Public Sector Comparator (PSC)

Public entities use the Comparator as a benchmark to help decide whether an alternative procurement method using private finance would offer better value to the public entity. Some of the key purposes of the PSC are:

• Encouraging the Government Agency to calculate full cost pricing at the initial stage of the project development
• Creating a uniform and consistent benchmark
• Taking decisions on implementation through PPP by demonstrating value to the public entity

Components of PSC

he Public Sector Comparator (PSC) is a tool used to compare the cost and risk of a public-private partnership (PPP) project with the traditional public sector procurement approach. The PSC analysis involves several components, including:

1. Project Scope: This component involves defining the project’s objectives, requirements, and scope. It includes a detailed analysis of the project’s technical, legal, and environmental aspects, as well as an assessment of any potential risks or issues.
2. Procurement Approach: This component involves defining the procurement approach for the project, including the selection criteria, evaluation process, and contract terms. It also involves an assessment of the risks associated with the procurement approach and the potential benefits and drawbacks of using a PPP model.
3. Cost Estimation: This component involves estimating the cost of the project using both the traditional public sector procurement approach and the PPP model. It includes an analysis of the various costs associated with the project, including design, construction, operation, and maintenance costs, as well as any financing costs.
4. Risk Analysis: This component involves identifying the risks associated with the project and developing a risk management strategy. The risk analysis includes an assessment of both the retained and transferable risks associated with the project and an analysis of the potential impact of these risks on the project’s cost and schedule. see Retained and Transferable Risks
5. Financial Analysis: This component involves analyzing the financial viability of the project. It includes an assessment of the project’s funding requirements, revenue potential, and financial sustainability, as well as an analysis of the financial risks associated with the project.
6. Value for Money (VfM) Assessment: This component involves comparing the costs and benefits of the PPP model to the traditional public sector procurement approach. The VfM assessment involves an analysis of the project’s overall value for money, including the quality, performance, and efficiency of the project.

The PSC analysis provides decision-makers with a comprehensive understanding of the costs and risks associated with a PPP project and helps them make informed decisions about the procurement approach for the project.

Competitive neutrality

Competitive neutrality refers to the principle that public entities and private entities should compete on a level playing field when providing goods and services. In the context of the Public Sector Comparator (PSC), competitive neutrality is an important consideration in ensuring that the analysis accurately reflects the costs and risks associated with both the public sector and private sector procurement options.

When preparing a PSC analysis, the costs and risks associated with the public sector procurement option are estimated based on the same assumptions and methodologies used to estimate the costs and risks of the PPP option. This ensures that the analysis reflects the true costs and risks of the public sector procurement option and provides a fair basis for comparison with the PPP option.

In addition, the analysis should consider any advantages or disadvantages that the public sector may have over the private sector, such as access to funding or preferential treatment in the procurement process. These factors can have a significant impact on the competitiveness of the private sector and should be taken into account when assessing the value for money of the PPP option.

Project Risks – Retained and Transferable Risks

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FD Planning Community Forum Discussion

• State Finance Commissions and Rural Local Bodies Devolution of Resources
• Interview with B K Sinha – The Municipal midas
• Municipal bond in India
• Bilateral and Multi-lateral Financial Institutions
• Cost recovery
• Investment needs and Budgeting for Infrastructure and Service in Metro towns
• Subsidy Reduction
• Revenue Sources of Controlling Authorities
• Public Private partnership

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