Press Release - PFI: Construction Performance
5 February 2003
Most construction work under the Private Finance Initiative
(PFI) is being delivered on time and at the cost expected by the
public sector. Central government has generally obtained a much
higher degree of price certainty and timely delivery of good
quality built assets, compared to previous conventional government
building projects, Sir John Bourn, Head of the National Audit
Office, reported to Parliament today.
Data produced by the NAO, the first independent analysis of
construction progress on central government PFI projects, showed
that:
- Under the PFI only 22 per cent of public building projects had
exceeded the cost expected by the public sector at contract award.
This is a dramatic improvement compared with a previous survey of
public building projects in 1999 which found that 73 per cent had
overshot the cost expected by the public sector where construction
related cost increases to the public sector had incurred in PFI
projects these did not arise from contractors simply asking for
more money to do the original job they were asked to do.
Departments had generally been involved in decisions about
additional work, some of which arose from new factors affecting the
departments’ needs after contract award. There is evidence of risk
transfer working as other cost increases were mainly borne by the
private sector.
- Under the PFI only 24 per cent of public building projects had
been delivered late with just 8 per cent being delayed by more than
two months. This is also a dramatic improvement over the previous
1999 survey which found that 70 per cent of building projects had
been delivered late to the public sector.
Only two of the PFI building projects, due to be completed by
summer 2002, were unfinished at the time of the census, and the
construction of one of those has since been completed. The National
Physical Laboratory at Teddington is the only project which is
still yet to be completed. Where PFI buildings have been delivered
late, departments have been able to defer payments or seek
financial damages.
The NAO also found that most public sector project managers
surveyed were satisfied with the design and construction, and
performance of their PFI buildings. However, it was difficult to
get a view of user satisfaction as only four of the projects
surveyed had conducted formal user surveys although where surveys
had been carried out they were generally positive. The NAO
recommend that the government should make greater use of user
surveys in future.
The NAO also says that it is not possible to judge whether the
generally favourable construction performance shown by the PFI
projects it surveyed could have been achieved using other
procurement methods. It recommends that departments should assess
the extent to which the improved construction performance in PFI
projects could be achieved in traditionally procured projects.
Sir John Bourn said today:
"The theory is that PFI should incentivise the private
sector to deliver good quality buildings on time and to the price
agreed with the public sector. The results of our census show that
this is being achieved in central government."
Notes for Editors
- The NAO census covered 37 central government PFI building
projects in England including 11 hospitals, seven prisons, seven
roads and a number of other projects such as office accommodation
and training facilities. The NAO’s coverage is of central
government activity and therefore the projects surveyed excluded
schools. As part of this study, the NAO spoke to construction and
design industry bodies, some major PFI contractors, and independent
academics.
- The 1999 survey referred to above was the Benchmarking the
Government Client Stage Two study, December 1999. It was referred
to in the NAO 2001 report Modernising Construction (HC87 2000-01).
Most of the projects surveyed in 1999 had been procured using
conventional procurement arrangements.
- Press notices and reports are available from the date of
publication on the NAO website at www.nao.org.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 09/03
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