Carried out in partnership with the London School of Economics, the study looked at 29 projects and concluded that the average cost saving was 17% when compared with estimates of conventional public sector projects.
According to reports in the Financial Times the report came with some caveats connected with the risk element in PFI projects. Projected savings are sensitive to valuation to the risks transferred. The research showed these represented 60% of forecast cost savings and only 17 of the projects had full evaluations of the risks.
However, the long term value of PFI, according to the study, still relies on how competently the private sector manages the risks it has taken on, and how well contracts running 25 to 30 years are managed by the public sector.
Andrew Smith, chief secretary to the Treasury, is reported as saying: ‘The encouraging thing is that project managers interviewed in the report are confirming in practice, after several years experience, all the advantages that it was said PFI would bring. It is clear that PFI is delivering real improvements in public services.’
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