Public Sector Comparator Psc in Public Private Partnership PPP Process

Public Private Comparator

Public Sector Comparator (PSC) in the Public-private partnership (PPP) Process

Increased global financial pressures have caused many government entities to cut costs in any way possible. One way is to outsource services or projects to private companies. However, when comparing costs, the public sector frequently bases its cost calculations for a project by omitting certain types of factors. These can include employee benefits, utilities, or total administrative costs. As result, public sector services may erroneously appear to be less expensive than private services. The public cost comparator (PSC) provides a better comparison of the costs of public and private services. If the private sector can provide services cheaper than the public sector, then the public sector may choose to engage in a public -- private partnership (PPP). This allows them to share the costs, benefits, and risks of the project.

More than one method exists for comparing public and private job costs. Several factors that must be considered in the comparison are the discount rate, risk factors, and total costs of the project. In many cases, the discount rate will be lower for the public sector because they already have the infrastructure in place. This research will discuss various methods for calculating the public cost comparator and the effect of public-private partnership framework on the ability to lower costs through outsourcing public services.

Defining Concept: PPP

What is PPP?

The public-private partnership is a funding method whereby private companies and government entities form a partnership to carry out infrastructure improvement projects. The PPP offers several advantages over traditional funding methods. The PPP avoids the need to raise taxes. PPP projects do not raise government debt. They transfer some of the risk away from the government and the use of public funds (Nisar 2007). PPPs offer many options that are not available under traditional infrastructure improvement models. It has been found that private companies are often not interested in low-dollar projects. They are interested in larger projects. For instance, they will often be interested in building a new building, but they will not be interested in the upgrade of an existing building (Nisar 2007). The PPP arrangement can deliver better services through combining the best that the public and private sectors have to offer (Nisar 2007).

It is important to understand that PPPs differ from privatization. The distinguishing difference between these two terms is that the PPP focuses on partnership. However, some disagree with the use of the term "partnership" as they argue that partnerships usually share the same objectives. In the PPP both the private and public sector do not share the same objective. The objective of the private sector is to turn a profit, while the objective of the public entity is to provide a service (OECD 2008). Utilizing the PPP, the realization of the objectives of one party leads to the accomplishment of the objectives of the other party, but the two are not the same. This contrasts with traditional procurement means, where the objectives of both the supplier and other government entities are the same. In this case, the objectives of both parties are to provide a public service.

The PPP is an agreement between a government agency and one or more private partners. In order to be of benefit to both partners the planned project must meet both objectives of profit for the private partner and service delivery for the government entity. The government has the responsibility of stewardship of public funds and must accomplish service delivery in the most effective and efficient manner possible, regardless of the procurement process chosen (OECD 2008). The public-private partnership can only occur if the criteria for each entity are met in the project plan and design.

The most typical form of PPP is where the private partners designed, build, finance, operate, and manage the capital asset. They may deliver the final service either to the government or to the end users (OECD 2008). The private partner may receive a stream of payments from the government, or charges levied directly to end users. The government sets the standard for the quality and quantity of the end product. Payments may depend on the ability of the private partner to deliver the quality and quantity of services requested. Private partners assume a considerable amount of risk, in that they must ensure that the project operates smoothly and efficiently according to government standards. The public-private partnership can develop in many different forms. These include the build-own-maintain, build-own-operate, build-develop-operate, design-construct-manage-finance, design-build-operate, buy-build-operate, build-rent-own-transfer, build-transfer-operate, and many others (OECD 2008).

The significance of these different forms of the PPP are important in an understanding of the Public Sector Comparator. If each of these different forms of the PPP will have an affect on the accuracy of the public sector comparator and its ability to provide a realistic comparison between public and private funding of a project. The most important aspect to understand about the Public Sector Comparator is that many variables will have an affect on its accuracy and reliability. There is no single answer as to which of the factors should be included in the public sector comparator and how much weight they should be given. The public sector comparator has both quantitative and qualitative aspects, each of which must be considered for the proposed partnership. There is no "magic formula" that represents the best answer for the public sector comparator to utilize. Each project is different and has different parameters. Choosing the proper form of the public sector comparator can be a daunting task, but it is one of the most important factors if government entities wish to maintain efficient and effective use of public funds.

