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A comparative review of quantitative VFM methodology for PPP infrastructure project in Indonesia and Australia

Pangeran, Moch Husnullah, Pribadi, Krishna Suryanto, & Susilawati, Connie (2010) A comparative review of quantitative VFM methodology for PPP infrastructure project in Indonesia and Australia. In Wang, Yaowu, Yang, Jay, Shen, Geoffrey, & Wong, Johnny (Eds.) Proceedings of 2010 International Conference On Construction & Real Estate Management, China Architecture & Building Press, Royal on the Park Hotel, Brisbane, pp. 290-295.

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Abstract

The Government of Indonesia (GoI) increasingly relies on the private sector financing to build and operate infrastructures through public private partnership (PPP) schemes. However, PPP does not automatically provide the solution for the financing scheme due to value for money (VFM) issues. The procurement authority must show whether a PPP proposal is the optimal solution that provides best VFM outcome. The paper presents a literature review of comparing quantitative VFM methodology for PPP infrastructure project procurement in Indonesia and Australia. Public Sector Comparator (PSC) is used to assess the potential project VFM quantitatively in Australia. In Indonesia, the PSC has not been applied, where the PPP procurement authority tends to utilize a common project evaluation method that ignores the issues of risk. Unlike the conventional price bid evaluation, the PSC enables a financial comparison including costs/gains and risks. Since the construction of PSC is primarily on risk management approach, it can facilitate risk negotiation processes between the involved parties. The study indicates that the quantitative VFM methodology of PSC is potentially applicable in Indonesia for water supply sector. Various supporting regulations are available that emphasize the importance of VFM and risk management in infrastructure investment. However, the study also reveals a number of challenges that need to be anticipated, such as the need of a more comprehensive PPP policy at both central and local government level, a more specific legal instrument for bidding evaluation method and the issue of institutional capacity development in PPP Units at the local level.

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ID Code: 39759
Item Type: Conference Paper
Keywords: public private partnership, value for money, public sector comparator, infrastructure, procurement, Indonesia, Australia
ISBN: 9787112126125
Subjects: Australian and New Zealand Standard Research Classification > ENGINEERING (090000) > CIVIL ENGINEERING (090500) > Transport Engineering (090507)
Australian and New Zealand Standard Research Classification > BUILT ENVIRONMENT AND DESIGN (120000) > BUILDING (120200) > Building Construction Management and Project Planning (120201)
Divisions: Past > QUT Faculties & Divisions > Faculty of Built Environment and Engineering
Past > Schools > School of Urban Development
Copyright Owner: Copyright 2010 Please consult the authors.
Deposited On: 01 Feb 2011 12:07
Last Modified: 01 Mar 2012 00:27

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