The VfM indicator is derived by taking the number of approved projects that fall into each VfM category (as defined below, and weighting each project by its cost (approved spending). This helps ensure the Indicator is relative; even if the majority of approved projects for any given year are high or very high VfM, the indicator will be lower if there are some projects with sizeable costs that are lower VfM (poor to medium). Cost here is defined as the PVC to the broad transport budget, the public budget available to fund transport schemes. This includes the operational and capital expenditure expected over the lifetime of each scheme, adjusted for inflation and discounted to reflect the tendency to prefer the receipt of goods and services now rather than later. It is net of any third-party expenditure (for example from the private sector) and revenues and also accounts for cost savings that may be realised to the broad transport budget[footnote 3]. PVC should only comprise public accounts impacts (costs borne by public bodies) that directly affect the budget available for transport. All other impacts, including operating costs and revenues for private sector transport providers and impacts on wider government finances, should be included in the present value of benefits (PVB). Costs to both DfT and local authorities have been included in the indicator. This reflects all public money committed to the project and is consistent with how we measure a project’s cost in its VfM assessment. The proportion of approved spending that falls within each VfM category is subsequently calculated, and presented in table 1 in the 2019 VfM indicator report. The proportion that is assessed to be high or very high VfM is then used as the VfM indicator.