The Malaysian Private Finance Initiative and Value for Money

Abstract

The concept of value for money (VFM) is the fundamental reason for most Private Finance Initiative (PFI) projects to be attractive in many developed and developing countries. The concept encourages governments to deliver Mega projects by using PFI procurement method. The aims of this paper are first, to investigate the notion of VFM for PFI projects by different countries (i.e. UK, Australia and Japan) and second, to discover the detailed components of Public Sector Comparator (PSC) protocol to evaluate VFM. Based on the consideration of these models, the paper proposes a framework of VFM assessment for PFI projects in Malaysia. In this framework, VFM assessment is designed to embrace the four phases of project life cycle (programme, project, procurement, and project construction phases). The implementation of VFM across project phases is needed to achieve project effectives (optimal risk sharing, cost saving, time saving, quality improved, client satisfaction and benefit to public) and to establish PSC guideline in the evaluation of VFM.