8 The Department has funded PFI in a series of bidding rounds (Figure 1 on page 4). During rounds one and two, PFI procurement was new to the housing sector and a particular complexity for local authorities, their advisers, the market, and the Department was achieving a robust cost for projects at the outset. It took some time for those involved to develop their understanding of stock condition issues, risks and risk pricing for PFI. This resulted in significant central funding increases between endorsement of business cases and finalisation of contracts, although there were no funding increases after contracts had been signed. Early projects were therefore not realistic in terms of expected costs and timetables. Twenty one of the 25 projects which have been signed to date have experienced cost increases above estimates in the business case, 12 of which were over 100 per cent. All signed projects, for which we have data, were delayed and were signed later than was expected when the business case was agreed. The delays range between five months, and five years and one month, the average being two years and six months. The Department took steps to check funding increases were valid, but we consider that across the programme these problems and delays put achievement of value for money at risk.
9 The limited evidence available allowing us to compare PFI to alternative forms of procurement means the Department cannot demonstrate that the programme has achieved value for money. While performance and costs vary between projects there was broad agreement from local authorities, providers and advisers, that PFI procurement can be excessively costly and generally takes too long relative to other routes. The Department's analysis of new build projects shows that the capital cost of PFI projects is similar to housing association developments. This analysis, however, does not take account of all project costs, for example, finance costs. While a straight comparison of the investment options for Decent Homes is difficult, the procurement times for PFI council housing of 34-75 months seen to date compare with an average period of 31 months to complete a stock transfer and 21 months to establish an Arms Length Management Organisation. Long procurement times can also increase procurement and tender costs for local authorities and bidders.