Global Perspective: UK, Australia, USA, Germany, Korea

Australia and the United Kingdom were among the first to adopt PPP strategies. However, France, Germany, Ireland, Italy, Japan, Korea, Portugal, Spain, Turkey, Argentina, Brazil, South Africa and others soon began to see PPP as a viable strategy for funding public projects (OECD 2008). The introduction of PPP into the government infrastructure raised several questions, one of which was whether the introduction of private entities into the public sector would create political problems. Those countries who wished to engage in the PPP process saw a need to develop clear legal framework and policies to ensure that sufficient capacity existed to manage the projects and that private entities did not gain control of some portion of the government (OECD 2008).

Many government agencies set up dedicated public-private partnership units to help with organization, set up or to help the government ensure that all provisions necessary are provided to the private entity to complete their task (OECD 2010). Seventeen OECD countries have dedicated public-private partnership units at a national level. The 17 countries are Australia, Belgium, Canada, Czech Republic, Denmark, France, Germany, Greece, Hungary, Ireland, Italy, Japan, Korea, Netherlands, Poland, Portugal, and the United Kingdom. However, not all countries choose to have this type of unit at a national level. Tthe 12 countries that do not have a public-private partnership unit on a national level are Austria, Finland, Iceland, Luxembourg, Mexico, New Zealand, Norway, Slovak Republic, Spain, Sweden, Switzerland, and the United States (OECD 2010).

In addition to different methods of managing public-private partnerships, countries also have different definitions of public-private partnerships. For instance, Korea defines a public-private partnership project as a project to build and operate infrastructure which has been traditionally constructed and run by government funding (OECD 2010). The United Kingdom defines a public-private partnership as "typified by joint working between the public and private sectors" (OECD 2010: 22). They further define the PPP by the types of projects that they can cover. The most common definition is that it must be one involving an investment of assets in a public project on a long-term basis between 15 and 30 years (OECD 2010). In this State of Victoria, Australia, a public-private partnership relates to the provision of any ancillary service that involves private investment or financing of more than a minimal monetary amount.

Throughout the world, PPPs account for varying percentages of infrastructure investment. Mexico and Chile utilize the greatest percentage of PPP infrastructure projects at >20%. Korea and New South Wales utilize between 10-15%. The UK, Czech Republic, Slovak Republic, Greece, Italy, South Africa, and Ireland utilize between 5-10%. The lowest usage of PPP infrastructure projects are undertaken by Austria, Germany, Canada, Denmark, France, Netherlands, Hungary, Norway and Spain at less than 5% (Burger & Hawkesworth 2010). Traditional procurement (TIP) is still the most widely utilized method for funding public projects and it is also the default mode of procurement. Many countries lack criteria to identify how projects are chosen as PPP or TIP candidates (Burger & Hawkesworth 2010).

In the State of Victoria, Australia the public-private partnership relates to the provision of infrastructure and related services which involve private investment or financing with a present value of payments for service to be made of more than AUD 10 million (OECD 2010). South Africa defines the public-private partnership as a commercial transaction between the government and a private partner in which the private party performs an institutional function on behalf of the governmental institution for a specified or indefinite period of time (OECD 2010).

As one can see, a variety of factors affect the public-private partnership. Not all countries treat public-private partnerships in the same way. They have different agencies for administering public-private partnerships, different ways of dividing risk and different ways of defining the public-private partnership. There are many differences in the types of transactions, payment methods, and rules that govern the public-private partnership. In order to understand the public sector comparator, one must first understand the various factors that influence the public-private partnership in its many forms.

The PPP in the UK, Australia, USA, Germany, and in Korea

The UK. In the UK several debates, such as the use of public sector comparators, the initiation process of PPPs, choice of discount rate, and cost of capital between PPPs and conventional procurement are taking place (Ball, 2009). Many of these issues are similar to those which are of primary concern in many countries around the world. As of 2006, 750 PPPs were in existence, representing a total capital value of USD 130 billion (Ball, 2009). In the UK, health and education represent the widest use of the PPP model. Building schools and hospitals are among the largest expenditures utilizing PPPs in the UK. This contrasts with Australia, where the largest expenditure are for transportation, roads, and water projects (Ball, 2009). The needs of countries utilizing PPPs differ, thus the nature of the projects are significantly different as well.

