Value For Money Of Shanty Towns Reconstruction Project

Nowadays, with the development of economy and urbanization, many shanty towns have been gradually reduced, but there are still some shanty towns in the center of the city. The houses in shanty towns are old, grim, and battered, and the ratio of land utility is low, which has seriously restricted the economic development of the region. Therefore, in order to pay attention to people's livelihood, promote new urbanization reform and realize the grand goal of "benefiting the people", shanty towns reconstruction is necessary and urgent.At present, the value for money guidelines of PPP projects have been issued, but there are no specific illustration in accordance with the different industries and fields. Basic indexes of qualitative analysis only reflect the assessment index of PPP project, and the characteristics of shanty towns projects are not taken into account in quantitative analysis. Thus, the research on value for money of shanty towns reconstruction projects is of great theoretical and practical significance.First of all, this paper will systematically analyze the basic meaning, the core elements and application value of PPP scheme. And value for money will be briefly introduced including basic connotation, characteristics, function and evaluation process. This paper will focus on the qualitative analysis and quantitative analysis of value for money. Public Sector Comparator and Competitive Bidding are both the ways of achieving the objection of value for money.Next, the shantytowns in A city, Sichuan province will be selected to be qualitatively analyzed. The determination of the indexes is the premise of the qualitative analysis, including six basic indicators and six additional indicators. According to the characteristics of shantytowns reconstruction projects, the additional indicators are respectively the accuracy of the whole life cycle cost estimation, land value analysis, resettlement compensation cost, social effect, the compatibility between the project and the policy and legal environment. On this basis, the process of the qualitative analysis will be discussed in detail, namely, determining the indexes and weights, expert scoring and forming a conclusion. In short, this shanty towns reconstruction project achieves VFM from the qualitative view.Then, based on qualitative analysis, the quantitative analysis should be carried out to further prove whether the project is suitable for PPP scheme, the only criterion of which is the relationship between PSC value and PPP value. PSC includes four parts:the initial PSC value, competitive neutrality adjustment, the cost of transferred risks and the cost of risk retention, whereas the PPP mainly includes equity investment, operating subsidies, risk bearing costs and related supporting investment, and also includes the special costs under PPP scheme. Annual PSC and PPP are calculated respectively, and then discounted. Eventually, the value and the index of VFM can be calculated, which are both positive. So, this project achieves VFM from the perspective of quantitative analysis.Finally, according to the expert interviews and literature analysis, this paper will select the discount rate, operation cost and competitive neutrality adjustment as the sensitive factors for single-dimensional sensitivity analysis. The results show that discount rate is the most significant influence factor, followed by competitive neutrality adjustment, and operating costs have the minimal impact on VFM. Therefore, in order to ensure the accuracy of such quantitative analysis, the discount rate should be selected carefully. Moreover, the competitive neutrality adjustment should also be calculated precisely.