Using Online Simulation Technique for Revenue-Based Value for Money Assessment Model in PPP Project

Abstract

Infrastructure public private partnerships (PPP) procurement must be carefully selected on the basis of value for money when compared to conventional procurement. While the value for money analysis has been widely used to ensure low procurement cost in PPP, little is known with respect to its effectiveness and data source. The paper explores existing value for money assessment model and reports its deficiencies in ignoring project revenue and network data collecting. Addressing the current issues, a new revenue based value for money assessment model with Monte Carlo simulation technique is proposed. Data used for simulation come from project participants who obtain and share data through an online virtual collaborative platform. By applying this online technique, project data is more easily shared and reused. This data transmission process is automated and seamless. Then, the effectiveness of new model was examined by using a hypothetical toll road case. It shows that the new value for money assessment model demonstrates the significant advantage in estimating the risk, cost, and revenue variance and assisting the public agency to make decision in the procurement phase.