The financial health and structure of the country also determine the nature and structure of PPP projects. In the UK, a strict policy is followed that does not allow the ratio government debt to exceed 40% of the GDP (Ball, 2009). Regardless of the government debt, new hospitals and schools are necessary. The PPP allows the UK government to pass some of its debt onto the private sector, thus allowing it to stay within its prescribed guidelines. The cost of the capital asset under a PPP can be removed from the public service balance sheet only if a sufficient level of risk is transferred to the private entity. In the UK, the Accounting Standards Board UK oversees PPPs. No equivalent board exists in Australia (Ball, 2009). Approval of the PPP depends on the ability to demonstrate that the PPP would provide a better value than conventional financing. This is a primary requirement in many countries that utilize the PPP. The goal of the is to protect and better manage public funds and to provide improvements in infrastructure utilizing the most efficient cost structure.

A comparison between attitudes towards PPPs in Australia and UK, found the attitude in Australia to be much more negative torts PPPs than that of the UK (Ball, 2009). The PPP is a much more acceptable form of financing and the UK. Ball attributes these differences too much stricter approval criteria in the UK, resulting in fewer failed projects.

Australia. The Western Australian government has produced a set of guidelines relating to the calculation of discount rates and each component of the raw and risk adjusted Public Sector Comparator (PSC). According to the guidelines, the purpose of the PSC is to assure that the tax dollars of the Australian people are spent wisely (Government of Western Australia 2011). The Victorian government has one of the most detailed sets of guidelines for calculating the PSC and determining the risk components of the PSC. The following basic guidelines are used to determine the PSC in Australia.

Australia is one of the best countries for the study of public-private partnerships and calculation of the PSC. Public-private partnerships in Australia are governed by a complex set of joint ventures law that is more advanced than in many other countries that utilize the public-private partnership (Duncan 2005). This is one of the key reasons for using Australia as an example for the study of factors that influence calculation of the PSC. Partnerships Victoria projects must follow the rules set forth in the official guidelines. Partnerships Victoria projects begin when a service need is identified by a department or agency. The project is then subjected to an investment appraisal using the current infrastructure investment evaluation policies and guidelines (Partnerships Victoria 2003). A business case is submitted to the government along with recommendations as to whether the project would be recommended for a partnership or traditional government contract project. If approved, the project will be compared to a reference project, which is a hypothetical situation in which the government provides and finances all of the services. The reference project does not need to assume that everything will be done within the public sector and these often include elements of outsourcing and third party contracts (Partnerships Victoria 2003).

The USA. The public-private partnership in the United States faces many political challenges and is currently a topic of debate. Deregulation efforts in the United States have faced many challenges. For instance, deregulation in the California Energy sector resulted in a crisis that shaped the view of policy makers and the public on privatization in the United States (Brusewitz 2005). For these reasons, the PPP has not been met with the same enthusiasm as in other parts the world. However, despite these concerns, the number of PPPs continues to grow in the United States. Contracts with private entities have a long history in the United States, but recently the trend is toward private entities taking on greater risks and assuming more responsibility and the projects (Brusewitz 2005). This is the issue that is of key concern and at the heart of the debate. As with Germany, no unified framework exist for the formation of public-private partnerships and the partnerships are based on a combination of government regulation in common law.

Germany. The example from Australia is an excellent starting point for discussion of calculating the PSC in the public-private partnership. Now let us examine some other examples from other areas of the globe. Germany utilizes PPP projects extensively, but they have no governing body of laws as we find in Australia. Instead, Germany has a large number of acts, rules, and regulations to apply. Germany has also created a number of institutions to facilitate the development of PPPs (Deringer 2009).

In Germany, PPPs are based on an agreement between the public and private entity, with private law taking precedence over public rules and obligations. The private partner is a legal entity, or sometimes a consortium consisting of several companies and different types of shareholders (Deringer 2009). There is no specific law or framework for the formation of PPPs. The public-private partnership must conform to constitutional law, administrative law, the law of public procurement, budgetary law, tax law, investment law, finance law, the law on public subsidies, contract law and corporate law. This makes the formation of PPPs in Germany and a highly complex issue (Deringer 2009).

