PART THREE Tendering for PFI deals PAR can be improved
This part of the report shows that tendering for PFI deals takes longer and costs more than expected. Many of the delays and excessive costs would be avoided by a more professional, coordinated approach to public sector tendering.
More Information
- It takes on average just under three years to tender and close a PFI deal
- Almost half of the time taken to tender a PFI deal is taken up by negotiations with a single preferred bidder
- It is hard to find systematic explanations for variations in the lengths of tendering periods, although there are differences between sector
- Tendering and negotiation periods could often have been reduced
- Projects are not always prepared sufficiently for the tendering stage
- Experience was not shared as widely as would be useful
- Delays are inevitable if an authority decides that it cannot afford the deal on offer
- Delays were caused in part by the lack of detailed design development prior to preferred bidder selection
- The bidder and its funders may raise issues late in negotiations, causing delays, but experienced authorities can mitigate this
- The direct cost of tendering delays was at least £67 million
- Professional advice usually cost more than planned and greater public sector experience would have led to savings
- Significant changes were made to one-third of projects at the preferred bidder stage
- A variety of methods were used by Authorities to check the cost of changes but they could not be wholly satisfactory