Most privately financed waste procurements have taken between 2 and 4 years to procure (from OJEU to financial close). With LATS target years looming, Authorities understandably want to consider approaches which may reduce procurement times. It is important to note, in this context, that in mature sectors of PFI, best practice in procurement timescales can now be as short as 12 months from OJEU to Financial Close, where standardised contracts and procedures are followed.
Procurement timescales and costs are driven more by the nature of the service being procured and the relevant procurement environment, than the source of finance being deployed, namely:
• EU procurement process;
• Complexity of services being procured;
• Number of stakeholders in project;
• Experience and capability of those involved in the transaction;
• Market response to the transaction;
• Life of asset; and
• Risk transfer.
The majority of such drivers are independent of the source of finance viz. Prudential Borrowing rather than private finance.
There are certain often-used arguments which assert that a procurement deploying Prudential Borrowing is likely to be quicker to reach financial close than a PFI project. For example, projects supported by Prudential Borrowing may be expected to be quicker because they do not have to undergo a WIDP and PRG (HMT's Project Review Group) scrutiny process and no third party lender due diligence is required. However, there are equally familiar arguments suggesting the opposite conclusion: e.g. that PFI projects may be quicker because they follow standard documentation and processes which are widely understood by Authorities, their advisers and the market. These projects are also more thoroughly scrutinised before going to market and are therefore less likely to be delayed at a later stage. Above all, some perspective needs to be given between the impact on the overall critical path of a PRG approval process, compared with the timescale typically required to receive planning consent. In any event, the focus of all procurements should be on the value for money, deliverability, sustainability, reliability etc of desired contractual outcomes over the life of the project (e.g. 25 years). Any perceived saving on procurement time should be viewed in this context.