Press Release - Managing the relationship to secure a
successful partnership in PFI projects
29 November 2001
Most (81%) public bodies involved in PFI projects believe that
they are achieving satisfactory or better value for money from
their PFI contracts according to a National Audit Office report
presented to Parliament today, based on the first ever major survey
of central government PFI projects in progress. There was generally
positive feedback from service users. And over 70 per cent of
authorities and contractors view their relationship as being good
or very good with only 4 per cent of contractors feeling their
relationship with authorities was poor.
There are over 400 PFI contracts currently in force committing
departments to future expenditure of around £100 billion. However,
there is limited experience of the issues that arise once a PFI
contract has been let. This report reviews the issues that arise
once a PFI contract has been let and highlights the need to give
attention to contract management issues and how the relationships
between authorities and contractors should be developed.
As PFI projects are long term arrangements, a successful outcome
is best achieved by authorities and contractors balancing both
contractual and relationship issues to approach projects in a
spirit of partnership. Authorities and contractors should seek to
understand each others’ businesses and should have a common vision
of how they will work together to achieve a mutually successful
outcome to the project. Authorities should regularly reassess their
relationships with contractors and the value for money their
projects are delivering, to identify ways in which relationships
can be improved.
The long term nature of PFI projects means that some contractual
changes are likely to be necessary during the life of the project.
The report found that although most PFI projects are still at an
early stage, around half of the contracts surveyed had been changed
since they were entered into. Changes related to the specification,
new services, additional building work or design changes and
performance measurement arrangements. Appropriate procedures for
dealing with change should be built into the contract. This
includes procedures to ensure that value for money is maintained
when contract changes occur.
Having staff with the right skills is critical to good contract
management, yet there is considerable variation in the extent of
training provided in contract management skills, with some
authorities providing little or none. Attention needs to be given
early in the procurement process to staffing, training and contract
management issues, and how the relationship between authority and
contractor will be developed.
The report recognises that the Office of Government Commerce has
issued guidance on contract management and calls upon it to take
forward its plans for keeping existing guidance up to date to
reflect developing experience amongst departments, and to consider
facilitating opportunities for staff from different authorities to
share experiences of managing PFI contracts and relationships with
PFI contractors.
Sir John Bourn said today:
"As PFI deals are long term arrangements it is essential
that authorities and contractors work together as partners to
achieve successful outcomes.
"The main elements of a successful relationship between
the public and private sectors are to adopt a partnership approach
supported by the right contractual framework, to have the right
skills mix present at the right time, and to make the partnership
work in practice.
"My report will help both authorities and contractors to
achieve good relationships on PFI projects to assist the delivery
of public services procured under the PFI."
Notes for Editors
- The Office of Government Commerce has central responsibility
for the development of Government policy and guidance on the public
sector’s approach to the PFI.
- The National Audit Office’s survey was based on over 100 PFI
projects across a wide range of projects and central government
departments including hospital, prisons, roads, property and IT
projects. Views were obtained from both the authorities and their
contractors.
- Press notices and reports are available from the date of
publication on the NAO website at http://www.nao.gov.uk/. Hard copies
can be obtained from The Stationery Office on 0845 702 3474.
- The Comptroller and Auditor General, Sir John Bourn, is the
head of the National Audit Office employing some 750 staff. He and
the NAO are totally independent of Government. He certifies the
accounts of all Government departments and a wide range of other
public sector bodies; and he has statutory authority to report to
Parliament on the economy, efficiency and effectiveness with which
departments and other bodies have used their resources.
Press Notice 57/01
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