Dinh Thi Thuy Hang

Ritsumeikan Asia Pacific University, Japan

Thitdi14@apu.ac.jp

EVALUATING THE DECISION-MAKING ON A PUBLIC-PRIVATE PARTNERSHIP TO FINANCE A ROAD PROJECT IN VIETNAM

 Abstract. Public-private partnership (PPP) has become a significant alternative to traditional procurement in  improving  public projects in many countries since the 1990s. Along with the development of PPP projects, value for money (VFM) assessment is considered as an effective tool to support PPP decision-making process, which is widely used by many governments. Like several countries, Vietnam has applied PPP to develop road transport infrastructure. However, the government of Vietnam has never conducted VFM assessment to determine whether using PPP instead of a conventional delivery is better choice to finance a proposed project. This paper proposes application of the value for money assessment to evaluate the suitability of PPP model for a given project. A case study of My Loi project in Vietnam is used to examine the viability of the method. The results of the research using Monte Carlo simulation methodology demonstrate that there is a 23.4 percent chance that PPP could be a good candidate to implement the My Loi project. Sensitivity analysis reveals that the outcome of VFM is the most sensitive to the toll of Public sector comparator (PSC) and the least sensitive to inflation.

Received: May, 2016

1st Revision: September, 2016

Accepted: November, 2016

DOI: 10.14254/2071-8330.2016/9-3/10

JEL Classification: L32, L33

Keywords: Public-Private Partnership (PPP), value for money (VFM), Monte Carlo simulation (MTCs), Public sector comparator (PSC), Vietnam