DCS advisors provide value-for-money (VfM) analysis and reports to our public and private sector clients across the cores sectors that we focus on, including infrastructure, energy & utilities, oil & gas, industrials and real estate. Our clients who are considering a major capital project investment, generally undertake cost-benefit studies, value-for-money (VfM) analyses and options analyses as the early steps when deciding to proceed with a project or transaction structured as a public-private partnership (P3) or a privatization. As a simplified description, a project VfM is an economic analysis that is used to confirm that the overall direct and indirect and risk-adjusted net benefits to the public sector derived from the P3/privatization scenario are materially greater than all practical and feasible "public sector comparator" scenarios.
in the case of a new-build, expansion of rehabilitation project, the "public sector comparator" scenarios may be comprised of all practical and feasible scenarios available to a government/public agency, which do not involve a P3 or a privatization, whereby the public sector could otherwise develop, finance, build, operate and maintain a project with its own sources of capital and resources. In the case of a sale of an existing operational asset (a privatization), which may or may not include additional capital investments made by the buyer, all practical and feasible alternatives available to the public sector, whereby an equal amount of net cash proceeds would be generated as compared to the net sale proceeds from privatization (after deducting any capital investment assumed in the "privatization scenario"). In the case of the privatization scenario, the "public sector comparator" may include a potential monetization/securitization scenario. As an alternative to selling (privatizing) a public asset, where the public sector continues to own and operate the asset, it may be possible that the free cash flows of the asset can be enhanced (through optimization of operational, maintenance, financing or pricing strategies) and securitized through a commercial or capital markets borrowing. DCS also offers expertise in the area of securitization as part of our capital fundraising advisory practice, which can also be applied here.
The results of the VfM must show that the P3/privatization alternative provides materially greater value than the "public sector comparator". If not, then the P3/privatization should not be pursued (at least on the basis of a fiscal rationale). VfM analysis is conducted using the net present value (NPV) of future cash flows, applying an appropriate social discount rate. Within the VfM analysis we consider all relevant direct and indirect benefits and costs. When we develop our VfM analysis for clients, we first consult with our client to gain a strong understanding of the proposed project's direct and indirect costs and benefits.
DCS advisors are able to provide VfM analyses and reports on a stand-alone basis or as an element of the services we offer to a public and private sector clients who also have mandated us to provide transaction advisory services, capital fundraising services, M&A or privatization advisory services or strategic planning services. In most cases, as cost-benefit studies and reporting will be only one element of a larger project delivery program, DCS will also be providing other complementary analytical services in relation to other transaction elements. Our preference is always to provide such comprehensive advisory services and coordinate all elements of the transaction, including VfM analysis and reporting services on behalf of our clients.
Under any VfM analysis and reporting mandate, DCS will draw from our vast global network of veteran industry expert advisor affiliates and our relationship consultants in order to assemble the most appropriate team to match the specific needs of the transaction at hand. This will always include leadership of DCS affiliate experts who possess decades of global transactional experience related to the specific sector and project type. In any VfM analysis and reporting mandate, our preferred role is always to serve as the lead project/program manager. Within this role we are also able to assist in the selection and procurement (or subcontracting) and management of other advisors, including local and international technical, economics and other specialized advisors or other specialized advisors, as the specific transaction may require. To the extent that other third-party advisors are required, there are many value added advantages of allowing DCS to assist in the procurement of these advisors. First, DCS expert affiliates themselves possess many of required technical, economics and managerial skill sets and we are best positioned to determine which additional outside third-party skill sets are required and which firms or individuals should be hired in these roles. Secondly, VfM analysis is a very complex undertaking, requiring the management and coordination of many simultaneous workstreams. DCS advisors are experts inproject and program management services and are ideally suited to manage and coordinate a multi-dimensional advisory team most efficiently and effectively.
Complementing our VfM analysis and reporting services, DCS advisors offer the following complementary advisory services that may be applicable, dependent on the specific needs of our client.
DCS experts provide comprehensive VfM analysis and reporting services in the following sectors that we specialize in. Please click on the below links to learn more about the sectors that we cover:
DCS experts provide comprehensive VfM analysis and reporting services to the following categories of clients: