In 2006 HM Treasury's publication "PFI: strengthening long-term partnerships"14 identified a number of measures needed to improve PFI projects. It found that, although PFI contractors were generally performing services to a high standard, there was a clear need to improve the preparation which Authorities gave to the transition from the procurement to the operational period. Signing the Contract and the completion of the facilities are key milestones and measures of success, but it is the provision of the services over the life of the Contract which determines the level of satisfaction of the users of those services and the delivery of the benefits sought. Thorough preparation for contract management is vital for successful delivery of the benefits of the project.
In the waste sector there is normally a long period between Contract signature and operational commencement due to the requirement to secure planning consent and the relatively long construction programmes for major waste treatment facilities. Following construction, there is also the commissioning period which the facility must satisfactorily complete before it can become fully operational. Some aspects of the contract management arrangements will only be relevant during the operational period and can be developed whilst the Contractor is securing planning consent and constructing the facility. However some contract management processes will be relevant immediately the Contract comes into force. WIDP therefore recommends that preparations for contract management should start whilst the procurement is still in progress and the Authority should have a clear Transition Plan in place by the time it reaches financial close. To achieve this, the necessary work should ideally commence at the appointment of Preferred Bidder. However even if a project has reached the later stages of procurement, or even financial close, it is never too late to introduce effective contract management arrangements.
The activities during the Transition Period will vary from project to project: some projects will go from procurement into a construction period and then into the full operational period. Other projects may have an interim services arrangement during their construction period whereby the Contractor delivers the services to a different specification and Payment Mechanism until the acceptance certificate is issued and full services are delivered. A few may have immediate services commencement concurrent with a core investment phase. This guidance suggests how Authorities should prepare for their contract management role before the procurement period has finished and the PFI contract has been signed, and the preparations which should be made during the construction or interim service periods. The approach recommended by WIDP is for the Authority (through its Contract Management Team) to approach the changes as a project and apply standard project management controls to the project.
Contract management should not be seen as a new activity detached from the procurement period of the project. Planning and preparation for contract management should start to be given serious attention in the procurement period15 and then developed further during the planning and construction periods of the project.
When the Authority is transferring existing Contracts, sub-contracts or arrangements with landfill operators, transfer stations, or off takers from HWRC sites to the Contractor it should recognise that the procedures, technology, working practices transferred will affect the Contractor's ability to comply with the standard of the new Contract from the outset.
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15 Even at the Preferred Bidder stage the Contractor may start planning/public engagement activities which may require input or communications input from the Authority. Thus there will be some activities that start before financial close and that will continue into the post close period. These activities will require continuous management by the Authority