P3 Toolkit
Analytical Tools
Webinar - Value for Money Analysis:
Constructing the Public
Sector Comparator and the Shadow Bid
View as PDF
Homework Assignment: Value for Money Analysis for Project with No Tolls
Webinar recording: Audio
P3-VALUE Webinar - July 11, 2013
Patrick DeCorla-Souza
P3 Program Manager
Office of Innovative Program Delivery
P3-Value Webinars
P3-VALUE: Suite of four integrated analytical tools
and supporting documentation to help practitioners understand processes used
to quantitatively evaluate P3 options
This is the third of four webinars on P3-VALUE
- P3 Evaluation Overview (May 2)
- P3 Project Risk Assessment (June 13)
- Value for Money Analysis (today)
- Financial Structuring and Assessment (August 7)
Course Outline
Lesson 1 Introduction to P3s and the P3 Toolkit
Lesson 2 Developing a Public Sector Comparator
Lesson 3 Developing a Shadow
Bid
Lesson 4 Comparing Procurement Options
Summary
Course Objective
After taking this course you should be able to:
- List the various components of the Public Sector Comparator (PSC) and Shadow
Bid (SB)
- Describe the methodologies used to estimate the PSC and Shadow Bid
- Explain how the PSC and Shadow Bid are compared using Value for Money (VfM)
analysis
- Access the P3-VALUE tools and supporting information
Lesson 1 - Introduction to P3s and the P3 Toolkit
What is a P3?
- Acronym: Public-private partnership (P3 or PPP)
- Definition: Contractual agreement between a public agency and a private
entity that covers more than a single phase of a project.
- FHWA's Office of Innovative Program Delivery focuses on P3s that include
financing
Common Types of P3s

Potential Benefits and Drawbacks
Potential Benefits
- Additional Financial Capacity
- Accelerates project delivery
- Conserves public sector debt capacity
- Life-Cycle Cost Efficiencies
- Creates incentives to manage costs over the life of the project
- Integrates project phases creating efficiencies
- Risk Transfer
- Budget and cost certainty
- Improved risk management reduces costs
Potential Drawbacks
- Loss of flexibility of public agency
- Complex procurement process
- Perceived higher financial costs (due to incorporation of risk premiums
into private sector returns)
FHWA's P3 Toolkit
- The P3 Toolkit provides educational tools and guidance
documents to enhance the capacity of public sector decision-makers to
evaluate and implement P3s
- Will address four key phases of P3 implementation:
- Legislation and policy
- Planning and evaluation
- Procurement
- Monitoring and oversight
P3 Evaluation
Value for Money (VfM)
- The optimum combination of life cycle costs and quality of a good or
service to meet the user's requirements
- Generally expressed as the dollar difference or % difference between
present value of costs for P3 vs. present value of costs for conventional
project delivery
VfM Analysis
- Quantitative analysis to compare the financial impacts of procurement
alternatives for a project
- Financial analysis
- Impact on balance sheet of the procuring agency
- Other benefits (e.g., to users) considered in qualitative assessment
Timing of VfM Analysis
Agencies typically conduct VfM analyses once they decide
to undertake a project and wish to assess delivery options
- Develop PSC or; Develop shadow bid
- Compare PSC with shadow bid to determine option with greater VfM
- Release RFP if P3 option is selected and receive actual P3 bids
- Compare PSC with actual bids to determine if VfM is achieved
- Compare PSC with actual P3 experience throughout project's life

*this webinar has a focus on the first 3 items
Pre-Procurement P3 Evaluation
- Identify potential procurement options
- Identify, monetize and allocate project risks (covered in 6/13 webinar)
- Develop public sector comparator (PSC)
- Develop P3 option ("shadow bid")
- Compare PSC to Shadow Bid
- Consider qualitative factors (e.g., benefits to users from accelerated
project delivery)
For a more detailed discussion, see Value for Money Analysis Primer
at:
http://www.fhwa.dot.gov/ipd/p3/toolkit/guidance_documents/index.htm
P3-VALUE Tools
- Risk Assessment Tool
- Helps identify risks, risk allocation, risk response strategies,
potential cost and schedule impacts
- Public Sector Comparator (PSC) Tool
- Calculates risk-adjusted life-cycle costs of conventional
procurement
- Shadow Bid (SB) Tool
- Calculates costs of P3 procurement, including payments to
private partner
- Financial Assessment Tool
- Compares PSC and Shadow Bid costs to calculate value for
money
- P3-VALUE Tools are accessible at FHWA IPD's website:
http://www.fhwa.dot.gov/ipd/p3/toolkit/analytical_tools/index.htm

