2.19 The NAO 2001 'Modernising Construction' (HC 87, Session 2000-01) report noted that some 70 per cent of departments' and agencies' projects were delivered late. In our census, only nine of the 37 PFI projects surveyed had been delivered later than expected at contract award, and only three of those (eight per cent of the total surveyed) had overrun by more than two months.16 Some of the improvement under PFI may be because specifications are often worked out in greater detail and cost and time targets are set later in the procurement process than under traditional procurement. So departments will have assessed their requirements to a greater extent, which reduces uncertainty in the process.
4 |
| PFI project delivery experience | ||
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| The Figure shows that 76 per cent of projects surveyed were ready to use on time or early. Only three projects (eight per cent) were delayed by more than two months (paragraphs 2.23-2.25) | ||
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| Construction completed | Ready for use |
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| Early | 10 | 12 |
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| On time | 19 | 16 |
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| Delivered on time or early | 29 (78%) | 28 (76%) |
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| Delayed by 2 months or less | 4 | 6 |
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| Delivered within 2 months of date specified | 33 (89%) | 34(92%) |
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| Delayed by more than 2 month | 4 | 3 |
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| Delayed in total | 8 (22%) | 9 (24%) |
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| Total Source: National Audit Office. | 37 (100%) | 37 (100%) |
2.20 Data received from the Department of Health support increasing improvement under the PFI. Of 61 traditionally procured hospital projects 75 per cent were completed later than the date expected at contract award.17 Forty seven per cent were completed over two months later than expected. However, this has improved recently. Of the 19 traditionally procured hospitals delivered since March 2000, 13 were late but only four were more than two months late. In contrast, nine of the 11 PFI hospital projects in our census were delivered early or on time. The remaining two projects were delivered within two months after the expected date. The Department of Health is also introducing a new approach to PFI hospital procurement. In some cases it proposes to seek competitive tenders for a batch of new hospitals. It hopes that this approach may reduce bidding costs, improve the speed of delivering projects and achieve economies of scale in the pricing of the contracts.
2.21 Six of the seven roads projects that responded were all delivered early with no construction related increase to the annual unitary charge.
2.22 Concerning prisons, the Prison Service has also experienced good results from the PFI. All seven PFI prisons were ready to use at or before the date required by the contract. No prisons have been procured by a non-PFI route in the last ten years so there is no recent comparative data.
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| Case Study |
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| Construction delivery on time Department of Health - South Manchester NHS Trust Hospital The construction phase of the South Manchester NHS Trust Hospital PFI was completed in 2001. It provided a new Acute Unit (319 beds) and Mental Health Unit (77 beds) and was completed slightly ahead of time and within 0.5% of its budget (based on the cost plan agreed at financial close). The South Manchester NHS Trust Hospital PFI project director has stated that the emphasis was placed on making the output specification for the works comprehensive, detailed and robust. He believes that this level of clarity increased certainty and reduced the risk of change following financial close. There was also close consultation with clinicians with weekly meetings addressing key capital development issues and promoting information flows. In addition, the Trust's project director notes that considerable time was spent in 'front-end planning' establishing processes and procedures. He considers that determining early a major element of the 'what to do and how to do it' issues resulted in certainty and speed of execution later. He considers that effective collaboration between the Trust and the private sector teams also enabled prompt resolution of design and construction issues. |
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16 No comparative data for this statistic are available for traditionally procured projects. The 2002 Mott MacDonald report found that traditionally procured standard building projects examined had taken between one and four per cent longer to complete than expected at business case stage, before contract award. Standard buildings are those not requiring special design considerations. Non-standard buildings examined had taken between two and 39 per cent longer. Non-standard buildings involve special design considerations and may include specialist hospitals, innovative prisons, high technology facilities, other unique buildings or refurbishment projects. The 1999 report, Benchmarking the Government Client found that construction programmes overran by an average of 13 per cent compared to the tender stage.
17 These 61 are varied in size and include major and minor projects. The NAO data are derived from mainly large construction projects.