Andrée Blais Discusses Use of VfM Model on Infrastructure Projects
Andrée Blais was quoted extensively in the P3 Bulletin article “Value for money needs standardization: If only it were that simple.” The article examines the use of Value for Money (VfM) analyses in alternative delivery, which has been criticized in the past, and recognizes industry efforts to make objective VfM analysis a key part of leveling the “playing field for public authorities when choosing their preferred procurement method.”
Commenting for the article, Andrée stated that VfM initially became “controversial because people questioned whether it was done to provide certain results” – justifying a decision to use a P3 method. But VfM analysis can be critical in reaching an understanding of the different delivery methods and making an informed decision on the best model for a given project. Andrée commented, “The public sector needs good expertise so that it can truly understand the risks and critically compare the risks that an agency retains on a design-build project against the risks it would retain in a P3 and understand which risks can be efficiently transferred across to the private sector in a P3.”
The article explains that it’s important for public sector decision-makers to be empowered to choose the best option – not simply the cheapest. Andrée commented, “Agencies need to understand what the implications are of different delivery models…for example, to consider the overall cost of public versus private investment, such as differing tax implications.”
Regarding how factoring in qualitative and quantitative benefits – and not just return on dollars – is one of the most critical elements in using a VfM analysis to compare delivery methods, Andrée added, “Qualitative things…[should] be evaluated. For example, the benefit to the community to have a well-maintained project over its life; or maybe a P3 can bring more innovation; or it can deliver sooner. That all needs to be considered alongside the cost.”
Andrée was asked for an example of how a VfM analysis can help a procuring authority answer questions such as “What is it about this particular procurement route that offers better value over the other possibilities?” She responded, “Building a school will benefit the whole community whatever model is used. So what specifically is it about P3, for example, that will provide greater benefit? Is it the operation & maintenance; the accelerated delivery; or the innovation that the model can bring?”
P3 Bulletin noted that questions on what constitutes VfM tend to bring experts down the route of more early engagement with the private sector and a focus, therefore, on the use of progressive P3 models. Discussing how VfM analyses are tied into the progressive model, she said, “Assessing value is a fundamental part of a progressive P3. As more risks are known and costs become clearer through the pre-development work, the public agency can compare pricing and the value of risks retained and transferred. This will inform negotiations at the point where the public sector is considering whether to deliver the full DBFOM approach or pivot to a different model.”
The article then highlighted how “this approach is similar to the one being undertaken by LA Metro in California” on its Sepulveda Corridor project, where Andrée is the lead of Nossaman’s team representing LA Metro. The publication goes on to say, “The Sepulveda Corridor project currently has two teams developing early works for two differing modes of transit: a heavy rail system and a monorail. The authority will decide at a later stage which–if either–project it wants to be completed, meaning it has the flexibility to find the best solution much later in the process than in a traditional scheme.”
Andrée closed by commenting on how enhanced use of VfM analyses will impact public sector decision making in alternative delivery, particularly if more projects follow progressive models. “For decades, the public sector has relied on competition to provide VfM, so it needs to be prepared for negotiation at the end of the process, rather than competition at the start…It needs to be continually benchmarking against other options.”