New VfM assessment guidance

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New VfM assessment guidance Powered By Docstoc
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     Scottish Executive

 Value for Money Assessment
     Guidance for PPPs
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        The New Guidance
 Aims
   Provide understanding of reasons for selection
    of particular investment route
   assist understanding VFM factors and
    methodology for PPPs
         - PPP or CONVENTIONAL
 Ensure consistency application of VfM
  assessment across public sector
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 Previous PPP VfM assessment process

 Green Book appraisal - quantitative focus
 Point Estimates – PFI vs Public
  Procurement Cost (late assessment)
 Reviewed by SE at FBC
 Limited review of wider VfM factors
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       What led to new guidance?
   Revisions to HMT Green Book
   Reports by NAO & Audit Scotland
   PFI – Meeting the Investment Challenge
   HMT VfM Assessment Guidance
AIM of HMT – update / overhaul processes
AIM of SE – adopt for Scottish PPP context
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New Treasury VfM guidance (2004)
 PPP only one of a number of options
 Only use / proceed with where
  appropriate & VfM
 Assess VfM early in process and
  throughout
 Qualitative & Quantitative assessments
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abcdefgApplication of VfM guidance to
                     Scotland
 SE VfM guidance builds on familiar processes:
 Option Appraisal (Green Book etc)
 How to Procure – Scottish Procurement Manual
 If potential for PPP, consider potential benefits of
  PPP route
 Apply new VfM Guidance (SE application note)
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    Overview new VfM Guidance
Initial PPP Suitability Test
Stage 1: Programme Level Assessment
Stage 2: Project Level Assessment
Stage 3: Procurement Level Assessment
 Qualitative and Quantitative elements
 Use of Evidence and Judgement
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PPP Consideration checklist
1. Is there a major capital investment requiring management
   of delivery and construction
2. Is there evidence that the private sector can deliver this
   project / programme and that it is likely to be VfM
3. Is the service capable of being defined in Service Outputs
4. Is a whole life costing possible
5. Confirm that procurement costs are not disproportionate
   to total costs
6. Is there a technology stable market
7. Confirm that planning for asset use over long term has
   been conducted
8. Confirm that appropriate incentivisation for the private
   sector to perform has been considered
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 Stage 1 - Programme Level
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       Stage 1 - Programme Level
 Programme = portfolio sharing common
  characteristics
 Undertaken Centrally / Departmental level
 Assess high-level “qualitative” strategic issues
     Viability / Desirability / Achievability


 “Typical” project assessed quantitatively
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        Stage 2 - Project Level
   OBC stage to procurement start
   Project team test (or retest) specific project
   Qualitative & Quantitative assessments
   Reliance on judgement and evidence bases
   Importance of assessing / valuing risk
   Affordability assessment crucial
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   Stage 3 - Procurement Level
 Ongoing VfM assessment from OJEU stage to
  financial close (Project Team)
 Repeat Qualitative Tests
 Adequate competition & proper process key
 Focus on affordability
 Risk-sharing deliverable?
 Plus…
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 Final quantitative test of Reference
               Project
 Final financial test of PPP VfM against cost of
  public procurement
    Consider alongside qualitative assessment – don’t view
     in isolation
    Provides clear audit trail
    No reconciliation to previous stages
    No set level of headroom
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         Recap of the Process
Initial PPP consideration
Stage 1: Programme Level Assessment
Stage 2: Project Level Assessment
Stage 3: Procurement Level Assessment
 Qualitative and Quantitative elements
 Use of Evidence and Judgement
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abcdeApplying the New Guidance and
            wider relevance
 All Scottish PPP projects
 As of now
 Particular link to Spending Reviews and
  Infrastructure Investment Plans at
  Programme level

				
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