Analysis of value for money (VfM) using the Public Sector Comparator (PSC) in transport PPP projects

Nakhon Kokkaew and Tanit Tongthong

Chapter 4 in The Elgar Companion to Transport Infrastructure Projects, 2026, pp 46-75 from Edward Elgar Publishing

Abstract: Countries around the world have welcomed Public–Private Partnerships (PPPs) as an alternative to financing infrastructure. However, in choosing PPP schemes over traditional project procurement, it should be more about efficiency, quality, and value for money (VfM) in the delivery of the project rather than the reason of fiscal constraints alone. Accordingly, the detailed and quantitative analysis of the value for money to be provided by a PPP project is vital for the success of the project implementation from the public sector's point of view. One of several methods used by many governments in determining whether the private proposals offer better VfM to the public sector is a quantitative assessment tool called the Public Sector Comparator (PSC). In essence, the PSC estimates the hypothetical risk-adjusted cost if a project were to be financed, owned, and operated by the government. In this chapter, the key concepts of VfM and the main processes and components of the PSC will be first given, followed by a computational model of the PSC. Then, an example of how VfM can be estimated using a computational framework of a PSC model is presented using a hypothetical highway project. We then discuss the tradeoff between (1) higher costs of private financing and (2) efficiency gains of the private sector. This chapter also provides an application of the PSC to a real PPP motorway project in Thailand. In closing the chapter, we provide some key insights into how research areas about the PSC should be conducted in the future so that its results and reliability can be further improved.

Keywords: Public–Private Partnerships; Public Sector Comparator; Value for Money; Transport Projects (search for similar items in EconPapers)
Date: 2026
ISBN: 9781800374874
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