Test Your Knowledge
True or False:
P3 evaluation may be undertaken using Value for Money analysis prior to
procurement as well as later during a project's life.
Questions?
Submit a question using the chat box
Lesson 2 - Developing a Public Sector Comparator
PSC Tool Overview
- Public Sector Comparator (PSC)
- Conventional procurement's baseline cost against which P3 option will
be compared
- Public Sector Comparator Tool (PSC Tool)
- Estimates the risk-adjusted life-cycle costs of a project delivered
by the public sector
- Prerequisites
- Estimates of project delivery schedule, life-cycle costs
and revenues
- Estimates of value of retained and transferable project
risks
- Basic project finance plan
Developing a PSC
- Key assumptions:
- Project can be completed to the same standards anticipated by P3 delivery
- Same time frame, e.g., funding or financing issues will not delay conventional
procurement
- Discount rate – all future cash flows are converted to "present value"
terms, including:
- Costs
- Revenues
- Financing (e.g., debt and equity receipts and payments)
Example of Present Value Calculation


Discount Rate
- Discount rate is a percentage by which a cash flow
element in the future is reduced per year, applied exponentially
- It is used to estimate how much money would have to be invested currently,
at a rate of return equal to the discount rate, to yield the cash flow
in future
- It is also used to estimate how large an investment can be justified
at a required rate of return equal to the discount rate on the basis of
expected future cash flows
- It may be used to account for uncertainty in future cash flows – one
"certain" dollar is worth more than one uncertain dollar
- A "nominal" discount rate accounts for inflation, and is applied to
nominal (i.e. inflation-adjusted) future cash flows
- A "real" discount rate is applied to future cash flows that do not
incorporate inflation
Present Value
- Present Value: A metric to determine the time-adjusted
(and risk-adjusted) value of future project cash flows:
- Sum of present values of positive and negative cash flows, including
the initial investment, is called Net Present Value (NPV)
- For a sum that is a net cost, the term Net Present Cost (NPC) may be
used
- Using a high discount rate will favor lower upfront investment with
higher recurring costs in the future (since the high discount rate will
minimize future costs)
Effect of a High Discount Rate
- The same annual payment ($25.6 M) appears to be much
smaller with a higher discount rate


