Letter and memorandum by PPP Forum
The PPP Forum is pleased to respond to the Committee's
request for written evidence to the above Inquiry.
Established in 2001, PPP Forum is an industry body
representing leading private sector companies in the PPP/PFI industry.
We currently have over 80 members covering the spectrum of professions
in the industry from project sponsors and contractors to advisers
and funders. Our role is to:
Engage with the Government and its Departments
and related public sector organisations in developing PPP/PFI
Promote accurate and informed information
about the achievements made by PPP/PFI in delivering modern public
services from new and upgraded infrastructure.
Take part in public debate and present
an informed and business based perspective on PPP/PFI and related
Whilst we are a pro-PPP/PFI body, we recognise
that procurement policy has to meet the wider interests of a government
providing public services. We have therefore given our response
an objective analysis when answering the questions the Inquiry
seeks to address. PPP/PFI has delivered significant infrastructure
in the last 15 years and the timing of this Inquiry should enable
the Committee to draw clear conclusions about the effectiveness
of this policy to date.
For further information on the content of this
submission or the PPP Forum, please do not hesitate to contact
1. How should the cost and benefits of Private
Finance projects be assessed? What discount rate should be used
in comparing Private Finance with conventional public procurement?
Are current procurement procedures satisfactory? Is enough information
disclosed on Private Finance projects fully to assess whether
the taxpayer is getting value-for-money?
The cost and benefits of the Private Finance
Initiative (PFI) can be assessed on a macro level, as regards
the PFI programme as a whole, and on a micro level, on a project-by-project
On a macro level, the question to ask is "where
would we be today without the PFI?". In this context, the
PFI can be seen as a very successful delivery tool enabling the
Government to procure many more infrastructure projects than it
would have been able to do in the same time period using traditional
procurement methods. In 15 years, the PFI programme has delivered
over 510 PFI projects which have now completed construction and
are in operation. This has meant that the benefits of new infrastructure
have been realised much earlier than by more piecemeal renewal.
A couple of examples. In its 2008 report1, the
Treasury noted that in education, the total schools capital investment
rose from less than £700 million in 1996-97 to £5.9
billion in 2007-08, and is projected to rise in 2010 to £8.2
billion. On the ground, this means that in Autumn 2009, over 100,000
secondary school students will be returning to learning environments
which have benefitted from investment as part of the Building
Schools for the Future (BSF) programme alone. Furthermore, a 2008
KPMG report2 indicated a statistically significant correlation
between PFI school projects and improved educational outcomes.
In health, the 2008 Treasury report noted3 that
between 1996 and 2008 70 PFI (and 23 traditionally) procured hospital
schemes were completed, and as at the time of the report another
27 PFI (and seven public capital) projects were under construction,
modernising the NHS estate such that only 20% of the NHS estate
is pre-1948 (down from 50% in 1997). It is not only a tool for
the initial delivery of the assetsPFI is a whole-life cycle
solutionit locks in the continued delivery the services,
and maintenance of the assets, for the period of the relevant
contract (up to 30 years).
How does PFI deliver?: It encourages
innovation in project design and delivery; it imports private
sector discipline into the delivery of public sector infrastructure
and services, resulting in time-certain and cost-certain procurement;
it allows the public sector to leverage up limited public sector
resources making them go further and enabling delivery of an intensive
building programmethe public sector does not have sufficient
skilled procurement teams to have been able to achieve the same
volume of capex-intensive procurements that have been successfully
undertaken since 1997 had it only used traditional procurement
methods (which, due to the risks the public sector retains under
that method, require more skilled public sector staff during the
procurement, construction and operation stages than PFI procurements);
by speeding up the delivery of assets, it also accelerates the
delivery of the related social benefit (improved healthcare, education,
transport); the standardisation of documentation has made possible
faster procurement of multiple PFI projects in "commoditised"
form; the long-term nature of PFI deals locks in the maintenance
of assets, and allows procuring bodies to make long-term plans
for the delivery of a service, with limited risk of a change in
policy/Government affecting those plans.
