Audit Commission weighs up PFI deals

and may result in the cost of public projects spiralling out of controlFollowing, Labour;s election victory, the government has promoted PFIs as its strategy for delivering high quality, modern public services, (including the much-maligned London Underground), but they have been hotly debated and public opinion is divided as to their benefit to the community.

Drawing on recently completed PFI schemes in health and government sectors, the Audit Commission today issued a management paper on the matter.

Foremost, it said, public sector managers needed to ensure that all agreements contained a degree of flexibility combined with appropriate incentives to ensure that the contract could respond to technological and organisational changes.

This is because PFI agreements are usually drawn-out affairs that can take up to four years to complete, during which a number of parameters could change.

Managers should carefully considered the costs involved in forming partnerships with private ventures, and should take care that they ‘actively manage’ all external advisers, and make use of in-house services where ever possible.

And all PFI contracts should ensure compliance with best value principals and meet all statutory performance indicators, targets and standards. At the end of the day, all PFI deals should deliver ‘measurable improvements’ in service quality over the life of a PFI contract.

Andrew Foster, controller of the Audit Commission, said that in addition to the ‘long and complex procurement process’, PFI schemes could also attract ‘opposition from staff and local people’ and could fail on the grounds of ‘affordability and poor value for money’.

‘But’, he said, many PFI deals had been successfully negotiated providing new facilities to the public, built and operated by the private sector.


PFI row ousts Labour MP

PFI row takes election centre stage

PFI/PPP deals can aid public sector

Related reading