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Public-Private Partnerships:
New VfM Guidance
Peter Conlong
Finance & Central Services Department
Analytical Services Division
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Outline of Presentation
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Need for new VfM guidance
HMT guidance
Scottish approach
Questions?
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Need For New Guidance
 Revisions to HMT Green Book
 Reports by NAO & Audit Scotland
 New Treasury VfM Assessment Guidance
To be applied in Scottish context
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New HMT Green Book
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“Unbundling” of discount rate
Optimism bias
Tax adjustments
Emphasis on valuing benefits
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Historical Problems With VfM
Assessments
 Focus solely on “the numbers”?
 Undertaken too late in process?
 Public procurement option not credible?
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New Treasury VfM Guidance
 PPP only one of a number of options
 Only use where appropriate & VfM
 Assess VfM early in process
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New Appraisal Process in Scotland
Stage 1: Programme Level Assessment
Stage 2: Project Level Assessment
Stage 3: Procurement Level Assessment
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Stage 1 - Programme Level
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Stage 2 - Project Level
 Undertaken at OBC stage
 Test specific project
 Qualitative & quantitative assessments
Increased reliance on judgement
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HMT Quantitative Model
 Simplified approach – reflects:
point at which analysis takes place
desire that authorities be able to run the model
themselves
 Use only at Stage 1 and Stage 2
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Stage 3 - Procurement Level
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Ongoing process from OBC to close
Adequate competition?
Risk-sharing deliverable?
Confirm affordability
Plus…
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Final VfM Test
 Unlike HMT, we are retaining final test of
VfM against cost of public procurement
 More detailed quantitative analysis
 Consider alongside qualitative assessment
 Provides clear audit trail
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Summary
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New guidance required
3-stage assessment process
Quantitative and qualitative
Retaining final VfM test
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Any Questions?
 The guidance is currently being finalised we would be grateful for your views