Is another way better?: On a micro level,
the question can be phrased "what are the costs and benefits
of a particular project as procured under the PFI compared against
another method of achieving the same outcome?". Or, put another
way, is the project "value for money" (VFM)? The alternative
procurement method currently used for making this comparison has
been "traditional procurement"ie the public sector
designs and delivers the project and the resultant services, and
only contracts to the private sector the construction of the relevant
infrastructure. Recent developments in the Treasury's guidance
for doing this comparison (the Quantitative Evaluation Tool, QET)
have made this assessment much simpler and more transparent, giving
a level of independence to the findings.
Room for improvement: First, the cost/benefit
analysis is currently routinely only made at the time of the project's
procurementit should also be made periodically during the
service delivery periodthis would show that operational
costs (to the public sector) during a PFI project's life are controlled
and continue to offer VFM, and that the quality of the relevant
asset is being maintained (compared to traditionally procured
assets, where historically chronic under-maintenance and lack
of investment led to the severe deterioration of assets). This
is reinforced by the payment reductions found in PFI projectsif
a project is not being operated and maintained to the required
standard, the tariff will be reduced. No such controls on service
and asset quality exist for traditionally procured projects.
Use a different comparator: Second, there have
been few major traditional procurements of projects that might
otherwise be suitable for PFI in recent years and, even for the
few there have been, as data on those projects is not routinely
collected (the last major collection seems to have been in 2002
for a study Mott MacDonald did for Treasury of 39 traditionally
procured and 11 PFI procured projects, which was then used for
their 2002 report on optimism bias4) and there is a particular
lack of data on the operating phase of traditionally procured
assets.5 So the data that is used for the QET is old and therefore
perhaps not credible. As such, a better VFM comparator could be
a similar PFI project, on which a more straight-forward comparison
could be made and for which much more detailed and recent data
Protection of asset condition: Another
benefit to be considered in this analysis is the requirement that
PFI assets be handed back at the end on the PFI project in a specified
condition. This is another means of avoiding the chronic running
down through lack of life-cycle maintenance of traditionally procured
public assets which was historically the overriding experience
for traditionally procured projects.
Discount rate: The discount rate to be
applied is a matter for the procuring authority to decide, taking
into account the relevant optimism bias assumed in the QET. The
underlying discount rate should be applied consistently across
all methods of procurement being considered.
Competitive dialogue works: The current procurement
procedures are challenging but workable. In the case of competitive
dialogue, the theory is goodit should result in more effective
competition and therefore better VFMbut the challenge lies
in improving its practical application. The Government needs to
give procuring bodies more direction on how the successive stages
of the competitive dialogue procedure should be run, particularly
the appropriate level of detail that the competitive dialogue
procedures need to be invoked for at each stage of the bid. Currently,
procuring bodies are erring on the side of caution and invoking
them at every stage, which is pushing the bidding costs up for
limited benefit. For example, what is the benefit of two bidders
doing two sets of title investigations, incurring one set of unnecessary
legal costs, when one set could be done and shared? If there was
more guidance on this point, then there could be significant cost
and time savings. As such guidance would reduce the complexity
of the procurement process, it may also reduce the risk of challenges
to the tender award.
Not enough information: There is plenty
of information on PFI projects availableon both the construction
and operation phasesto assess VFM. But if traditional procurement
is used as the VFM comparator, there is not enough information
on conventionally procured projects, and the limited information
that exists is too old, to make a meaningful comparisonsee
2. How does the performance (eg, cost, delivery
dates and service quality) of schools, hospitals, prisons, roads
and other projects operated under private finance compare to those
which were traditionally procured?
Constructed and operated on time and on budget:
During the construction phase, PFI procurement has a proven better
track record of bringing projects in on-budget and on-time in
comparison to traditional procurement.
