|BCA||Benefit Cost Analysis|
|CFADS||Cash Flows Available to Debt Service|
|DSCR||Debt Service Coverage Ratio|
|DSRA||Debt Service Reserve Account|
|GPL||General Purpose Lanes|
|IRI||International Roughness Index|
|IRR||Internal Rate of Return|
|ML/TL||Managed Lanes or Tolled Lanes|
|MMRA||Major Maintenance Reserve Account|
|O&M||Operations and Maintenance|
|PDBCA||Project Delivery Benefit-Cost Analysis|
|PL||Profit & Loss|
|PSC||Public Sector Comparator or Conventional Delivery|
|VDF||Volume Delay Function|
|WACC||Weighted Average Cost of Capital|
The purpose of this guide is to assist users in the use of the updated version of the Public-Private Partnership Value for Money Analysis to Learn and Understand Evaluation tool (P3-VALUE 2.0) and to provide insights into the concepts underpinning the new Project Delivery Benefit Cost Analysis (PDBCA) module for highway projects. The overall objective of this combined Value-for-Money (VfM) and PDBCA tool is to facilitate a consistent comparison of Conventional Delivery and Public-Private Partnership (P3) delivery.
Please refer to FHWA's Guidebook for Value for Money Assessment for more information on VfM analysis. For more information on PDBCA, please refer to FHWA's Project Delivery Benefit-Cost Analysis: A Framework. In short, VfM and PDBCA are separate analyses that take different perspectives and help provide answers to the following questions:
The first version of the P3-VALUE tool consisted of four modules in separate Excel files that enabled users to conduct a VfM analysis. P3-VALUE 2.0 integrates all these separate modules into a single Excel-based tool and adds the PDBCA component to it. It should be noted that the development of P3-VALUE 2.0 was a continuous balancing act between flexibility (necessary for real-life calculations), simplicity (necessary for educational purposes) and complexity (necessary for more accurate calculations). The result is a tool that is relatively easy to use while still allowing for sufficient flexibility. The simplified overall structure of the P3-VALUE 2.0 is shown in the figure below.
As shown in the figure, the tool compares the P3 delivery model to the Public Sector Comparator (PSC or Conventional Delivery, used interchangeably throughout this guide and in the tool) and Delayed PSC. For a discussion on the definition of Delayed PSC, please refer to Part II 5.1. As can be seen, the VfM analysis and PDBCA share a number of common elements such as project costs and risks. Other elements such as revenues and financing are used only for VfM, whereas economic benefits are only relevant for PDBCA. P3-VALUE 2.0 enables users to make assumptions regarding P3 efficiencies that may impact the project's costs, revenues, risks and/or benefits, hence helping users distinguish between conventional and P3 delivery. Before discussing the tool in more detail, it is important to explain what P3-VALUE 2.0 can and what it cannot do.
Figure 1: Simplified Overall Structure of P3-VALUE 2.0
P3-VALUE 2.0 does not direct users to a decision about whether or not a project delivery method is the "correct" choice. The tool only educates users about potential benefits and outcomes of one delivery method compared to another. The ultimate decision as to whether a project should be procured as a P3 or not will need to be determined by further detailed and project-specific financial and economic analysis, as well as other social, institutional and legal considerations.
P3-VALUE 2.0 has both an educational and a transactional objective. The tool aims to demonstrate to users how to perform a VfM analysis and PDBCA, thereby enabling them to reach the following educational objectives:
P3-VALUE 2.0 enables users to carry out a high level analysis of a real-world highway project, thereby enabling users to reach the following transactional objectives:
The P3-VALUE 2.0 tool incorporates a variety of technically challenging concepts and may be considered relatively complex due to the fact that it includes both VfM and PDBCA. Although this document provides a guide to navigate the tool, enter inputs, and review outputs, it does not aim to discuss in detail the calculations performed by the tool. However, the guide does explain the most important concepts used in the tool, which are discussed in the Part II of this guide. Furthermore, it is recommended that the user develop a thorough understanding of Value for Money and Benefit Cost Analysis (BCA) fundamentals before using this tool. In order to assist users in developing a thorough understanding of the BCA fundamentals used in this tool, FHWA has made available a guide on the Project Delivery Benefit-Cost Analysis framework. Additionally, a training module has been created to accompany the P3-VALUE 2.0 tool. It is recommended that users of P3-VALUE 2.0 attend one of the P3 evaluation training courses or webinars offered by FHWA. The training course and a series of webinars will help the user understand key concepts, and will provide the opportunity to become familiar with the tool using a stylized real-world example. Considering the aforementioned, the tool supports three types of methods for professionals to learn about the concepts covered in P3-VALUE 2.0:
This guide contains two separate parts to support a user's learning: User Guide (Part I) and Concept Guide (Part II). The User Guide describes in detail the tool's structure, how to use and navigate the model as well as what inputs are required for the model to carry out the different analyses. Furthermore, the User Guide discusses the model's calculations and presents its various outputs. The Concept Guide on the other hand describes the key concepts that underpin P3-VALUE 2.0's calculations. As a result, Part II is more conceptual and less "hands on" than Part I.
 A disbenefit is a negative benefit, such as an increase in delays or higher emissions.