2.31 As noted previously, there are no firm boundaries between different delivery models. Many major projects, such as those that have been scrutinised by the Major Projects Review Group (see Chapter 5) have adopted specific approaches to unique procurement challenges. Many publicly funded projects draw on the developments in PPPs and vice versa. Examples of hybrid approaches that are being adopted to address specific requirements are Project MoDEL (see Example 2.6), and ProCure21 (see Example 2.7).
| Example 2.6: Project MoDEL Project MoDEL aims to consolidate MoD facilities in London onto a modern core site at RAF Northolt. The MoD has contracted an industry partner to deliver an integrated programme, including the disposal of surplus sites and the delivery of a construction programme. The proceeds of the land sales will be used to deliver the programme. The MoD has obtained a firm price for the first tranche of work. For delivering subsequent tranches the industry partner manages a competitive process. The industry partner is barred from delivering subsequent tranches itself in order to reduce potential conflicts of interest. The industry partner is taking risks in relation to the pricing and quality of the works at RAF Northolt, the levels of receipt that can be achieved on sales of land in the future and its ability to manage the programme so as to minimise the finance costs associated with negative cash flow. It is remunerated primarily through the disposal receipts and is therefore incentivised to control costs and maximise receipts. The MoD shares in the benefits of the industry partner's efficiency. |
| Example 2.7: ProCure21 ProCure21 is the Department of Health's procurement method to improve the delivery of capital projects using public funding in the NHS. ProCure21 allows NHS Trusts to use a framework of construction companies, called principal supply chain partners, to deliver their capital schemes using common principles, practices and tools. This approach offers price certainty by using a guaranteed maximum price and any overspend is borne by the principal supply chain partner; whereas the benefits of any underspend are shared equally. ProCure21 requires the client and supply chain to work together in a transparent and cooperative relationship, by using open book accounting and early warning notices, which form part of a pro-active risk management framework. The programme has over 360 schemes registered with a value of over £2.5 billion. To date, 200 schemes have been completed with a value over £1 billion. So far the ProCure21 approach has delivered positive results: 94 per cent of schemes in 2006 came within budget and 89 per cent of schemes were on time. |