Whilst most PFI contracts have a requirement for benchmarking or market testing, at the date of the survey relatively few had got to the time when this had become obligatory. At the time of our survey 87% of our respondents indicated that they had not undertaken a benchmarking exercise for their PFI contract. We have noted that of the 13% who had undertaken a benchmarking exercise, 75% reported positive profits in every year of operation since the contract.

As a result of benchmarking, more prices rose than fell. In 75% of cases the overall price of the services rose by up to 10%. The reasons behind these price changes ranged from pension costs and wage rates to changes in service specification and staff numbers.

Benchmarking did not tend to affect the relationship with the authority and in 33% of cases it actually improved it. As with last year's survey, most respondents think there will be a modest rise in the overall price of the service charged, with only 4% of managers expecting increases of more than 20%.

So, despite the concerns raised in last year's survey that benchmarking could be a significant relationship issue for both sides, the limited evidence suggests that it should not be feared, but rather seen as an opportunity for making improvements.

Does the PFI contract include a requirement to undertake periodic benchmarking or market testing of services?

Have you undertaken a benchmarking/market testing exercise for the PFI contract?

' As a result of benchmarking, more prices rose than fell. In 75% of cases the overall price of services rose by up to 10% '