Key Steps in Developing a PSC
- Estimate the hypothetical, risk-adjusted cost of a
project delivered through conventional approach:
- Base costs (including financing)
- Cost impacts of risks
- Other project costs such as procurement and oversight costs
- Adjustments for any competitive advantages and disadvantages that accrue
to the public agency by virtue of its public ownership, a.k.a. "competitive neutrality"
1. Base Costs
| Cost Item |
Description |
| Capital Costs |
Includes design, right-of-way purchase and
construction costs. |
| Operations Costs |
Day-to-day costs of operating the project. |
| Maintenance Costs |
Routine and preventive maintenance costs.
Items such as pavement overlay, replacement of
lighting, and snow and ice removal. |
| Reconstruction & Rehabilitation Costs |
Costs associated with major structural replacement
or upgrades, e.g., bridge or pavement replacement. |
| Financing Costs |
Costs associated with the interest charged
on debt, as well as other costs, such as arrangement
fees, commitment fees, and "swap" credit premiums. |
2. Cost Impacts of Risks
| Cost Item |
Description |
| Retained Risk Costs |
The costs of project risks that a public agency
bears. If a retained risk is realized, then the
public agency is responsible for the related costs of responding to that
risk event. |
| Transferable Risk Costs |
Risk costs that may be transferred from the
public agency to its contractor, though the public
agency may still pay a risk premium through the contractor's bid price. |
| Shared Risk Costs |
The public agency and the contractor may share
the burden of some risks that cannot be efficiently transferred. |
3. Other Project Costs (Examples)
| Cost Item |
Description |
| Procurement Costs |
Transaction costs incurred by the public agency throughout the
procurement process for preparing and advertising a bid, receiving and reviewing proposals, etc. |
| Monitoring & Oversight Costs |
Costs inherent to the public agency as it performs its project
oversight and monitoring activities, such as site inspections or Federal-aid reports. |
| Right-of-way Costs |
Costs associated with land acquisition and right-of-way entitlements. May be included in Base Costs (capital costs). |
4. Competitive Neutrality Adjustments (Examples)
| Cost Item |
Description |
| Federal corporate tax |
"Opportunity cost" of Federal corporate taxes that would be paid
under a P3. Consideration depends on the procuring agency's viewpoint |
| State corporate tax |
"Opportunity cost" of State corporate taxes that would be paid
under a P3. Consideration depends on the procuring agency's viewpoint |
| Self-insurance Cost |
For example, tort liability limits under public operation favor
the public sector |
| Costs associated with transparency, accountability and public scrutiny |
For example, a public agency may incur higher costs for public involvement with a P3 procurement; on the other hand, greater public involvement may be required in the operations phase with traditional delivery, especially in toll rate setting. |
Test Your Knowledge
True or False:
Using a high discount rate to get the present value of a
stream of future cash flows will result in a lower present
value.
Illustration of PSC Estimation
- We will use hypothetical project data to illustrate
how a PSC may be estimated.
- We will first show how the data may be used with a very simple model
- To illustrate each step of the process
- Using simple assumptions
- We will then show results produced by P3-VALUE focusing on:
- How the results differ from our simple calculations
- Why the results differ
Hypothetical PSC Cost Data
- Design-Bid-Build (or Design-Build)
- Base design/construction costs of $30M in Year 1 and $70M in year 2 – P3-VALUE
expects these cost in nominal dollars
- $10 million (real dollars) per year O&M costs over 28 years
- Risk cost estimates for design-build phase:
- 10% probability (P10) that they will be at or below $10 M
- 70% probability (P70) that they will be at or below $20 M
- 90% probability (P90) that they will be at or below $30 M
- Risk cost estimates for operations phase:
- 10% probability (P10) that they will be at or below $1 M
- 70% probability (P70) that they will be at or below $2 M
- 90% probability (P90) that they will be at or below $3 M
- Other project costs are assumed to be zero for simplicity
Hypothetical PSC Assumptions
- Financing:
- Bond financing for 100% of construction costs, at 5% interest
and 30-year maturity
- $2 M in bond issuance costs are financed as part of the debt
- For simplicity in this illustration, no reserves are required,
but reserve requirements (for debt service and O&M) would normally
also be required to be financed
- Inflation = 3% annually
- Discount rate = 5%
- This rate is the same as the public sector borrowing rate
- It assumes that all project risks are accounted for in the cash
flows
Base PSC Capital Costs
- While nominal costs are $100 M, the present value
of those costs are only $92.1M

Base PSC Operations Costs

PSC Design Build Risk Costs

PSC Operations Risk Costs

PSC Net Financing Costs (at P70)