Some numbers: A 2003 NAO
report on the construction of PFI projects6 stated that "[procuring]
departments were obtaining a high level of price certainty under
PFI contracts, and there was little change in the payments as
a result of construction related changes"70% of contracts
had no price change at all, and the 30% that did were all due
to authority-led changes which would have also resulted in price
increases under traditional procurement (with only six of 37 having
an increase in annual payments of more than £10,000).7 Compare
that with 73% of traditionally procured projects which ran over
budget according to a 1999 study referred to in the 2003 NAO report,8
and according to the 2002 Mott MacDonald report9 cost overruns
of up to 51% for building projects and 66% for engineering projects
which was attributed to "the large number of risks excluded
from the contractor's price at the award stage".10
The 2003 NAO report also stated that "76%
[of PFI projects] were ready to use by the contractual deadline"
(and only three of the 37 surveyed were more than two months late),
11 compared with a finding in the 2001 NAO report12 (based on
the 1999 study referred to above13) that 70% of traditionally
procured projects reviewed were delivered late. 14
Some traditionally procured assets help illustrate
how costly and late they can beThames Barrier: estimated
cost £54 million and build period of four years, final cost
£535 million15 and it took eight and a half years to build;
Scottish Parliament: original budgeted cost £109 million,
final cost £431 million and three year delay; 16 British
Library: estimated cost £116 million, final cost £520
million17 and four year delay; Guy's Hospital Phase III: estimated
cost £83.1 million, final cost in excess of £152 million18
and a three year and four months delay. 19
Inherent discipline in PFI projects:
One reason PFI projects are on-time and on-budget is that the
process of procuring, and the structure of, a PFI project typically
instils discipline and rigour to its procurement. A high level
of initial due diligence is required before the procuring body
can make a business case for the project to get Treasury funding
for the ongoing service payments. And a high level of detail is
required as a result of the procurement procedures and as a feature
of the contractual structure of a PFI. This means that the procuring
body needs to decide in detail what it wants before the contract
is signed, which results in better-developed projects going to
market, and the need to vary the contract after its award (particularly
during construction) is reduced. Under traditional procurement
though the award process is shorter and less complicated, the
trend has been that contracts are regularly varied after award,
resulting in significant costs increases and delays to the construction
In addition, the private sector has a proven
better track record of being able to (and it is in its interests
to) control costs during construction and operation. Due to risk
transfer such costs are, as regards the public sector, fixed and,
rather than haggling for payment of cost overruns, the private
sector is focussed on the project becoming operational, and on
continuing to operate the asset, in accordance with the PFI contract
to ensure that its long-term payment stream under the contract
commences and continues to flow.
PFI ensures standards of operation and maintenance:
During the operational phase, as noted above, it is difficult
to make a comparison (of PFI vs traditional procurement) given
the lack of data available on the operation and maintenance of
traditionally procured projects. 20 But the presence in PFI contracts
of required service levels and the transfer of life-cycle risk
to the private sector, the fact that there are payment deductions
for not meeting service standards, and the fact that those service
levels and maintenance requirements are locked-in for up to 30
years, means that the assets should be operated and maintained
to a certain level each and every year. It appears that there
is no equivalent procedure (or incentive) in the public sector
to track and maintain performance. The long-term nature of PFI
deals also enables procuring bodies to make long-term service
delivery plans and is a major improvement on traditionally procured
assets whose operation and maintenance budgets remain exposed
to cutbacks or redeployment.
And performance levels are being met:
In Treasury's review of over 500 operational PFI projects, 21
79% of projects reported that service standards are delivered
always or almost always, 89% reported that services were being
provided in line with the contract or better, 83% reported that
their contracts always or almost always accurately specified the
services required, and 72% report good or very good service. 22
3. Is there significant risk transfer to
the private sector or is it more apparent than real?
Risk transfer is real: There are numerous
examples of private sector losses, illustrating that the private
sector is taking real riskswhen they could not manage them,
they sustained losses (losses that without that risk transfer
would be likely to have been incurred by the public sector).
Examples of private sector losses:
National Physical Laboratory, which was terminated for non-performance
in December 2004, resulting in losses for the private sector in
excess of £100 million; 23 the Cornwall Schools project,
which has recently failed in operation and has been terminated
by the Cornish LEA Council, resulting in the loss of the shareholders
equity investment of £5.5 million; the Defence Animal Centre
PPP which has also recently run into difficulties during operation,
which the project company (with £2.6 million of equity at
risk24) and its lenders are currently trying to resolve; Dudley
Hospital on which the sponsors incurred additional costs of £100
million25 due to time and cost overruns during construction; Kajima
Construction, which in one year lost £80 million due to construction
delays and cost overruns; 26 Croydon Tramlink, whose private sector
operators made financial losses between 2000-03 of £18.3
million; 27 Leeds Royal Amouries Museum, which the NAO reported
"involved a major transfer of risk to the private sector"
and which was delivered on-time in March 1996 and to budget, but
which nevertheless incurred losses during operation, with the
private sector's cumulative loss estimated to be £10 million
by early 1999. 28
Risk transfer is valuable even on successful
projects: The value of risk transfer is sometimes difficult
to appreciate as not all risks transferred to the private sector
will materialise on every deal. The fact that risks have not materialised
on some deals could be put down to the fact that they have been
allocated to the party best able to manage them, and that the
incentives for managing them (in the form of liabilities borne)
have been set at the right levels, ensuring contractual performance.
