Value for money
PPP payments against the public sector comparator.
By Surojit Chakraverti, founder of L3VLUP and an investor running a long-short healthcare and technology equities strategy.
On this subject: value for money.Updated 2 October 2026
Part of project finance and infrastructure models, with the models, labs and guides around it.
What it does
The authority’s side of a PPP. Before procuring privately it compares the present value of the unitary charges it would pay with a public sector comparator: the cost of building and running the asset itself, plus the construction and operating risks it would keep, discounted at the public sector rate. A PPP that costs more to finance can still be value for money if the risk it transfers is worth more than the extra cost, which is why the test turns on the risk adjustment as much as on the rates.
Where it lives
The same schedule in each model that carries it, with the rows to open. Open a model in the browser, go to the sheet, and click the lines.
- Assumptions, rows 39–41: Public sector discount rate (nominal), Comparator: construction risk retained by the public sector, % of capex, Comparator: operating risk retained, % of operating and lifecycle costs
- Bid, rows 14–18: The authority’s payments: unitary charges less deductions, Public sector comparator: build and run it publicly, with the risks it would keep, Present value of the PPP payments, Present value of the public sector comparator…
What a reviewer looks for
- A comparator with no allowance for retained risk.
- Comparing undiscounted totals.
- Leaving deductions out of the authority’s payments.
Learn it, then build it
Vocabulary: Value for Money (VfM), Public Sector Comparator (PSC), Public-Private Partnership (PPP).