3.12 Many Authorities anticipated issues in advance of preferred bidder negotiations, but often found that they proved more difficult to resolve than expected. These issues include matters such as finalising the detailed design, obtaining planning approvals, land and property issues (such as covenants and deeds), employment, pensions and energy issues. Although these issues were common to many PFI deals, they tended to be resolved by individual Authorities acting in isolation. There may have been scope for improving the tendering process through further development of standard specifications and guidance frameworks. For instance, some NHS Trusts told us that negotiation times would have been reduced had there been a standard market approach across schemes where retained estate is included, a standard definition of latent defects and a common approach towards clearing backlog maintenance.
3.13 Many Authorities reported that they passed on any lessons learnt following the completion of their PFI tendering process to Departmental Private Finance Units (PFU), and sometimes to other Authorities. Such intelligence can be extremely effective, as the example in Box C overleaf suggests, but there was no systematic way of ensuring that useful lessons were shared within or across sectors. Although many Departments require projects to complete self-evaluation templates known as post-project evaluations, these were often not completed and were not pursued by Departments.
BOX C |
The benefits of sharing lessons between projects Once they had closed their deals in 2004, both St George's Hospital Morpeth and Addenbrooke's Elective Care, Diabetics and Genetics Centre shared some lessons they had learned with two Trusts which were in the process of tendering for PFI hospitals. Both the Trusts which had received this advice had tendering periods significantly shorter than average, and both succeeded in keeping tendering costs to budget. |
3.14 The Treasury's contract standardisation guidance and additional sector-specific guidance and standard contracts are a mechanism through which lessons have been learnt and passed on to future projects. An example of this is the new insurance provisions which have resolved difficulties experienced by a number of projects following the events of 11 September. Although there are clear benefits from the introduction of a standard contract, including greater consistency, we did not find that it led to an improvement in overall tendering times for the projects we examined. One reason for this was that some of these projects were delayed by the transition between versions two and three of the standard contract during 2004.