| PFI deal as contracted | Conventional procurement alternative |
Final deal cost at 2001 prices (discounted over 35 years to April 2001 and excluding clinical costs) | £125 million 35 years £130 million 60 years (Based on annual unitary payment of some £10 million) | £130 million 35 years £140 million 60 years (Risk adjusted) |
Cost profiles | Annual unitary charge of some £10 million plus refurbishment costs of £12 million under separate arrangements. | Full capital construction and refurbishment costs of some £62 million (cash estimate) over first four years, followed by ongoing maintenance and ancillary services. |
Risk allocation ■ Remaining with public sector ■ Passed on to private sector | ■ Clinical service provision; ■ Change in Trust requirements; ■ NHS specific regulatory/legislative changes. ■ Construction Design (except changes due to external NHS requirements); ■ Meeting specified performance standards and operating cost risk; ■ Non-NHS specific regulatory/ legislative changes. | Most risks retained by the public sector. |
Cost of advisers used in procurement (actual prices) | £2.3 million | The Department has suggested a range of between 2 to 4% of capital value for schemes over £20 million. This would give between £1.2 million and 2.4 million in this case. |
Original estimate of deal cost (based on 30 year contract): ■ Invitation to negotiate (1998/99 prices) ■ Selection of preferred bidder (February 2000 prices) |
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Trust's assessment of additional benefits of its chosen procurement over conventional procurement | Greater price certainty. Incentivises contractor to complete development on time as full payment only starts once the building is ready for use and occupied. Payment linked to delivery of service which incentivises the PFI contractor to deliver the quality of service which is specified over the contract period. Same contractor designs, maintains and operates building under one contract and is therefore incentivised to adopt whole-life costing. | Cost overruns passed to public body.
Design, maintenance and operation of building is dealt with under separate contracts. |