The objective of the study was to consider whether, based on early experiences, benchmarking/market testing is likely to contribute to the value for money of PFI projects. At the time of our fieldwork, only 11 PFI projects had undertaken the value testing process. Therefore, although we were able to comment on the value for money outcome in each case, and highlight lessons drawn from these first practical experiences, we did not have enough evidence to make a confident prediction of how the arrangements will work in the future. During our study, the Treasury released new guidance which we have referred to throughout the report. This new guidance will affect how value testing is used in the future.
An issue analysis approach was adopted to define the scope of the study. Initial background research was undertaken and meetings held with public sector stakeholders such as the Treasury (which has responsibility for PFI policy), Partnerships UK (PUK) and the Department of Health. From this it became clear that since standardisation was introduced in 1999, those PFI contracts written prior to standardisation were likely to have bespoke value testing clauses. We therefore decided that part of this study would investigate the quality of the contractual provisions for value testing within PFI contracts both before and after standardisation. To facilitate this, we employed legal consultants as they had the necessary skills to assess contract clauses (see overleaf). We visited all 11 PFI projects that had undertaken a value testing process, undertaking interviews and file reviews in order to consider whether the projects had achieved value for money from the process. To complement this work we employed management consultants (see overleaf) in order to access their knowledge and expertise in the soft service market. Finally we decided it would be of value to get the perspective of the projects with regards to what they had learnt from the process. As a result, a series of high-level audit questions were set:
■ Are the mechanics for effective benchmarking and market testing in place?
■ Has the benchmarking/market testing process been successfully applied?
■ Have lessons been learnt so far to improve the benchmarking/market testing process?
A study methodology was then designed to answer these questions.