1. Value for Money Assessment Marcel Ham Principal, IMG Rebel

2. Three innovations enhance conventional VFM assessment Lifecycle Performance Risk Premium to account for long term performance and coordination risks P3 Differences Estimator to help the user determine expected differences resulting from P3 delivery Project Delivery BCA to include all economic costs and benefits to society in addition to cash flows to government LPRP PDE PDBCA

3. Innovation 1: Lifecycle Performance Risk Premium Capital expenses VIP = AP @ WACC commercial - AP @ WACC risk-free Availability payment @ WACC commercial Operating expenses Capital expenses Availability payment @ WACC risk-free Operating expenses

4. Innovation 2: P3 Differences Estimator Differences in costs and benefits between P3 and conventional delivery may be related to: Project characteristics (e.g. project size) Context characteristics (e.g. market appetite) Delivery characteristics (e.g. output-based specifications) P3 Differences Estimator uses industry expert opinions and project scoring to anticipate potential differences in cost and benefits between P3 and conventional delivery.

5. Innovation 3: Project Delivery BCA Compares financial impacts of different delivery models on procuring agency Does not consider costs (e.g. losing bids) and benefits (e.g. travel time savings) to society Compares economic impacts of different delivery models on society Expands VFM assessment by incorporating social costs/benefits, including: cost efficiencies expedited delivery faster incident response improved pavement quality VFM assessment Project Delivery BCA

6. Problems remain in the practical application of VFM assessment VFM assessment is not easy and can easily turn into numbers-juggling exercise and a black box. VFM assessment often creates false precision by overemphasizing quantitative analysis, while lacking of reliable data. VFM assessment at times is seen as a punch-list item that just has to be done to justify already made decisions.

7. Recommendations to further improve VFM assessment Better data: Collect more data on long term cost and risk and conduct ex-post evaluation of P3s. Better phasing: High level assessment at early stages, detailed level at later stages. Better understanding: More emphasis on qualitative analysis of expected differences. 1 2 3

8. IMG Rebel Marcel Ham 4350 East West Highway Suite 950 Bethesda, MD, 20814 Office: (301) 907-2900 Cell: (240) 204-2682 Email: MHam@IMGRebel.com

9. Contact details IMG Rebel Marcel Ham 4350 East West Highway Suite 950 Bethesda, MD, 20814 Office: (301) 907-2900 Cell: (240) 204-2682 Email: MHam@IMGRebel.com