Public Private Partnership (P3) Financial Model for Value-for-Money (VfM) Analysis

Financial Feasibility, Financial Model, IRR (Internal Rate of Return), NPV (Net Present Value), Project Finance

This financial model calculates the risk-adjusted life cycle cost for traditional Design-Bid-Build (DBB) and P3 mode of project delivery in terms of Net Present Value (NPV) to arrive at the final VfM.

This financial model estimates the cash flow on planning, design-build, operations, and maintenance over the entire project life cycle based on real cost, activity duration, indexation, and conversion to nominal values.

The financial model calculates the debt servicing based on the financing structure and the construction interest based on each activity cost, duration, gearing ratio, and debt-equity drawn during the construction period. The model considers all the maintenance and operations cost during the life cycle.

The life cycle risks have been identified, quantified using qualitative/quantitative methods, and allocated to the Government and Private sector. Monte Carlo simulation using random numbers has been used to quantify the residual risk.

The financial model is structured in forty-three (43) tables with descriptions and locations in the “Table of Contents”. The model has listed all the assumptions and sources with tables that have input data. The “About the Model” tab explains DBB, P3, and VfM. There is an explanation about a tab on top of each tab.

The dates are key to driving this model. The project schedule has the planned dates and duration.

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