The formation of the PPP in Germany follows the same steps as it does in Australia and many other countries. The phases include identification of possible projects, preparation and planning, the award procedure, and implementation and control of the project (Deringer 2009). The PPP Acceleration Act was devised to facilitate the formation of public-private partnerships. Amendments to other areas of the German law were made to help facilitate the formation of PPPs as well. The Federal PPP Task Force, Federal Ministry for Transport, Building and Urban Affairs in Berlin and a number of other organization were form to facilitate the formation of PPPs throughout Germany (Deringer 2009). Many steps of been taken in Germany to facilitate the formation of PPPs, but they do not have the highly developed framework that is found in Australia. The complexity and lack of uniformity makes calculation of the PSC a task that can only be accomplished on a per-project level. This lack of uniformity also results in a lack of consistency in the VFM and PSC.

Korea. Developed countries such as the UK, USA, Germany, and Australia have more experience with PPPs then and developed nations. In general, developing countries of the Asian and Pacific region are new to the idea of PPPs as a means to accomplish infrastructure improvements (ESCAP, 2011). PPP projects are often long and are not always desirable for this reason. PPP projects in developing nations often pose problems that are in addition to problems associated with them in developed nations.

Land acquisition for the project is often problematic in developing nations (ESCAP, 2011). This is particularly the case for road and rail projects that involve acquisition of land from multiple landowners. Land acquisition is an uncertainty for infrastructure projects. The rules, lost, and norms differ in various countries. Governmental structural support is not as sophisticated and highly developed nations. This lack of governmental support is a key factor that limits PPPs in Asian countries. Governments in Asia are attempting to develop structures that will support greater usage of PPP for infrastructure development. Among these countries that are actively seeking to develop infrastructure that supports PPP projects are Korea, Thailand, and Japan (Pombjera & Manibhandu, 2007).

Developing clear definitions for the PPP process is the first, and most important step that is being taken. After the Asian crisis, the Korean government revised its Private Capital Inducement Act to increase the use of private sector resources in infrastructure development (Pombjera & Manibhandu, 2007). The Koran law is designed to attract foreign investment in infrastructure development by providing incentives.

The Korean law specifically lists 33 items that are eligible for consideration as PPP projects. These includeroads, railway, airport, waste disposal facilities, information and communication network, distribution complex, urban park, recycling facilities, Libraries, museum and art galleries, and International conference facilities roads, railway, airport, waste disposal facilities, information and communication network (Pombjera & Manibhandu, 2007). This definition of the PPP project is much broader than that in other parts of the world such as the UK and Germany. Although the scope of projects is greater in Korea, the forms that the PPP can take are much more limited. Korea only allows for forms of the PPP project: (1) BTO (Build Transfer and Operate) (2) BOT (Build Operate and Transfer) (3) BOO (Build Own and Operate) (4) other Method proposed by private sector (Pombjera & Manibhandu, 2007).

Korea allows the government to develop a yearly plan for each project that includes:

"•the investment amount, duration, location, scale

• the proceeds of the concessionaire i.e. user fee

• the method (BOT BTO)

• the public assistance method

• information on the operation and management

• the eligibility requirements for the" (Pombjera & Manibhandu, 2007).

Korea has set up a special Private Infrastructure Investment Centre of Korea (PICKO), which is similar to the PUK in the UK (Pombjera & Manibhandu, 2007). The center is designed to eliminate the bureaucracy and consolidate government agencies needed to administer the PPP. The center allows administrative support in a central location. It serves legislative, investment, administrative, educational, Consulting Services, research, and the development of PPP projects. When one considers the functions of the center to those in other countries, the PICKO provides more comprehensive services than those of other nations. Of particular note is its participation in legislative activities. The Korean laws are much more precise in their definition and roles in the PPP.

Economic Effectiveness Analysis on PPP

The main reason for considering a PPP is a lack of government funding available (ESCAP, 2011). However, this is not a good reason to undertake a PPP. Several factors can make the PPP project more expensive than conventional funding. For instance, the cost of borrowing money can be more expensive for private companies than for the government. There also administrative costs for managing the contractual obligations of the PPP (ESCAP, 2011). Transaction costs a PPP projects can be high. The government can also expose themselves to greater risk through implicit and explicit liabilities (ESCAP, 2011). These factors must be considered for determining the economic effectiveness of the PPP.

