Last Updated:
25 May 2022

The Non-Financial Benefits of PPPs

A review of concepts and methodology

Many public authorities use value for money (“VfM”) analyses to compare delivering an investment through a PPP with implementing it through a “conventional” procurement. These ex-ante VfM analyses usually focus on the financial costs (risk-adjusted) of providing what is assumed to be an equivalent output. However, where there are reasons to believe that the non-financial benefits of delivery under a PPP will be greater than under conventional procurement, traditional VfM approaches will underestimate the benefits of PPPs. In fact, the incentives which are specific to PPP projects are specifically intended to deliver greater nonfinancial benefits than conventional procurements. Ignoring this issue could lead to an unwarranted bias against PPPs.