Note: Financing for reserve funds is not included – they can greatly increase
costs
PSC Results from P3-VALUE
| Nominal Discount Rate |
Results - Risk Adjusted Payments ($) |
| 5.00% |
PV of Payments with P10 Risk Adjustment |
PV of Payments with P70 Risk Adjustment |
PV of Payments with P90 Risk Adjustment |
| Payment Item |
|
|
|
| Design and Construction After Subsidy # |
- |
- |
- |
| Construction Phase Transferable Risks # |
- |
- |
- |
| Construction Phase Retained Risks # |
- |
- |
- |
| Operations |
101,692,152 |
101,692,152 |
101,692,152 |
| Routine Maintenance |
101,692,152 |
101,692,152 |
101,692,152 |
| Periodic Maintenance |
- |
- |
- |
| Operations Phase Transferable Risks |
20,338,430 |
40,676,861 |
61,015,291 |
| Operations Phase Retained Risks |
- |
- |
- |
| Other Project Costs (ROW etc) |
- |
- |
- |
| PSC Adjustments |
- |
- |
- |
| Principal Debt Payments |
41,890,908 |
45,768,288 |
49,645,668 |
| Interest & Fee Payments |
76,377,465 |
82,473,436 |
88,569,408 |
| Total Payments |
$341,991,107 |
$372,302,889 |
$402,614,671 |
| Toll and Other Revenue |
- |
- |
- |
| Total Payments After Toll and Other Revenue |
$341,991,107 |
$372,302,889 |
$402,614,671 |
Comparison of PSC Estimates
- With P3-VALUE, a 6-month payment schedule is used instead of a one-year
schedule; also amount invested includes debt service and O&M reserves that
must be financed upfront
| SIMPLE MODEL |
P3-VALUE |
| Discount rate = 5% |
Cost ($M) |
Discount rate = 5% |
Cost ($M) |
| Base DB costs |
92.1 |
Principal |
45.8 |
| DB Risks |
18.4 |
Interest & Fee |
82.5 |
| Total investment |
110.5 |
Total investment |
128.3 |
| |
|
| Base O&M costs |
206.3 |
Base O&M costs |
203.4 |
| O&M risk costs |
41.3 |
O&M risk costs |
40.7 |
| Total O&M costs |
247.6 |
Total O&M costs |
244.1 |
| Financing costs |
2.0 |
Financing cost |
(incl. above) |
| Total cost |
360.1 |
Total cost |
372.3 |
Test Your Knowledge
True or False:
If the discount rate is equal to the interest rate on the debt, the present value
of a stream of debt service payments discounted to the year the loan is made will
be equal to the amount borrowed.
Questions?
Submit a question using the chat box
Lesson 3 - Developing a Shadow Bid
Shadow Bid Tool Overview
- Shadow Bid
- Cost of P3 option
- Includes estimated payments to private partner as well as other costs
incurred by public sponsor
- Shadow Bid Tool
- Estimates the risk-adjusted, life-cycle costs of a project delivered
by the private sector
- Prerequisites
- Estimates of project delivery schedule, life-cycle costs
and revenues
- Estimates of value of retained and transferable project
risks
- Basic project finance plan
Developing a Shadow Bid
- Estimate the total costs to the public agency for delivering the same project as a P3 (instead of conventional
delivery)
- Components include:
- P3 contract payment: Amount that would be required by private sector
to deliver the project based on its costs and desired rate of return
- Retained risks: Value of risks retained by the public sector in P3
delivery structure
- Other project costs: Costs incurred by the public agency to facilitate
project delivery and oversight
- Note that the term "shadow bid" as used in Value for Money analysis includes
both the estimated private bid cost as well as additional public costs
Estimating the P3 Contract Method
- Payments to Private Partner cover:
- Base life-cycle costs borne by private partner
- Capital Costs (Design and Construction)
- Annual Operations and Maintenance Costs
- Periodic Maintenance Costs (Reconstruction and Rehabilitation)
- Costs of transferred risks
- Financing costs:
- Interest on debt
- Equity returns
- Includes consideration of corporate taxes to be paid by concessionaire
1. Base Life-Cycle Costs of Private Partner
Costs may be reduced (relative to PSC) due to:
- Cost Efficiency
- Lower design-build costs
- Lower O&M costs
- Schedule Efficiency
- Faster design and construction
2. Costs of Transferred Risks
- Costs may be reduced (relative to PSC) due to risk
management:

3. P3 Financing Costs
P3 financing costs incorporate risk premiums for:
- Identified project risks that are transferred
- Unidentified project risks that are transferred
- Market risks ("systematic" risks)
- Inflation
- Economy
- Interest rates (e.g., when short-term loans have to be refinanced)
- Costs may increase (relative to PSC) due to incorporation of project risk
premiums that may not be incorporated in PSC financing costs
Hypothetical Shadow Bid Costs
- DBFOM with "availability payments" made by public agency
over a 30-year concession term, contingent on meeting performance standards;
no toll revenue
- 10% DB cost reduction relative to PSC
- 5% O&M cost reduction relative to PSC
- Risk management efficiency
- 50% of design-build phase risk costs are transferred
- 100% of operations phase risk costs are transferred
- 25% lower risk costs for all transferred risks
Hypothetical Shadow Bid Assumptions
- Financing costs
- Project funded 80% by debt and 20% by equity
- Average debt interest rate is 6.0% (vs. 5% for PSC)
- Required return on equity is 12% ("hurdle" rate)
- For simplicity in this illustration, we assume no reserves
are required; reserve requirements (for debt service and O&M)
would normally also be required to be financed
- No consideration of taxes paid by concessionaire (for simplicity
in the illustration)
- Inflation = 3% annually
- Discount rate = 5%
- This rate is the same as the public sector borrowing rate
- It assumes that all project risks are accounted for in the
cash flows, e.g., through contingencies and risk premiums in
financing costs
Base SB Capital Investment Costs
- Nominal costs are $90 M (10% reduction relative
to PSC), and the present value of those costs are only $82.9 M

