Value for Funding: Expanding the Analytical Framework for Infrastructure P3 Evaluation

Abstract

Value for Money (VfM) is the standard evaluation framework for infrastructure public-private partnership (P3) alternatives to traditional public-sector project procurement and financing. VfM’s primary focus is on a net present value cost comparison between the alternatives. However, in light of the challenges that US state and local governments face in the current economic environment, an additional analytical framework that explicitly expands the focus to include public-sector funding and fiscal issues in the evaluation of an infrastructure P3 would be useful in many cases. We are calling this new framework a ‘Value for Funding’ (VfF) approach. This paper briefly describes the rationale and methodology of a VfF approach in general, and lists four planned papers by the authors to further develop the framework over the next year.

Keywords: infrastructure, public-private partnerships, infrastructure funding, public-sector fiscal issues, stochastic modelling, Value for Money, Value for Funding

JEL Classification: C15, H43, H54, H71, H72