Value for Money Presentation
The presentation to ADB staff and other participants on value for money (VfM) assessment and its relation to the Principles of QII, particularly Principle 2 on raising economic efficiency in view of life cycle costs. The objectives of the session were to understand the role of VfM in the project lifecycle, and understand the key factors driving VfM analysis – feasibility, affordability, and sustainability and efficiency. VfM assessment will determine if a project meets the basic criteria for selection as a PPP. VfM has both qualitative and quantitative dimensions that figure into a final decision. It is based on financial analysis resulting in an indication of the financial feasibility of a project, typically reflected in the project’s financial internal rate of return (IRR) and/or financial net present value (NPV).
The VfM also provides an economic analysis resulting in an indication of the economic feasibility of a project, typically reflected in the project’s economic IRR and/or economic NPV. The training presented these concepts based on best practices and provide guidance on:
- where the VfM fits into the project infrastructure project cycle and QII principles; and
- use of VfM in project screening and developing the business case to justify a PPP project.