of the PPP option.
• Calculating the VfM differential.
• Practical application of adjustments.

Module 11: Qualitative VfM Assessment

• Importance of qualitative factors in VfM decision-making.
• Non-quantifiable benefits of PPPs (e.g., innovation, improved service quality, accelerated delivery).
• Structured qualitative assessment frameworks.
• Integrating qualitative and quantitative findings for a holistic VfM conclusion.
• When qualitative factors might outweigh quantitative results.

Module 12: Sensitivity Analysis and Scenario Planning

• Identifying key variables that impact VfM results.
• Performing sensitivity analysis on critical assumptions (e.g., traffic demand, interest rates, construction costs).
• Developing "best-case" and "worst-case" scenarios.
• Stress testing the VfM model.
• Communicating the robustness of VfM conclusions.

Module 13: VfM Reporting and Decision-Making

• Structuring a comprehensive VfM assessment report.
• Presenting complex financial and risk information clearly.
• Formulating recommendations for procurement choice.
• Role of VfM in securing government approvals.
• Engaging with decision-makers and stakeholders on VfM findings.

Module 14: Challenges and Limitations of VfM Assessment

• Data availability and reliability issues.
• Subjectivity in risk valuation and qualitative assessments.
• Complexity of modeling long-term contracts.
• Potential for manipulation or "optimism bias."
• Evolving methodologies and best practices.

Module 15: Case Studies and Future Trends in VfM Assessment

• In-depth analysis of VfM assessments from various countries and sectors.
• Lessons learned from real-world VfM applications.
• Emerging trends: integrating sustainability (ESG) into VfM.
• The role of digital tools (BIM, AI) in enhancing VfM assessment.
• Continuous improvement and adaptive approaches to VfM.

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.