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Benefit-Cost Analysis for Public-Private Partnership Project Delivery - A Framework

January 2016

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1.0 Introduction

Value for Money (VfM) analysis is frequently used to evaluate Public-Private Partnership (P3) highway concession proposals. VfM analysis considers the financial impacts of choosing a P3 delivery model over a more conventional approach. The analysis is undertaken from the perspective of the procuring agency, and does not quantitatively estimate non-financial public benefits and disbenefits. For example, the public benefit from accelerated project delivery is one of the key reasons that State and local governments in the U.S. pursue P3s. Yet the current VfM analysis approach does not account quantitatively for benefits to travelers and others from delivering a project earlier than would have been possible under conventional procurement. Few attempts have been made to quantify and monetize benefits from accelerated project delivery or other improvements in service quality under a P3. Benefit-Cost Analysis (BCA) applied to project delivery models - hereafter referred to as Project Delivery Benefit-Cost Analysis (PDBCA) - could complement VfM analysis to address these issues and contribute to transparency and accountability in the P3 development and procurement process.

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