The Government has indicated its desire to encourage private investment in infrastructure where this results in better and more efficient delivery of public services.
In the right circumstances - and if properly managed - privately financed projects (PFPs) can deliver better value for money than traditional public sector procurement.
However the PFP approach brings new risks to government. PFP deals are often complex and typically involve commitments over several decades. There are particular challenges in ensuring that the contract arrangements can deal with changing circumstances over such a long period and that the potential benefits are in fact realised.
This report looks at the New Schools Privately Financed Project, launched in 2001 to provide NSW government schools primarily in new urban release areas. Nine new schools were built under this project, with a further ten schools to be provided over the next three years under a second PFP contact.
Our audit examined whether the processes for awarding these contracts were adequate to maximise the potential for value for money.
Although the report focuses on the provision of new schools, its findings and recommendations are relevant to all agencies considering privately financed projects to provide public infrastructure.
Bob Sendt
Auditor-General
March 2006