December 27, 2013
The Public Sector Comparator Tool User Manual is an educational resource and is part of FHWA's P3-VALUE suite. This User Manual corresponds to the FHWA Public Sector Comparator Tool, providing an overview of the Value for Money process and instructions for utilizing the PSC Tool for developing a PSC. Together, these educational resources provide users with a better understanding of the process for evaluating the costs of P3 procurement against the costs of traditional procurement methods.
The information and examples outlined in the User Manual do not encompass all issues and options for constructing a PSC for a highway project. The FHWA P3 Toolkit contains additional information and Appendix B of the User Manual provides references and resources from domestic and international jurisdictions for further guidance.
The PSC Tool has been designed for use in FHWA-sponsored training. FHWA anticipates that at the conclusion of the PSC/VfM training, users will have a greater understanding and appreciation of VfM analysis and of several key considerations when developing a PSC. FHWA encourages users to engage appropriate experts (either in-house or external) to develop their own tools and processes for evaluating potential P3 projects. The level of knowledge gained from this training should help in such an effort.
P3-VALUE provides a notional example of a functioning and interactive VfM Toolkit. A number of assumptions and formulas are included in the PSC Tool that relate to the pre-populated "Example Scenario" and may not be suitable for all potential scenarios. Additionally, a financial tool used to model a PSC for a real-world project is highly customized to reflect the unique project structure, and to optimize the financing needed to deliver the project for the lowest cost. Users should note that because the tool uses a simple financial model that does not account for the full complexities of typical project finance debt structures, such as interest earnings on bond proceeds or a subordinate debt tranche, project financing costs may be higher than might be expected for an actual project. Also, the model is designed for use with revenue-generating toll projects, and financing costs estimated by the model will be exaggerated particularly if the model is used for non-toll projects.
The P3-VALUE suite has been constructed with minimal 'black box' formulas, so users are able to view each step in the VfM analysis process. While this provides greater clarity to users in how each tool produces outputs, it also limits the flexibility of P3-VALUE to produce the most efficient results. For example, the financing structure presents only one debt facility, which is not optimized to make most efficient use of financing throughout the construction phase. Functions such as this would typically be seen in financial models employed when conducting a VfM analysis for a real-world project.