Application of value for money methodology to evaluate a public-private partnership road project

Abstract

A value for money (VFM) assessment allows public policy makers to determine which procurement, between traditional or public-private partnerships, is better to procure for a specific project. Although the government of Vietnam has established a large number of PPP projects since first announcing its desire for private participation in 1993, the government has never carried out an evaluation of the “economy, efficiency and effectiveness” of PPPs over traditional public procurement. This paper proposes a value for money methodology to evaluate whether decisions to pursue a PPP creates good value for the Vietnamese government. A case study in Vietnam (Phu My project) is applied to examine the reliability of the method. The result of research reveals that there is a 84.9 % confidence level that a PPP model may not be a better option for procurement in the Phu My project. In addition, vehicle tolls and the inflation from 2016-2034 have had the largest impact on the case’s value for money.