PFI projects: Their scope for delivering vfm

One of the key initial requirements for Private Finance Initiative (PFI) deals is to provide a convincing evidence of Value for Money (VFM). In the United Kingdom, this evidence is based on the four pillars set out by the National Audit Office (NAO), namely: i.Setting clear objectives, ii.Application of the proper procurement processes, iii.Getting the best available deal, iv Ensuring the deal makes sense. VFM is also supposed to be achieved through the three Es economy, efficiency and effectiveness. Whilst each of the three Es has been defined individually, no attempt has been made so far, to provide a coherent framework in which to measure an outcome in terms of VFM. This paper proposes a set of measures based on the definitions of economy, efficiency and effectiveness, in order to arrive at a framework for measuring VFM. This framework is then used to evaluate the NAO's own analytical framework, with a view to judging the scope for VFM in PFI projects.