Base SB Operations Costs

SB Transferred Risk Costs (at P70)

SB Financing Costs (at P70)

Shadow Bid Costs (from P3-VALUE)
- Note: Procurement costs are not included;
they may be higher for a P3 and would be included in "Other Project
Costs (for Agency)"
| Value for Money Analysis Results |
| Manual Input |
Risk Adjusted Payments ($) |
| 5.00% |
PV of Payments with P10 Risk Adjustment |
PV of Payments with P70 Risk Adjustment |
PV of Payments with P90 Risk Adjustment |
| Payment Item |
| Availability Payments |
$332,769,407 |
$355,241,557 |
377,713,707 |
| Construction Phase Retained Risks |
$4,434,779 |
$8,869,557 |
13,304,336 |
| Operations Phase Retained Risks |
$ - |
$ - |
- |
| Other Project Costs (For Agency) |
$ - |
$ - |
- |
| Total Payments Before Toll Revenue |
$337,204,186 |
$364,111,114 |
391,018,042 |
| Toll and Other Revenue |
$ - |
$ - |
- |
| Total Payments After Toll Revenue |
$337,204,186 |
$364,111,114 |
391,018,042 |
Comparison of PV of SB with P3-VALUE Results
| SIMPLE MODEL |
P3-VALUE |
| Discount rate = 5% |
Cost ($M) |
Discount rate = 5% |
Cost ($M) |
| Base DB costs |
82.9 |
|
|
| DB Risks |
6.9 |
|
|
| Total investment |
89.8 |
|
|
| Financing cost |
25.2 |
|
|
| Base O&M costs |
196.0 |
|
|
| O&M risk costs |
31.0 |
|
|
| Total O&M costs |
227.0 |
|
|
| Total concessionaire cost |
341.9 |
Availability payments |
355.2 |
| Retained risks |
9.2 |
Retained risks |
8.9 |
| Total cost |
351.2 |
Total cost |
364.1 |
Availability Payment Calculation (P70)
- PV of concessionaire's costs:
- Uniform availability payment over 28 years*:
- Similar to mortgage payment, with $341.9 M "borrowed" and an "interest"
rate of 5%**
= $25.3 M
*Annual availability payments are made by public agency over a 28-year
operating period (i.e., 30-year term less 2-year design-build phase),
contingent on meeting performance standards
*The PV of total concessionaire costs (i.e., $341.9M) includes the
costs for financing with debt and equity, so the 5% discount rate is appropriate
in this case
Shadow Bid Availability Payments (P70)

P3-VALUE Availability Payment Results
- With P3-VALUE, the availability payment is inflated over the term of the
concession, rather than being uniform throughout – that is why the first year
availability payment is lower than we calculated with our simple model

Test Your Knowledge
Multiple answer:
Which of the following are included in the calculation of payments to a concessionaire:
- Base life-cycle costs estimated for the concessionaire
- Costs of risks transferred to the concessionaire
- Costs to the concessionaire for financing the project
- Cost of risks retained by the public sector
Questions?
Submit a question using
the chat box
Lesson 4 - Comparing PSC and SB
Comparing PSC to Shadow Bid

