Making Changes In Operational Pfi Projects
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Making changes in operational PFI projects
Author: Great Britain: National Audit Office
language: en
Publisher: The Stationery Office
Release Date: 2008-01-17
This NAO report forms part of a number of NAO reports looking at PFI (Private Finance Initiative) projects undertaken across the public sector. PFIs are contractual arrangements with private sector companies to design, build, finance and operate institutions such as schools and hospitals. At present there are over 500 operational projects throughout the UK, with a combined capital of £44 billion. It is also estimated that including future payments, with many projects running up until 2031-32, capital will rise to £91 billion. Given the length of many of the contracts, it is inevitable that operational changes to services will be required, so it is important that PFI contracts have flexibility, with built in value for money. The report is divided into three parts, with appendices. The NAO has set out a number of finding including: that PFI deals are offering sufficient flexibility to the public sector; that some projects achieve better value than others, but that (i) higher value changes were not always competitively tendered; (ii) for minor works, there was little consistency in the methods used by the public sector; (iii) that the cost of replacing items throughout the life of the contract was also inconsistently applied; (iv) that contractors had often charged additional fees, which were not specified in the original contract. The NAO recommendations, include: where there is a relevant contract clause, competitive tendering should be undertaken; for existing contract deals, authorities employing contractors need to put in place consistent and robust means to validate the costs of small changes; public authorities should explore with their private sector partners the feasibility of clarifying current contracts, so they follow current best practice; contract management should be properly resourced in order to manage the change process. Public sector authorities could improve value for money of operational changes by: adopting a strategic approach to changes; keeping a good permanent record of changes and payments made; fostering open lines of communication with front-line users and other stakeholders as well as the PFI contractor.
Lessons from PFI and other projects
Author: Great Britain: National Audit Office
language: en
Publisher: The Stationery Office
Release Date: 2011-04-28
Lessons from the experience of using PFI can be applied to improve other forms of procurement and help Government achieve its aim of securing annual infrastructure delivery cost savings of £2 billion to £3 billion. To secure the best value for money from all types of procurement, the public sector needs to develop skills the NAO has identified. These are collecting better data to inform decision-making; ensuring projects have the right skills; establishing effective arrangements to test, challenge and, if necessary, stop projects; and using commercial awareness to obtain better deals. The case for using private finance in public procurement needs to be challenged more. Also, privately financed projects will often still be off balance-sheet which may continue to act as an incentive to use PFI. There has not been a systematic value for money evaluation of operational PFI projects by departments. So there is insufficient data to demonstrate whether the use of private finance has led to better or worse value for money than other forms of procurement. The Treasury and departments should identify alternative methods for delivering infrastructure and related facilities services to maximise value for money for government. The NAO welcomes the current plans of the Treasury and Cabinet Office to strengthen project assurance. The report highlights the need for independent challenge capable of stopping projects which do not give the prospect of value for money. This is particularly important as there is still a shortage of the skills needed to manage and oversee complex major projects.
Private finance projects and off-balance sheet debt
Author: Great Britain: Parliament: House of Lords: Select Committee on Economic Affairs
language: en
Publisher: The Stationery Office
Release Date: 2010-03-17
A report that recommends a reform of the way, financial liabilities arising from private finance projects (PFPs) are treated in public accounts. It also deals with the growth in the secondary market for PFPs where investors sell on their stake in a project, in many cases once the construction period of that project has been completed.