A Study On VFM Assessment Method Of The Sanitation PPP Project

To achieve the goals of balancing urban and rural developments and of intensively bolstering urbanisation which were set by the Third Plenary Session of the 18th Central Committee of the Communist Party of China as well as to boost the economic and social sustainability,there is an increasing demand for the establishment and investment of large-scale infrastructure in our country during recent years.However,influenced by the limitations of the financial system and by a series of practice performed by the central authority to rigorously control their debts,standardise their behaviours of financing through bond issuance,and clear their financing platforms,local governments do not have sufficient disposable financial resources to fulfill the gradually growing needs for public affairs.To reduce the financial pressure facing the governments,break down the monopoly barriers of public products and services,encourage the market competition and make the market play an important role in resource allocation,a new model of the cooperation between governments and the society,also known as the PPP model,has progressively become an essential method used by many governments to perfect the quality of public products and to improve the efficiency of the provision of public services.The Value for Money(VFM)evaluation method or a so-called assessment system with "the best value" is used to judge whether it is appropriate for a certain project to replace traditional operational models with the PPP model and also provides the main participants of the PPP model with an effective framework for comparison and analysis.Additionally,through comparing the costs and benefits of conventional models with that of the PPP model,the method can help to realise the aims of screening projects,guaranteeing the rights and benefits of both governments and the society,as well as promoting the PPP model to develop healthily and continuously.The document published by the Ministry of Finance,Guidelines for the evaluation method of the PPP model,the VFM method(Trial Implementation)(Finance[2015]167)has played a role in ensuring the efficiency of funds usage,avoiding blind procurement,and diminishing corruption over the period of the PPP model's rapid development and therefore has a positive influence to some extent.Nevertheless,due to the undeveloped design ideas,limited assessment techniques,as well as deficiency in data and professionals,the currently used VFM method in our country still has some drawbacks.Through analysing the VFM assessment method of the PPP project,the integration of sanitation in Longhua District this paper will firstly identify the disadvantages of the basic concepts,regulation design and application of the VFM method in our country's public services.Then,combining the experience of developed foreign countries and regions with our country's reality,it will give suggestions about how to improve the VFM method from three perspectives,including dividing the whole VFM assessment process into a few stages,additionally conducting sensitivity analysis and clarifying qualitative assessment indicators.Finally,the paper will take the PPP project,the integration of sanitation in Longhua District as an instance to test the feasibility and practicality of these suggestions,presenting a practice reference to advancing our country's VFM assessment method.