Comparison of PSC and SB: Simple Model Results
- Difference = $9M or about 1.9%
- With the P3 option, the comparison with hypothetical data indicates that
the reductions due to lower investment and O&M costs would exceed the increase
in financing costs, so that the P3 would provide marginal value for money
| |
PSC |
Shadow Bid |
| Simple Model |
Cost ($M) |
Cost ($M) |
| Total investment |
110.5 |
89.8 |
| Total O&M costs |
247.6 |
227.0 |
| Financing costs |
2.0 |
25.2 |
| Retained Risks |
9.2 |
|
| Total cost |
360.1 |
351.1 |
Comparison of PSC and SB: P3-VALUE Results
- Difference = $8.2M or 2.2%
- The P3-VALUE comparison suggests that the P3 option would cost the public
agency 2.2% less than the public procurement option.
| PSC |
SHADOW BID |
| P3-VALUE |
Cost ($M) |
P3-VALUE |
Cost ($M) |
| Total investment (incl. financing and retained risks) |
128.3 |
Availability payments |
355.2 |
| Total O&M costs |
244.1 |
Retained risks |
8.9 |
| Total cost |
372.3 |
Total cost |
364.1 |
P3-VALUE Financial Assessment Tool
- Imports results from PSC and SB tools
- Compares the results for four scenarios:
- Nominal dollars for P70 (i.e., 0% discount rate)
- Present value terms for P10
- Present value terms for P70
- Present value terms for P90
P3-VALUE Present Value Comparison
(P70)
| PSC Discount Rate: 5% |
PV of Payment with P70 Risk Adjustment |
| VfM Discount Rate: 5% |
PSC |
SB |
| Project Payments |
|
| Design Construction After Subsidy# |
$ - |
(1) |
| Operations |
$101,692,152 |
(1) |
| Routine Maintenance |
$101,692,152 |
(1) |
| Periodic Maintenance |
$ - |
(1) |
| Risk Adjustments |
|
|
| Construction Transferable Risk# |
$ - |
(1) |
| Construction Retained Risk# |
$ - |
$8,869,557 |
| Operations & Maintenance Transferable Risk |
$40,676,861 |
(1) |
| Operations & Maintenance Retained Risk |
$ - |
$ - |
| Availability Payment |
|
$355,241,557 |
| Payment Type |
|
|
| Adjustments |
|
|
| PSC Adjustments |
$ - |
N\A |
| Financing |
|
|
| Principal Debt Payments |
$45,768,288 |
(1) |
| Interest & Fee Payments |
$82,473,436 |
(1) |
| Other Project Costs |
$ - |
$ - |
| Toll + Other Revenues |
$ - |
$ - |
| Total Payments |
$372,302,889 |
$364,111,114 |
| Notional Value For Money ($) |
$8,191,775 |
| Notional Value For Money (% of PSC) |
2% |
(1) Included in the Availability Payment
P3-VALUE Comparison - P10, P70, P90
- With the higher risk scenario, the difference is larger due to
the more efficient risk management assumed in the P3 option. Likewise,
difference is lower in the lower risk scenario.
| PSC Discount Rate: 5% |
PV of Payment with P10 Risk Adjustment |
PV of Payment with P70 Risk Adjustment |
PV of Payment with P90 Risk Adjustment |
| VfM Discount Rate: 5%
| PSC |
SB |
PSC |
SB |
PSC |
SB |
| Project Payments |
|
|
|
| Design Construction After Subsidy# |
$ - |
(1) |
$ - |
(1) |
$ - |
(1) |
| Operations |
$101,692,152 |
(1) |
$101,692,152 |
(1) |
$101,692,152 |
(1) |
| Routine Maintenance |
$101,692,152 |
(1) |
$101,692,152 |
(1) |
$101,692,152 |
(1) |
| Periodic Maintenance |
$ - |
(1) |
$ - |
(1) |
$ - |
(1) |
| Risk Adjustments |
|
|
|
|
|
|
| Construction Transferrable Risk# |
$ - |
(1) |
$ - |
(1) |
$ - |
(1) |
| Construction Retained Risk# |
$ - |
$4,434,779 |
$ - |
$8,869,557 |
$ - |
$13,304,336 |
| Operations & Maintenance Transferable Risk |
$20,338,430 |
(1) |
$40,676,861 |
(1) |
$61,015,291 |
(1) |
| Operations & Maintenance Retained Risk |
$ - |
$ - |
$ - |
$ - |
$ - |
$ - |
| Availability Payment |
|
$332,769,407 |
|
$355,241,557 |
|
$377,713,707 |
| Payment Type |
|
|
|
|
|
|
| Adjustments |
|
|
|
|
|
|
| PSC Adjustments |
$ - |
N\A |
$ - |
N\A |
$ - |
N\A |
| Financing |
|
|
|
|
|
|
| Principal Debt Payments |
$41,890,908 |
(1) |
$45,768,288 |
