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Value-for-money measurement in public-private partnerships

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Author Info
Grout, Paul A. () (Centre for Market and Public Organisation, University of Bristol)
Abstract

Public-private partnerships (PPPs) are long-term partnerships between the public and private sectors that usually involve the private sector undertaking investment projects that traditionally have been executed (or at least financed) and owned by the public sector. This paper considers alternative approaches to value-for-money tests and discusses some of the main conceptual problems associated with these tests. It explains why comparisons between private bids and a public sector comparator are difficult and prone to significant error. It is argued that tests centered on comparisons between private sector alternatives are well focussed, less prone to measurement error than other tests, and more likely to deliver the best candidate from the group it considers. The paper also considers the PPP evidence from the United Kingdom and summarises the experience of outsourcing in the private sector.

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Publisher Info
Paper provided by European Investment Bank, Economic and Financial Studies in its series EIB Papers with number 7/2005.

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Length: 25 pages
Date of creation: 06 Jun 2005
Date of revision:
Handle: RePEc:ris:eibpap:2005_007

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Related research
Keywords: private finance initiative; value for money; discount rates; outsourcing;

Find related papers by JEL classification:
D61 - Microeconomics - - Welfare Economics - - - Allocative Efficiency; Cost-Benefit Analysis
H43 - Public Economics - - Publicly Provided Goods - - - Project Evaluation; Social Discount Rate
H57 - Public Economics - - National Government Expenditures and Related Policies - - - Procurement
L33 - Industrial Organization - - Nonprofit Organizations and Public Enterprise - - - Boundaries of Public and Private Enterprise; Privatization; Contracting Out

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

  1. Paul A Grout & Margaret Stevens, 2003. "Financing and Managing Public Services: An Assessment," The Centre for Market and Public Organisation 03/076, Department of Economics, University of Bristol, UK. [Downloadable!]
  2. Holmstrom, Bengt & Milgrom, Paul, 1987. "Aggregation and Linearity in the Provision of Intertemporal Incentives," Econometrica, Econometric Society, vol. 55(2), pages 303-28, March. [Downloadable!] (restricted)
    Other versions:
  3. Hart, Oliver & Shleifer, Andrei & Vishny, Robert W, 1997. "The Proper Scope of Government: Theory and an Application to Prisons," The Quarterly Journal of Economics, MIT Press, vol. 112(4), pages 1127-61, November.
    Other versions:
  4. Sandmo, Agnar & Dreze, Jacques H, 1971. "Discount Rates for Public Investment in Closed and Open Economies," Economica, London School of Economics and Political Science, vol. 38(152), pages 395-412, November. [Downloadable!] (restricted)
  5. Almas Heshmati, 2003. "Productivity Growth, Efficiency and Outsourcing in Manufacturing and Service Industries," Journal of Economic Surveys, Blackwell Publishing, vol. 17(1), pages 79-112, February. [Downloadable!] (restricted)
    Other versions:
  6. Arrow, Kenneth J & Lind, Robert C, 1970. "Uncertainty and the Evaluation of Public Investment Decisions," American Economic Review, American Economic Association, vol. 60(3), pages 364-78, June.
  7. Brealey, R A & Cooper, I A & Habib, M A, 1997. "Investment Appraisal in the Public Sector," Oxford Review of Economic Policy, Oxford University Press, vol. 13(4), pages 12-28, Winter.
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Andrea MAIRATE & Francesco ANGELINI, 2006. "Cost-benefit analysis and EU cohesion policy," Departemental Working Papers 2006-34, Department of Economics University of Milan Italy. [Downloadable!]
  2. Claude Montmarquette & Iain Scott, 2007. "Taux d’actualisation pour l’évaluation des investissements publics au Québec," CIRANO Project Reports 2007rp-02, CIRANO. [Downloadable!]
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