After contract award

2.32 Projects have also been delayed after the award of contracts, particularly in the construction phase. The most serious delays have been to the main treatment facilities such as energy from waste and mechanical biological treatment plants which come at the end of the waste treatment process. These residual waste treatment plants are particularly important because they are typically the most expensive single element of the contract and tend to provide the highest tonnage diversion from landfill of the facilities commissioned.

2.33 The factors most likely to cause delays are: failure to acquire a suitable site for construction; failure to gain planning approval for the facilities, or both. Some early projects suffered significant delays as a result. For example, in Surrey and in Hereford and Worcester construction was delayed for several years because of delays in obtaining planning permission (Figure 18 on page 26). There is no evidence, however, to suggest that planning delays were caused or exacerbated by the use of PFI as the procurement route. Other, non-PFI waste infrastructure projects have also suffered planning delays over the last decade.

17	During procurement there have been changes in terms of both technology and project net present value based on a NAO review of six projects

Project		Procurement	Signed	Project NPV	(£m)	Preferred	technology	Reason for technology change
				Outline Business Case e	Full Business Case	Outline Business Case	Full Business Case
East London Waste Authority		2000-01	2002-03	308	500	None stated	Mechanical biological treatment	n/a
Leicester City Council		2000-01	2003-04	127	126	Mechanical biological treatment	Mechanical biological treatment	n/a
Central Berkshire		2002-03	2006-07	159	248	Mechanical biological treatment	Energy from waste	An opportunity arose during procurement to make use of a 3rd party (merchant) energy from waste facility in neighbouring Slough.
Northumberland County Council		2004-05	2006-07	208	318	Mechanical biological treatment	Energy from waste	During the procurement process it became clear that energy from waste would provide enhanced landfill diversion and be more affordable than mechanical biological treatment.
Shropshire Waste Partnership		2004-05	2007-08	307	370	Mechanical1 biological treatment	Energy from waste	uncertainty around landfill diversion performance of the project given regulation precluding application of mechanical biological treatment products to land and markets for solid recovered fuel.
Greater Manchester WDA		2004-05	2008-09 (expected)	1,950	Project being finalised	Mechanical biological treatment	Mechanical biological treatment with refuse derived fuel	n/a
Source: National Audit Office review of the case studies
NOTE 1 Shropshire Waste Partnership did not promote a preferred technology within the procurement process; however mechanical biological treatment was identified in the Outline Business Case reference project.

Progress in delivering residual waste treatment facilities

Project

Signed

Type of residual waste facility

Construction of residual facilities completed?

Signed before the formation of Defra

Isle of Wight

June 1997

EfW1

n/a

Hereford and Worcester

December 1998

EfW

- not started

Kirklees

April 1998

EfW

(2002)

Surrey

June 1999

EfW

- not started

South Gloucestershire

July 2000

n/a2

- not started

Signed after the formation of Defra

East London

December 2002

MBT

2 facilities one in 2006 and one in 2007

East Sussex & Brighton & Hove

March 2003

EfW

- not started

Leicester City Council

May 2003

MBT

(2005)

West Sussex

March 2004

n/a2

n/a

Nottinghamshire

June 2006

EfW

- not started

Central Berkshire

October 2006

EfW3

- in progress

Cornwall County Council

October 2006

EfW

- not started

Northumberland

December 2006

EfW4

- in progress

Lancashire

March 2007

MBT

- in progress

Shropshire

September 2007

EfW

- not started

Southwark

February 2008

MBT/EFW

- in progress

Cambridgeshire

March 2008

MBT

- in progress

West Berkshire

March 2008

n/a2

n/a

EfW - Energy from Waste (Incineration); RDF - Refuse Derived Fuel; MBT - Mechanical Biological Treatment

- completed

- not completed

Source: National Audit Office

NOTES

1 Refurbishment of existing facility.

2 No new residual facilities are being built as part of the PFI contract: the contractor will use other facilities to help meet landfill diversion obligations.

3 This project will use a merchant Energy from Waste facility (under construction) in Slough.

4 This project involves an extension of an existing facility in Middlesbrough.

2.34 Once contracts are signed, the Department is unable to influence planning decisions directly. The Department has therefore revised its guidance to state that local authorities should provide suitable sites, but that the contractor should apply for planning permission once the contract has been awarded. Obtaining sites and planning permission can however be challenging, as Case Examples 3 and 4 show. In some circumstances WIDP may advise authorities to make their own planning application. With this approach there is, however usually no right of appeal against an adverse determination and also a risk that the transfer of design risk to the contractors may be compromised.

2.35 Planning permission remains a key risk for future projects. Adverse public opinion and opposition is often made worse by a lack of awareness and objective information about modern waste facilities, such as how they work, what they look like and why they are needed. At present the Department does not directly support local authorities in developing communication plans or public relations strategies aimed at providing better information to the public. It is, however, planning to pilot a communications toolkit to help local authorities in this area and has commissioned a report on best practice approaches to securing planning consent.

CASE EXAMPLES 3 AND 4

Site Acquisition And Planning Permission

East Sussex And Brighton and Hove Councils completed procurement of their project in 2003. The contractual responsibility for site acquisition and planning lies with the contractor. However, the contractor's attempts to acquire a key site for one of the residual waste facilities by private tender failed and caused considerable delays to the original project programme. The delays necessitated a renegotiation of the contract, which resulted in an extension of the contract term from 25 to 30 years. Construction of key facilities has been delayed, although the contract has thus far delivered its agreed performance targets for landfill diversion because the contractor has been able to use alternative facilities.

Lancashire County Council's project is for two mechanical biological treatment plants, with provision for a third if required. The Council retained contractual liability for planning permission risk. The Council's Planning Committee's initial decision to grant planning permission for one of the sites was subsequently subjected to a Judicial Review. It caused a delay of 49 weeks, resulting in a £15 million compensation claim from the contractor, as well as the potential additional costs of landfill tax and purchasing LATS as a result of the delay.