Research On The Application Of Value For Money Theory Of PPP Project

With the development of China,the demand for people with infrastructures and public services become higher and higher.However local government has great trouble to afford the public service growing sustainably because of the reform of tax distribution system.For this reason,trying to find suitable business pattern to provide public service,which not only lightens the state finance burden but also provide public service with high quality become a big problem to local governments.To solve the problem,more and more local governments look gathered in the PPP(Public-Private Partnership)mode.PPP mode have a lot of advantages,such as reducing construction cost and easing government financial pressure,but it is not a master key for every projects.PPP does not mean successful and is not suitable for every infrastructures according to plenty of practices in china and other countries.Evaluating the feasibility of a public project with PPP mode should have quantifiable basis.Although there are many PPP projects in the field of sewage,garbage disposal and expressway industries,a number of troubles were discovered.Most all of the PPP projects in China don’t require base number of a tender in bidding process.Government adopt competitive negotiation model to bid usually.It increases randomness and phenomenon of too much emphasis on short-term economic to determine bid-winner without base number.Drawing on the experience of other countries-England.Australia and so on for example,adopting PSC(Public Sector Comparator)system can solve the problem and evaluate the efficiency of diffident business pattern.The investment cost of local government can be quantized clearly with PSC model.After reading documents extensively,the decision-making method of PPP mode in England,Australia,German,honking,Japan,Singapore have been analyzed to introduce VFM(Value for Money)evaluation system,the concept of PSC and method of calculation to China.Compare to infrastructure project financial analysis in China,the author try to improve PSC method to increase the applicability of it.Then Localization improvement method of PSC is used to analyze a true rail transit case to make sure it does work in China.Based on the study,a decision that can be used by local government in selecting appropriate business pattern model was developed.