Sometimes risks do materialise, and where they have there is real
and tangible evidence of both private sector equity and debt investors
in PFI projects incurring significant losses (as described above)
which would otherwise have been borne by the public sector.
PFI gives financial and practical protection:
And it is not just a matter of financial loss. The other practical
issue which is important to the public sector and continuity of
service is how the aftermath of the risk materialising is dealt
with, particularly when the risk impacts multiple projects. The
PFI sector has been subjected to systematic shocks, shocks which
have been accommodated by the private sector (for example by restructurings),
and through which projects have survived. For example, when Jarvis
failed29 and 27 PFI projects were affected, query whether the
projects could have as effectively been kept on track had they
been traditionally procured. Similarly in the case of Ballast,
whose failure affected multiple PFI projects, which it was involved
in as bidder, contractor or equity holder, most of which projects
4. How effective and costly has it been to
monitor the private sector providers' performance and quality
of service in Private Finance projects in comparison with traditional
PFI has detailed performance metrics:
One of the real benefits of PFI is that the structure gives the
ability to measure in detail the performance of an asset over
the life of the PFI contract (between 15 and 30 years)performance
measurement is built into contracts, is transparent and can be
provided to the public sector by a contractor at a marginal cost,
as it tracks reporting requirements it already has to its shareholders
and its lenders.
In traditional procurements, the only way to replicate
such an assessment would be through internal procedures in the
relevant body responsible for administering that asset. As noted
above, historically there seems to be a lack of data collected
and made available on the operation and performance of traditionally
5. When the basis of a Private Finance contract
needs to be altered post procurement because of changing client
needsfor example, a bigger jail is required due to a larger
than expected prison populationhas this proved problematic
compared to projects under traditional procurement? What has been
the experience of PFI projects that have reverted to the public
Lessons have been learned: The process
for making mid-contract variations in PFI projects has improved
dramatically since the introduction of PFI. Lessons have been
learned from early projects which resulted in the enhanced and
simplified change mechanics being included in SoPC4. Procuring
authorities appear better prepared to carry out long term planning
and scoping of their initial project requirements, minimising
the need for changes during the contract. In addition, the variations
procedure in PFI contracts forces procuring authorities to properly
analyse the proposed variation and its rationale, and to develop
the best way forward with the private sector, resulting in better
variations being made.
The NAO 2008 report on changes to operational PFI
projects30 notes that "PFI projects are offering sufficient
flexibility to the public sector",31 "The timescales
for completion of larger changes compares well with [traditionally
procured projects]" 32 and "if the change process is
managed well and there is a good relationship between the parties,
changes are more likely to be cost-effective and implemented quickly".33
Coping with small variations: Smaller
variations have a reputation for being problematic and expensive.
This is being addressed in practicesome contracts are now
designed to take certain probable small variations into account,
and procedures have been developed to provide (in terms of cost
and time) in advance for better certainty and cost-control should
they arise. Many change procedures now include a competitive element,
effectively benchmarking the quote received from the incumbent
contractor against the market, again controlling costs and ensuring
Coping with large variations: Larger
variations can throw up different more complex issues. If the
variation is required to be funded by the private sector, the
relationship between classes of lenders (those lending against
the originally scoped project, and those lending for the variation)
can be difficult to resolve. It can therefore simplify matters
considerably (and reduce costs) if the public sector funds the
larger variations. There is also evidence that PFI change mechanics
have worked especially well for significant changesas noted
above, the 2008 NAO report found that timescales for larger changes
under PFI contracts compares well with traditionally procured
Timing of variation: The experience of
dealing with a variation can also differ based on whether it is
made during the construction or the operation phase. Those made
during the construction phase are more problematic than those
during the operation phase, as the knock-on implications for the
construction timetable are much more complicated and can be costly.
