42 Sixty five per cent of the projects surveyed were completed to the price as set out in the contract. The remaining 35 per cent of projects were delivered for a price higher than that set out in the original contract (Figure 9). The 2008 delivery to price statistic of 65 per cent is statistically significantly different from the 2003 statistic of 78 per cent. Appendix 1 sets out further explanation of the statistical analysis.
43 However, in the 2008 survey projects largely attributed price increases to public sector initiated changes post contract signature, most of which enlarged project scope and deliverables, subsequently increasing the cost of the project as the original design had been changed. Our earlier NAO reports concluded that project changes in the absence of competitive tension are a risk to value for money3.
44 In 25 per cent of projects there had been a price increase from the contracted price which was only attributed to public sector or third party initiated changes. Adding these projects to those that were delivered on price, results in a figure of 90 per cent that experienced no price increase or price increases only for public sector and third party initiated changes (Figure 9).
Figure 9 | ||||
PFI price delivery compared with contract | ||||
year of survey | on price | over price | ||
2008 % | 2003 % | 2008 % | 2003 % | |
No price increase after contract letting | 65 | 78 | 35 | 22 |
Range this percentage is likely to lie within | (55-75) |
| (25-45) |
|
No price increase or price increase for public sector and third party initiated changes | 90 |
|
|
|
Range this percentage is likely to lie within | (84-96) |
|
|
|
Source: National Audit Office | ||||
NOTES | ||||
1 Statistics are based on 91 respondents in 2008 and 37 respondents in 2003 (23 additional 2008 respondents were unable to provide these data). 2 A range of values has been presented as those who responded to our survey were only a sample of the total population, and therefore we cannot be certain the figures obtained are exactly those we would have obtained if every project responded. This is not relevant for the 2003 results as a census was conducted. See Appendix 1 for full details. 3 In 2003 it was reported that price changes only occurred where the public sector had made changes. In the 2008 survey the nature of such changes has been investigated further, therefore it has not been considered appropriate to present a comparative statistic to the 90 per cent shown for 2008. | ||||
45 Twenty per cent of survey respondents were unable to tell us how much the construction element of their PFI construction projects had cost the public sector. This was partially attributable to project teams moving on over time with consequences for corporate memory. In addition, by the very nature of PFI, cost structures are complicated as they include whole-life costs. They are also paid over a long term, as a annual charge for thirty years or more. Operational project teams may not, therefore, have sight of the specific construction elements included in the price paid.
_________________________________________________________________________________
3 NAO report. Making Changes in Operational PFI Projects, (HC 205, 2007-08).