PFI/PPP projects have been under heavy scrutiny throughout 2011. The media seems content to resign any kind of PFI/PPP project to the scrapheap of “labour-led dalliances” which have left the public out of pocket. But there is a future for PFI, or rather, there has to be a future for PFI if the government is to remain committed to its planned public sector building and infrastructure projects.
On 14 November 2011, George Osborne announced the Government’s intention to reform its approach to PFI and a Treasury-led engagement process with stakeholders is underway. In a press conference following this announcement, Lord Sassoon, Commercial Secretary to the Treasury, called time on PFI in its current form.
But even with the associated risks that PFI projects carry, namely inflexible contracts and inflated costs which were deemed “extremely inefficient” by the National Audit Office in 2011, the government still needs private sector investment to manage the delivery of buildings and infrastructure. So, what next?
The’ new breed’ of PFI/PPP should ideally be rooted in two of the elements most missing from former projects, transparency of budgets and visibility of all spending commitments. Essentially, PFI/PPP needs to be managed using a whole life cycle costing model but more than this, projects need to be managed from the beginning in a way that promotes efficient and transparent processes across the board.
PFI is an excellent solution to funding public sector building projects but it is only an appropriate answer if it can be managed in a way that equally protects the interests of both the public and private sector. Whatever your political views of PFI/PPP may be what is clear is that it’s probably still too early to tell if our public assets will in fact be better maintained than they would be otherwise. Many early projects are still only 10 years old and, so far, they appear to well-maintained but there is a lack of trust surfacing about what has been spent v. what cash was paid over. Change is certainly needed but hopefully it won’t be driven by short termism. Sustainable and sound long term economic policy is what’s needed and that means it may have to cross over the next election timeframe. It’s interesting to note that many non EU economies thriving today such as Canada, Australia and India are using PFI/PPP extensively. They have taken our model, improved it and made it work.
My own experience with difficulties in managing PFI projects led to the creation of kykloud, hopefully the government can also use their experience to take a step back, assess what’s needed to make it work and make sure that the ‘new breed’ of PFI can work to satisfy all parties and ensure they get the outcome they need.