Facilitates long-term planning: The long-term
nature of PFI deals gives long-term stability to procuring bodies,
whose service provision solutions might otherwise be subject to
political interference for example on a change of policy or of
Government. With PFI they can plan for the long-term with their
PFI delivery partner.
6. How should future payments by the Government
under existing Private Finance contracts be recorded in public
sector accounts? Is risk transfer an appropriate test? Should
all such liabilities be included in the national debt? Should
they be accounted for separately from government debt? How much
does the public sector accounting treatment of capital and revenue
aspects of projects matter?
The harmonisation of UK and EU budgetary and
debt measurement rules on the recording of payments under PFI
contracts in public sector accounts is a welcome development,
increasing transparency and comparability of government debt across
7. Would public sector investment in the
last decade have been lower without Private Finance? If so, by
PFI has delivered key Government policy:
PFI procurement represents only about 10-15% of the Government's
total investment in public services34 and has been described by
the Government as having "a small but important role in the
Government's investment plans".35 At the same time, it has
been the key tool for delivery of Government policy in certain
areas such as health, education and prisons. So although its absence
may not have been felt significantly across the whole procurement
programme, it would have meant significantly less progress was
made in certain sectors, as the same level of investment could
not have been facilitated using traditional procurement methods,
both in financial terms (due to the large initial capital outlay
which would have been required to pay up-front for the construction
of the assets) and in practical terms (as noted above, the public
sector is not set up to deliver such an intensive procurement
programme in terms of sheer volume of deals, particularly taking
into account the variety of procuring bodies that have procured
PFI projects since 1997, such as local authorities, NHS Trusts,
8. How much impact has the financial crisis
had on launching new Private Finance projects? Is the crisis likely
to have a permanent effect on the Private Finance market?
PFI debt is no different:
As a general point, the financial crisis has had an impact which
has been felt across the whole economy, including the PFI sector.
The impact on the PFI sector is no more or less than the rest
of the UK's economy. In recent months, the finance market has
steadiedcredit risk is becoming less of a concern and pricing,
liquidity and terms are stabilising, and this has flowed through
to PFI financings.
Help rebuild the economy:
The use of PFI is a key tool for the Government in its endeavours
to stabilise and rebuild the economy as it permits the leveraging
up of limited Government resources to bring more projects to market,
creating more economic activity and jobs than if those resources
were deployed in traditionally procured projects.
Facilitating greater investment: There
is a latent demand in the private sector for public sector infrastructure
investment, in the form of life insurance and pension funds looking
for long-term stable investments, which could be accessed more
effectively by the public sector if such opportunities were available
for investment. It would be helpful if the Government could facilitate
the meeting of that demand by revising the regulatory provisions
regarding the proportion of those funds permitted to be invested
Government can also further assist the market
by being clear on the priorities it has for infrastructure investment
and development. If the Government is pushing a particular sector
forward (or parts of the sector, recent examples being waste and
Building Schools for the Future), the private sector will follow.
The establishment of The Infrastructure Financing Unit (TIFU)
by the Treasury is a good example of this. It has facilitated
the achievement of financial close of various projects simply
by its existenceto date one project has utilised TIFU funds
(Manchester Waste), but other projects' successful closing has
been due in some part to the backstop that TIFU provides, thus
allaying funding concerns that might have otherwise stalled deals.
Some impact on new launches: Overall,
the financial crisis has delayed, but not prevented, the progress
of some larger PFI deals, as compared with for example the M&A
debt market where the credit crisis had a much more dramatic and
sustained impact on the availability of debt.
More particularly, the market for smaller PFI
deals has remained liquid since the financial crisis, albeit that
senior debt interest margins have increased (though these have
largely been offset by low interest rate swaps) and there has
been a reduction in the volume of long tenor debt available, although
there is still sufficient supply in the market to support the
funding of the current UK PFI pipeline.
