publications:
updates & bulletins 
Report on Operational PFI Projects by Partnerships UK Introduction The Treasury commissioned Report on Operational PFI Projects published in March 2006 by Partnerships UK purports to be a comprehensive survey and review of the performance of PFI projects in all sectors during their operational phase. Of 390 surveys issued, 105 were returned and in-depth interviews were carried out in relation to twelve projects. The Report relates to projects which were operational at March 2005. The survey assesses how well the operational phase is progressing, detailing what issues have arisen or may arise throughout the remainder of the life of the projects. Despite the sector diversity and relatively small number of respondents, the findings are surprisingly similar, with a strong degree of consistency between many of the views expressed in the surveys and in-depth interviews. The Report contains a detailed methodology of how data has been collected and analysed from both public and private sector counterparts. On the whole, this is a positive survey with both public and private sector contract managers expressing their satisfaction with the high levels of operational performance meeting, and often exceeding, contract requirements. However, as more projects move into the operational phase and towards their first benchmarking exercise, there are key areas of concern, reported mostly from the public sector. The Report therefore serves to highlight these practical concerns in a manner designed to both inform future policy as well as being useful guidance to assist future projects moving from construction into their operational phase. The Key Findings Performance Overall, there is a general consensus that performance of the projects has been good. 96% of respondents rated the overall performance of the project in terms of delivering the services as either “Satisfactory” or above, with 66% stating that their project’s performance was either “Good” or “Very Good”. Furthermore, 89% confirmed that service levels are being achieved “Always”, or at the very least, “Almost always”. It appears from the findings that good communication between the parties is paramount; where problems had arisen, the shared partnering approach has helped to minimise difficulties, with 82% reporting that matters were “almost always” resolved within the rectification periods in the contract. User Satisfaction On the basis that end-user satisfaction is a good indicator of a project’s performance, end-users are also sampled in the survey, although it must be noted that there was no consistent methodology in the surveys between projects; however, as a general overview of the levels of satisfaction, in 79% of all projects, end-users reported that they are either “Always” or “Almost always” satisfied with the services offered by the providers. Payment & Performance Mechanism Payment mechanisms within the overall performance measuring system are being effectively utilised to achieve the requisite service levels as specified in the contract. However, the survey has highlighted that for some public sector contract managers, the payment mechanisms could be difficult to understand, and for even more contract managers, they did not appear to incentivise the service provider to improve performance. Change Mechanism Most of the projects had made changes, however, it was generally perceived that the process of effecting a variation was cumbersome and expensive, particularly when the changes required were minor. In some instances, changes were accumulated until there were enough changes to warrant invoking the formal procedures or were traded off so as to avoid the need to invoke the change mechanism. Furthermore, the time required to effect the variation procedures was also seen to be unnecessarily lengthy, particularly if funders’ approvals were required. Benchmarking Concerns were raised by public sector contract managers about the expertise and resources needed to carry out the benchmarking and market testing exercises, along with a distinct lack of comparable benchmarking data. There was also a real fear that original under-pricing in the contract would lead to benchmarking prompting significant increased costs. Monitoring & Governance The survey showed that regular formal meetings between the parties is essential for project success. Although contract management team structures do vary enormously between the projects and sectors, there was a clear consensus that there should be continuity of some staff from the procurement through to the operational phases. Relationships On the whole, the relationships appeared good with a clear emphasis on a collaborative “partnership” relationship of shared objectives and mutual reward. Differences that arise appear to be resolved amicably. This “new partnership” working is essential over the lengthy terms of most of the projects. Indeed, 97% of public sector project managers rated their relationship with their counterpart as “Satisfactory” or better. Continuity of staff was also identified as being of significance and a key driver in improving performance. Dispute Resolution Encouragingly, both the public sector project managers and their private sector counterparts appear to view the formal dispute resolution procedure as a “last resort” option, and as such very few of the projects surveyed had resorted to using the mechanism (less than 20%). Training & Support Public sector managers felt that, on the whole, there was not enough central support for project specific advice on issues such as managing the service contracts, benchmarking and change variation. There also appeared to be no mechanism for sharing best practise. It was felt that a lack of training opportunities also needed to be addressed. For further information please contact Catherine Burke on catherine.burke@martineau-uk.com Martineau's publications are no substitute
for taking advice before reaching a decision on your individual
problems. If you would like any further information about any of
the issues raised in our publications please email us at lawyers@martineau-uk.com.
|