Under Eurostat rules, PPP ease are classified as private investment if the private partner bears most of the construction risk, and either availability or demand risk (Ted-Minassian, 2006). Low deficits can result in some projects being classified as PPPs just to classify them as private, even though the government still has sizable risks. In addition, some projects that are well suited for PPPs are not being designed optimally in order to classify them as private (Ted-Minassian, 2006). Both of these scenarios represent economic inefficiency in the use of PPPs. The economic effectiveness of the PPP depends on the ability to properly classify it based on the economic situation in the host country.

Public Sector Comparator

Relationship between PPP & PSC

Public-private partnerships (P3) are a growing trend throughout the United States and Canada. The Province of British Columbia has invested more than $9 billion in 25 P3 projects since 2002 (Naim 2009). PSC projects have many benefits to the public. These include lower costs, higher levels of services, and reduced risk through risk transference or sharing (Naim 2009). P3 projects also give the public sector access to capital that they would not otherwise have.

The PSC is used to determine the value for money (VFM) of a project using the P3 model. The PSC helps to determine whether the public will receive a sufficient return from the project if they use a public-private partnership. Value for money is the driving force behind PPPs and traditionally procured projects (TIP) (Burger & Hawkesworth 2010).

Value for Money

Value for Money (VFM) tests come in many different forms which give different results. Choosing the correct VFM methodology is one of the most difficult tasks faced by PPP cost analysts. Simple cost tests and full cost-benefits tests give approximately the same answers and are considered to be acceptable substitutes for each other (Grout, 2005). Choice of discount rate and certain types of risk are different for various VFM methods.

Several types of risks are involved in each project and different VFM methods treat them differently. Specific risks are those that are only involved with the project under consideration. They are different for every project. Specific risks can be categorized and priced accordingly (Grout 2005). Systematic risks differ from specific risks. Systematic risks are closely related to a correlation between the risk of a particular asset as compared to the risks associated with a set of all assets (Grout 2005).

Differences exist in the way various countries approach VFM tests. In Victoria, Australia the VFM is calculated through the net present cost to the government. It takes into account the public sector method of providing preferred output. The comparison considers the specific costs and risks the public procurement is likely to face. The method also takes into account the value of risks allocated to private parties in the PPP. This method attempts to remove advantages that are inherent with the government entity, simply as a result of their position. The PSC is used as a benchmark to assess bids. The method takes into account innovation that will make it more or less costly for the government to deliver services to the public. The method also has a qualitative aspect such as the bidder's reputation, references and performance on past projects (Grout 2005).

VFM tests in British Columbia, Canada include both quantitative and qualitative elements. The method includes a qualitative assessment of the VFM under different procurement methods, a PSC calculation and a procurement test. Like the Victoria, Australia model competition neutrality is assumed (Grout 2005). The Canadian method also considers many factors that are difficult to quantify in monetary terms. One such example of this type of factor is indirect jobs that will be created by the project. Macroeconomic effects such as economic stimulus and environmental benefits also fall into this category.

In Ireland the VFM method focuses on the appraisal process and the capacity of the private sector to deliver in terms of monetary value. The Irish method takes into account the potential for the project to be procured as a PPP and the form of PPP that will offer the best value for money. The Irish method takes into account the result of similar projects in the past and the capacity of the private sector to provide quality service should they be chosen. In the case where there is doubt about the ability of the PPP to deliver the services that are promised, the contracting agency will develop a shadow bid. This allows the contracting agency to compare the costs of the provision of services through the PPP and through traditional procurement channels (Grout 2005).

In the Netherlands, the process contains four primary steps. The first is the inception report which outlines the various procurement options. The second portion is the qualitative analysis to provide insight into the financial difference between the various options. The third is the quantitative analysis of the various procurement options. The final report concludes whether the PPP represents the best VFM or whether the traditional procurement methods will be utilized (Grout 2005).

This comparison of various VFM methods demonstrates the diversity in methods that can be utilized to accomplish the same task and to arrive at the same decision. These methods use a mix of quantitative and qualitative methods to arrive at their conclusions. Some of the methods, such as that of Ireland use almost entirely quantitative methods. However, others such as that of Canada, rely more on qualitative methods. This comparison demonstrates the variability in the methods used and the lack of standardization that exists. The VFM method chosen is a matter of preference, economic conditions in the country and preference. VFM methods utilize a hybrid of quantitative and qualitative methods in various degrees.