Larger, more complicated deals have felt some
impactthere is a question as to whether there is enough
liquidity in the market to fund large deals, particularly as the
project bond market has stalled due to the impact of the financial
crisis on the monoline insurers who had played an integral role
in bond financing structures. Again, the availability of long
tenor debt for very big ticket projects (such as M25) or projects
with volume risk (such as waste PFI) has been affected, resulting
in cash sweep arrangements being introduced to reduce the debt
tenors (but at no extra cost to the public sector). These larger
projects have also benefitted from recent increases in lending
activity by the European Investment Bank and, as already mentioned,
from TIFU's presence as a backstop if there is a shortfall in
private funding due to the financial crisis. TIFU has given procuring
bodies the confidence to press on with deals in uncertain marketsit
allows them to concentrate on selecting a preferred bidder on
the basis of the quality and deliverability of the bid, rather
than being distracted by concerns regarding the credit of the
bidder's funders, or their liquidity. TIFU's presence has also
helped keep a control on the cost of funding.
No permanent effect: Private finance
has always had to adapt to changing marketsit has invested
in infrastructure for many years and across many sectors, and
has evolved as necessary to meet changing requirements, and will
continue to do so. For example, though the project bond market
is currently very limited, it is expected to adapt to the departure
of the monolines and become available again in some fashion.
9. Are there realistic alternative roles
for private finance than the current PFI-type private finance
models? Should the UK be aiming for more diversity in private
finance models? Would a national infrastructure bank (such as
the proposed Dodd-Hagel NIB in the US) add any value in the UK?
Should the public sector have a more hands-on role in financing
PFI not the only solution: In addition
to the SoPC4 PFI project structure, there are already many other
delivery models being employed for private sector investment in
public infrastructure, such as those discussed in the 2008 Treasury
paperjoint ventures, strategic alliances, strategic infrastructure
partnerships, concessions, using a integrator approach and other
hybrids of these structures, 36 and others currently in use in
the market, such as Local Asset Backed Vehicles and Private Developer
Schemes. 37 Many of these methods are frequently employed and
embraced by the private sector whose approach is flexible and
capable of innovation.
Other private finance models could include the creation
of infrastructure utilities, like the English and Welsh water
utilities, rewarded on the basis of a regulated return on assets,
for example a road network privatisation. But this would not be
appropriate for construction projectsit can only work where
a business can be created from existing operational assets.
Another option would be to harness the life
insurance and pensions funds' long-term appetite for infrastructure
investment and its stable long-term cashflows, for example by
relaxing the regulatory restrictions on the proportion of funds
able to be invested in such assets (as mentioned above).
It is hard to see what value a NIB would add.
It is likely that it would invoke issues of state aid that would
prove difficult to resolve, and it would tie up more public capital
where the greatest element of infrastructure capital is already
provided by the public.
Public sector is hands-on already: The
public sector already has a hands-on role in financing, in the
form of funding competitions which are now required for every
project, and in delivery in its role in the original design of
the service output they require.
10. Is there an optimal mix between conventional
public procurement and Private Finance for public sector investment?
What is the long run role of private finance in the delivery of
infrastructure both in the UK and globally?
The optimal mix depends: This can only
be determined by reference to projects under consideration during
a particular periodsome projects are better suited to a
PFI structure, and others to traditional procurement methods,
as demonstrated by the fact that only 10-15% of spending on public
services is on PFI projects. Only those projects suited to PFI
should be structured in that way. So there can be no hard and
fast rule as to what the proportions of each should be in any
given periodit will change with the projects coming up
in accordance with Government policy.
The UK is ahead of the game:
The UK PFI market has acted as a pathfinder in the global PFI
market in the development of models for private sector investment
in public assets. It has built up a considerable skills base,
in both the public and private sectors. And it has led the way
in standardisation of documentation, in the development of public
and private sector guidance on the letting of PFI contracts and
their ongoing management and scrutiny, and in the development
of a vibrant secondary market in PFI projects. The UK is now looked
to by many jurisdictions for best practice, and is exporting its
private and public sector expertise to other jurisdictions. This
is something that the UK should promote.
