Making Changes in Operational PFI Projects

HC 205, Report by the Comptroller and Auditor General, Session 2007-2008

National Audit Office (NAO)
TSO (The Stationery Office)
Making Changes in Operational PFI Projects - Front
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'Making Changes in Operational PFI Projects (HC 205)' forms part of a number of National Audit Office 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 and it is therefore important that PFI contracts have flexibility with built in value for money.

Findings include:

  • PFI deals are offering sufficient flexibility to the public sector.

  • Some projects achieve better value than others, but:

    • higher value changes were not always competitively tendered;

    • for minor works, there was little consistency in the methods used by the public sector;

    • the cost of replacing items throughout the life of the contract was also inconsistently applied; and

    • contractors had often charged additional fees, which were not specified in the original contract.

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 that 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, by keeping a good permanent record of changes and payments made, and by fostering open lines of communication with front-line users and other stakeholders as well as the PFI contractor.

Extent 36 pages ISBN 9780102951929
Size A4 Price £13.90
Format Paperback Published 17 Jan 2008
Availability Out of stock - available to order Availability help (opens in new window) Delivery Delivery options and charges
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