The Processes of PSC in PPP

The PSC has several components. Inflation rates are determined by projections provided by the state government. Direct capital costs include items such as construction and commissioning, raw materials, design and planning, upfront consultancy costs, and contingencies. Capital receipts include the residual value of the project once complete. Maintenance and lifecycle costs include capital and maintenance costs, lifecycle costing, and labor required for maintenance (Government of Western Australia 2011). Direct operating costs include the cost of inputs, employee costs that are directly related to the service provision, and insurance. Indirect costs include corporate overhead. Third party project revenues include third party demand for infrastructure and government allowed third party utilization (Government of Western Australia 2011). These items are common to many PSC calculations and are not unique to the Australian PSC.

The government has several advantages over the private bidder. They do not have to pay land tax, payroll tax or stamp duty. These represent advantages that a government entity has that are not available to an outside bidder. These advantages would be different in other countries and under different tax schemes. Project specific risk would be different from project to project. This is risk that is associated with the outcome being better or worse. This risk is estimated as part of the PSC calculation. Not all risk is retained by the public entity. Some risk is transferred to the contracting party. Risk can be divided into transferred and retained risk (Government of Western Australia 2011). Sensitivity analysis is performed to determine the robustness of the PSC and potential changes in the assumptions used to calculate it (Government of Western Australia 2011). A calculated discount rate is applied to the PSC and to the bids received.

Partnerships Victoria also outlined several different risk categories. Quantifiable risks include retained risk and transferable risk. Transferable risk is that which can be transferred to the private party if the project proceeds. Retained risks are those that the government expects to incur if the project proceeds under Partnership Victoria (Partnerships Victoria 2003). Other components of the PSC that must be considered in a Partnerships Victoria Project are transaction costs, inflation, efficiency dividend, residual value, competitive neutrality, abatement and bonus adjustments. Calculating the PSC in a Partnerships Victoria project must take into account many factors. The goal is to transform as many factors as possible into quantifiable terms.

Australia's PSC guidelines and policy is an excellent example of a highly defined process for constructing an accurate PSC in the public-private partnership. Partnership Victoria projects require a PSC to be constructed for every project in the initial stage during the pre-market period. The PSC can be changed throughout the procurement process if circumstances change that reflect a more efficient delivery of services. The PSC allows an accurate estimate for the most efficient use of public funds. It is important that it be as accurate as possible and demonstrates the best estimation of value for money. In some cases, the PSC is disclosed to bidders to allow for a more efficient bidding process (Partnerships Victoria 2003). There are many variations of this process in other countries, but the Australian example is the most widely used for the development of PSC in the world.

Developing A Successful PPP

Several factors were found to be necessary for a successful P3 project. These are:

"• Clearly defined project scope;

• Clearly defined needs and objectives;

• Clearly defined process for project development and approval;

• Flexibility for the private sector in innovation and delivery;

• Allocation of risk to those parties best able to manage and mitigate risk elements;

• Clearly defined performance measurements and incentives;

• Private sector competition" (Naim, 2009).

One of the key errors in the implementation of PPP projects is that they are often implemented in a hurry, with a lack of adequate funding or advice from experts in the field (Delman, 2010).

Recent economic Crisis and PPP

The current financial crisis impacts governments all over the world. Many countries that did not consider public-private partnerships in the past are now beginning to explore the benefits of the public-private partnership to their economy. A majority of the literature that promotes the public-private partnership as the ultimate answer to the world's financial woes. However, the this research study addresses many issues that can jeopardize success of the public-private partnership in accomplishing its goals. One of the most important factors in the ability to establish a successful beneficiary partnership was the accuracy and ability to provide a meaningful public sector comparator.

The Futuristic role of PPP

Boundaries between the public and private sector are shifting and in some cases becoming blurred. Many governments now seek public-private partnerships as a way to balance struggling economies and improve their economic position. The face of public management is changing and public performance is now measured by output and efficiency more so than in the past (Bult-Spiering & Dewulf, 2006). As was found throughout this research study, the difference between public and private projects can take many different forms. This has been described as a spectrum according to the amount of autonomy that the private partner has in performing the duties required by the project. The spectrum ranges from complete public autonomy without the use of private partnerships to one where the private entity takes complete control of the project with very little government intervention (Bult-Spiering & Dewulf, 2006). Different countries take a different approach to public-private partnerships and in many cases differences can be found according to the project be undertaken. All of these factors have an affect on the ability to accurately calculate the PSC.