Examining the Value for Money of Deals Under the Private Finance Initiative/Public Private Partnership

Abstract

The focus of this paper is the framework of issue analysis developed and used by the NAO to test value for money in Private Finance Initiative /Public Private Partnership (PFI/PPP) projects. The framework takes the form of a hierarchy of statements expressed in terms of advice to the procurer. Starting from the general, these statements become increasingly detailed and specific. The paper highlights the ‘four pillars’ of issue analysis. It then presents brief case studies, which illustrate each of the four pillars, based on specific deals in which the NAO has applied this methodology, before drawing some conclusions about auditing PFI projects. The NAO's rigorous framework has already helped public bodies to secure more favourable PFI deals and should help to improve the value for money of future PFI deals.