Public Private Partnership (P3) Financial Model for Value-for-Money (VfM) Analysis

A dynamic tool to calculate risk adjusted Value-for-Money as a rationale to deliver a project in P3 mode.

This financial model calculates the risk adjusted life cycle cost for traditional Design-Bid-Build (DBB) and P3 mode of project delivery in terms of Net Present Value (NPV) to arrive at final VfM.

This financial model estimates the cash flow on planning, design-build, operations and maintenance over the entire project life cycle based on real cost, activity duration, indexation and conversion to nominal values.

The financial model calculates the debt servicing based on the financing structure and the construction interest based on each activity cost, duration, gearing ratio and debt-equity drawn during the construction period. The model considers all the maintenance and operations cost during the life cycle.

The life cycle risks has been identified, quantified using qualitative/quantitative methods and allocated to the Government and Private sector. Monte Carlo simulation using random numbers has been used to quantify the residual risk.

The financial model is structured in forty three (43) tables with description and location in "Table of Contents". The model has listed all the assumption and sources with tables that have input data. The "About the Model" tab explains about DBB, P3, and VfM. There is an explanation about a tab on top of each tab.

This Best Practice includes
Once Excel File with multiple tabs

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Further information

The tool can be used by PPP Professionals and PPP Units in Government Department to calculate Value-for-Money (VfM) during the PPP Project Planning stage. A positive VfM is the rationale for deciding on PPP mode of Project Delivery over traditional Design-Bid-Build (DBB) mode of Government Project Delivery.

The dates are key on driving this model. The project schedule has the planned dates and duration.


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