1. In 2006, changes to operational PFI projects totalled £180 million, but many operational PFI contracts are under-managed. Negotiating good deals is important but managing them well afterwards is key to value for money. Yet there are wide variations in the level of resources used to manage PFI deals, and many schools and hospitals consider that they do not have enough staff to do a good job.
2. There are limits to the Treasury's capacity to control the allocation of resources to contract management at a local level. The Treasury should identify and disseminate examples of where, in handling change, PFI projects have benefited from sufficient resourcing of contract management.
3. There is insufficient central support for contract managers. The Treasury, Departments and Partnerships UK should increase the roll-out of training programmes to support contract managers when changes need to be made to PFI projects.
4. At present, only 29% of project changes over £100,000 are subject to competition. The arguments for handing additional work to an incumbent contractor are not persuasive nor do they hold sway in every project. Public sector authorities should raise this percentage so that alternative bidders compete to undertake the work whenever possible.
5. Management fees cost the taxpayer over £6 million a year, despite Treasury guidance issued in March 2007 which advised against the payment of management fees in new PFI deals. Hundreds of operational deals are still paying unjustified management fees. The Operational Taskforce, run by Partnerships UK on behalf of the Treasury, should require existing operational deals to remove management fee charges from existing contracts.
6. There are large differences in the cost of making similar minor changes to PFI projects, but the effort put into checking that costs are reasonable varies widely from project to project. Public sector authorities need to validate the value for money of changes to PFI contracts. By the end of 2009, Partnerships UK should draw up guide prices for common minor jobs, based on existing cost information from the Royal Institution of Chartered Surveyors and others.