Assessment and Evaluation Flashcards
7 cards from real CP3P practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Assessment and Evaluation flashcards as text
Under IMF and Eurostat-style statistical guidance, PPP assets are more likely to be recorded on the government's balance sheet when what condition applies?
Answer: The government bears the majority of construction, availability and demand risks
If the government retains most key risks, the asset is treated as public and recorded on the government's balance sheet.
Why can treating 'off-balance-sheet' accounting as the main reason to choose a PPP be problematic?
Answer: It can hide long-term fiscal commitments and leads to choosing PPPs for accounting reasons rather than value for money
Choosing PPPs mainly for accounting treatment can create hidden fiscal liabilities and does not guarantee value for money.
In a market sounding exercise during project preparation, what is the government primarily trying to assess?
Answer: Private sector appetite, capacity, and views on the proposed risk allocation and commercial structure
Market sounding gauges investor and lender interest and feedback on project structure before procurement is launched.
A bankability assessment of a proposed PPP focuses on which question?
Answer: Whether lenders are likely to finance the project given its risk allocation, cash flows and security package
Bankability examines whether the project's risk profile and revenue structure meet lender requirements for debt financing.
What financial ratio do lenders most commonly use to assess whether a PPP project's operating cash flows can cover its debt obligations?
Answer: Debt service coverage ratio (DSCR)
The DSCR compares cash flow available for debt service with scheduled principal and interest payments for each period.
When evaluating a demand-risk toll road PPP, why is an independent traffic and revenue study important?
Answer: It provides credible demand forecasts that underpin revenue projections, financing and risk allocation decisions
Toll road revenue depends on traffic, so independent forecasts are critical to judge viability and lender confidence.
Which statement best describes qualitative VfM assessment?
Answer: It considers non-monetized factors such as innovation potential, market competition, output specifiability and management capacity
Qualitative VfM reviews factors that are hard to quantify but strongly influence whether a PPP will deliver better value.