Conclusions and Recommendations
1. In 2006, changes to operational PFI projects
totalled £180 million, but many operational PFI contracts
are under-managed. Negotiating
good deals is important but managing them well afterwards is key
to value for money. Yet there are wide variations in the level
of resources used to manage PFI deals, and many schools and hospitals
consider that they do not have enough staff to do a good job.
2. There are limits to the Treasury's capacity
to control the allocation of resources to contract management
at a local level. The Treasury should
identify and disseminate examples of where, in handling change,
PFI projects have benefited from sufficient resourcing of contract
management.
3. There is insufficient central support
for contract managers. The Treasury, Departments
and Partnerships UK should increase the roll-out of training programmes
to support contract managers when changes need to be made to PFI
projects.
4. At present, only 29% of project changes
over £100,000 are subject to competition.
The arguments for handing additional work to an incumbent contractor
are not persuasive nor do they hold sway in every project. Public
sector authorities should raise this percentage so that alternative
bidders compete to undertake the work whenever possible.
5. Management fees cost the taxpayer over
£6 million a year, despite Treasury guidance issued in March
2007 which advised against the payment of management fees in new
PFI deals. Hundreds of operational deals
are still paying unjustified management fees. The Operational
Taskforce, run by Partnerships UK on behalf of the Treasury, should
require existing operational deals to remove management fee charges
from existing contracts.
6. There are large differences in the cost of
making similar minor changes to PFI projects, but the effort put
into checking that costs are reasonable varies widely from project
to project. Public sector authorities
need to validate the value for money of changes to PFI contracts.
By the end of 2009, Partnerships UK should draw up guide prices
for common minor jobs, based on existing cost information from
the Royal Institution of Chartered Surveyors and others.
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