PFI is here to stay globally: The interest
in using PFI as an investment tool is growing across the world,
and plays a key role in the investment strategies of the UK and
other major economies such as the US, the Middle East, Canada,
Australia and India. The size of the global PPP market in 2008
was US$71,225 million, with 212 deals closing. The UK is ahead
of the curve in its embrace of PFI in public sector infrastructure
investment, and in its development of a sophisticated PFI market,
a fact of which the UK Government and public service, and the
private sector, can be proud.
Procurement: delivering long-term value, HM Treasury, March
2008 at pages 4-5.
2 PFI in school buildingdoes it influence
educational outcomes?, KPMG, 2009
3 As detailed in endnote , at page 5.
4 Review of Large Public Procurements,
Mott MacDonald, July 2002, Table 3, at page 14.
5 As noted in several places in the Mott MacDonald
report (see endnote ), for example at page 18 "The data
collection process revealed difficulties with respect to gathering
information on operating expenditure and benefits shortfall. Firstly,
data on operating expenditure and benefits shortfall was broadly
unavailable, and, secondly, determining benefits shortfall was
based on personal interpretation as benefits estimated at business
case were not clearly defined."
6 PFI: Construction Performance, National
Audit Office, 5 February 2003
7 At page 11.
8 At page 11, referring to a study published
in December 1999 "Benchmarking the Government Client Stage 2
9 Details in endnote .
10 At page 25 of the Mott MacDonald report detailed
in endnote .
11 At page 14 of the NAO report detailed in endnote
12 Modernising Construction, National
Audit Office, 11 January 2001
13 Details in endnote .
14 At page 4.
15 As noted by the Environment Agencysee
16 As noted in the Holyrood Inquiry: A Report
by the Rt Hon Lord Fraser of Carmyllie QC on his Inquiry into
the Holyrood Project", Scottish ParliamentSP Paper
205, 15 September 2004
17 As reported in Britain's costliest library
must balance the books: The final chapter for the country's most
expensive public building to be built this century, Financial
Times, 25 June 1998, page 9.
18 As reported in Cost Over-runs, Funding
Problems and Delays on Guy's Hospital Phase III Development,
National Audit Office, 10 June 1998, in paragraph 1 on page 1.
This report also documents the other problems experienced with
the use of the traditional procurement method for that project.
19 As reported in the NAO report detailed in
endnote , in paragraph 8 on page 2.
20 As noted throughout the Mott MacDonald report
(see endnote ).
21 As reported in PFI: strengthening long-term
partnerships, HM Treasury, March 2006.
22 At page 1.
23 The Termination of the PFI Contract for
the National Physical Laboratory, National Audit Office, 10
May 2006, Table 2 on page 5 (http://www.nao.org.uk/publications/0506/the_termination_of_the_pfi_con.aspx)
24 As reported in "Sick dog put down",
Project Finance International, 26 August 2009.
25 As reported in "McApline profit wiped
out by Dudley Hospital losses", Contract Journal,
24 August 2005, page 2.
26 As reported in "Delays on PFI schemes
hit construction giant in the balance sheet", IJ Online,
19 April 2005.
27 Improving public transport in England through
light rail, National Audit Office, 23 April 2004, at paragraph
2.35 on page 25 (http://www.nao.org.uk/publications/0304/improving_public_transport.aspx)
28 The Re-negotiation of the PFI-type deal
for the Royal Amouries Museum in Leeds, National Audit Office,
18 January, at paragraphs 5 and 6 on page 2
29 In large part due to losses sustained under
PFI contractsas reported in "Shareholders wiped out
in Jarvis debt restructuring", The Independent, 24
May 2005 (http://www.independent.co.uk/news/business/news/shareholders-wiped-out-in-jarvis-debt-restructuring-491864.html)
30 Making Changes in Operational PFI Projects,
National Audit Office, 17 January 2008
31 At page 4.
32 At page 5.
33 At page 5.
34 PFI: Strengthening long-term partnerships,
HM Treasury, March 2006, page 1
35 As noted in the 2008 Treasury paper (see endnote
), at para 1.11 on page 7.
36 As discussed in detail in the 2008 Treasury
paper (see endnote ), at paras 2.12-2.35 on pages 16-25.
37 All of these methods are also discussed in
Building Flexibility: New Delivery Models for Public Infrastructure
Projects, Deloitte & Touche LLP, 2008