Value for Money assessment for procuring infrastructure projects: state of the practices in global markets

Governments worldwide are grappling with their constrained budgets to deliver their much-needed infrastructure, which is exacerbated by the COVID-19 pandemic. As such, public-private partnerships (PPPs), with the private sector's investment and ingenuity, would appear to be a popular alternative. Value for money (VfM) assessment has been acknowledged as the major criterion to evaluate PPPs against traditional public sector procurement. Faced with different domestic demands (e.g., aging infrastructure, population boom, and financing shortage), governments tend to place different emphases when undertaking the VfM assessment. Hence, it is important that governments compare and contrast their practice with similar and disparate bodies to engender the best possible result. With this in mind, this study draws on the state of the practices in three of the most developed PPP markets (i.e., the United Kingdom (UK), Australia and China) to provide a cross-continental comparison on their VfM assessment. The results show that: (1) These global markets use a public sector comparator (PSC) as the benchmark in VfM assessment where the net present value of a PPP is compared against a hypothetical PSC; (2) Ambiguous qualitative assessment is conducted only against PPPs to strengthen their policy development; (3) Australia’s priority is in service provision whereas that of the UK and China is project finance and production; (4) All markets are seeking an amelioration of existing controversial VfM assessments so that purported VfM relates to project lifecycles. Using grey literature and empirical evidence, a pathway is proposed in the context of UK to make headways towards a sensible selection of procurement approaches for its future infrastructure interventions. Accordingly, the contributions of this study are twofold: (1) it diagnoses state of the practices of global markets’ VfM assessment; (2) it provides foundations for a theoretical framework to be developed and examined so that governments can make informed decisions on procuring their projects.