Uncertainty analysis of value for money assessment for public-private partnership projects

In recent years, private sectors are encouraged to take an active part in franchising of urban infrastructure investments and operations, which promotes the rapid development of public-private partnership (PPP) in infrastructure and public service supply. Value for money (VFM) assessment has been officially proposed to provide a reference for selection of projects planning to adopt PPP. Based on the bottlenecks of VFM application in China and the uncertainties for urban infrastructure PPP projects, a discounted cash flow (DCF) model is established for VFM of infrastructure PPP projects. Then, a Monte Carlo simulation model is established on the basis of uncertainty factors for VFM. Through the analysis of Huai’an trams PPP project, coping strategies of uncertainties for VFM are put forward. Findings of the research may propel the establishment of a complete VFM evaluation system for PPP projects. Key instructional functions of VFM during the process of decision-making can be brought into full play and PPP may develop orderly.