P3 Toolkit

Analytical Tools

P3-VALUE Analytical Tools

December 2012

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Chapter 8 - Qualitative Analysis

Deciding how best to procure a project also requires consideration of a number of factors that are not easily quantified. A comprehensive VfM analysis should not ignore qualitative factors that influence procurement decisions. Such factors include:

• Speed of delivery;
• Political and institutional support;
• Quality of facility and service;
• Differences in scope;
• Ability of the public sector to enforce performance standards;
• Value to the public sector of cost and schedule certainty;
• Effects on public sector debt capacity and cash flow; and
• Degree of market interest and macroeconomic conditions.

Qualitative factors may have significant influence over the final decision. Indeed, where the results of the quantitative assessment yield marginal differences in the costs of different procurement options, or where there is a high level of uncertainty around input variables, the qualitative analysis of procurement options may be more heavily weighted than the quantitative analysis.

Agencies may use qualitative analysis to determine which projects have the potential for P3 delivery and should be subject to a more comprehensive evaluation. Qualitative screening criteria can be applied on a project-by-project or on a programmatic basis to screen out those projects for which it is unlikely that a P3 delivery method would be worthwhile. Screening criteria may include:

• Does the agency have statutory authority to procure the project as a P3?
• Is the project of sufficient size to justify increased transaction costs associated with P3s?
• Are there potential efficiencies in contracting out design and construction responsibilities to a single entity?
• Are there potential efficiencies in allowing for private sector provision of long-term operations and maintenance?
• Does the project have strong political support?
• Is it likely that the project will receive environmental clearance within two years?

FHWA is developing a screening tool to assist in assessment of the appropriateness of a major project (costing $100 million or more) for P3 procurement.

 

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