(1) |
$49,645,668 |
(1) |
| Interest & Fee Payments |
$76,377,465 |
(1) |
$82,473,436 |
(1) |
$88,569,408 |
(1) |
| Other Project Costs |
$ - |
$ - |
$ - |
$ - |
$ - |
$ - |
| Toll + Other Revenues |
$ - |
$ - |
$ - |
$ - |
$ - |
$ - |
| Total Payments |
$341,991,107 |
$337,204,186 |
$372,302,889 |
$364,111,114 |
$402,614,671 |
$391,018,042 |
| Notional Value For Money ($) |
$4,786,921 |
$8,191,775 |
$11,596,628 |
(1)Included in the Availability Payment
Qualitative Assessment
- Key qualitative considerations related to project goals:
- User benefits from accelerated project delivery
- Safety
- Service quality
- Reliability
- P3 contract-related considerations include:
- Viability: Ability to formulate a sound contract
- Performance: Opportunity for innovation
- Believability: Public agency's capabilities and those of the private
sector
- Flexibility: Ability of the public agency to coordinate regional network
policies
- Analytical process to assess costs and risks is resource-
intensive and may require outside expertise
- Analysis results are entirely dependent on the assumptions, especially regarding
risk transfer
- Choice of discount rate can skew the results – extreme care is needed to
ensure risk costs are not double-counted in the discount rate
- Does not answer the question: "Can the government agency afford the costs
of delivering a project as a P3?"
- Does not quantitatively assess non-financial costs and benefits of a project
(e.g., benefits of project acceleration)
Course Summary
Lesson 1 Introduction to P3s, Value for Money and
the P3 Toolkit
Lesson 2 Developing a Public Sector Comparator
Lesson 3 Developing a Shadow Bid
Lesson 4 Comparing Procurement Options
Summary
Homework Assignment
- Run a Value for Money analysis using the P3-VALUE tools
with the hypothetical project data presented in this webinar:
- Availability payment concession
- Technical assistance options:
Resources
IPD's P3 Website:
http://www.fhwa.dot.gov/ipd/p3/
P3-VALUE Website:
http://www.fhwa.dot.gov/ipd/p3/toolkit/analytical_tools/index.htm
FHWA Value for Money Assessment Primer:
http://www.fhwa.dot.gov/ipd/pdfs/p3/p3_value_for_money_primer_122612.pdf
FHWA Value for Money Analysis Fact Sheet:
http://www.fhwa.dot.gov/ipd/pdfs/p3/factsheet_03_vfm.pdf
P3-VALUE PSC and Shadow Bid Tools:
http://www.fhwa.dot.gov/ipd/p3/toolkit/analytical_tools/index.htm
P3-VALUE PSC Tool User Manual:
http://www.fhwa.dot.gov/ipd/pdfs/p3/p3_value_psc_manual_v1.pdf
P3-VALUE Shadow Bid Tool User Manual:
http://www.fhwa.dot.gov/ipd/pdfs/p3/p3_value_shadowbid_manual_v1.pdf
I-595 Corridor Value for Money Analysis:
http://www.transportation-finance.org/pdf/funding_financing/financing/i595_vfm_0609.pdf
Presidio Parkway Value for Money Analysis:
http://www.presidioparkway.org/project_docs/files/presidio_prkwy_prjct_bsnss_case.pdf
Sea-to-Sky Highway Value for Money Analysis:
http://www.presidioparkway.org/project_docs/files/presidio_prkwy_prjct_bsnss_case.pdf
Upcoming P3-VALUE Training
- Jul. 19: Office Hours: Homework Assignment Review
- Aug. 7: P3 Financial Assessment 201
- Sep. 5: P3 Evaluation Overview
- Sep. 20: P3 Project Risk Assessment 201
- Oct. 3: Public Sector Comparator/Shadow Bid 201
- Oct. 18: P3 Financial Assessment 201
To register, please visit
http://www.nhi.fhwa.dot.gov/resources/webconference/eventcalendar.aspx
Contact Information
Patrick DeCorla-Souza
P3 Program Manager
Office of Innovative Program Delivery
Federal Highway Administration (202) 366-4076
Patrick.DeCorla-Souza@dot.gov
Thay N. Bishop, CPA, CTP
Senior Program Advisor/Capacity Builder
Office of
Innovative Program Delivery Federal Highway Administration
(404) 562-3695
Thay.Bishop@dot.gov
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