PPPs are reducing the cost of public procurement although there is significant variation between industry sectors and types of projects. In the United Kingdom, a series of reports since 1997 suggests cost savings based on a comparison of the PSC and winning bid were within the range 10-20% (see Table 2). In Australia, the results have been at the lower end of that range with the Fitzgerald Report identifying an average 9% cost saving for a portfolio of diversified projects, Allen Consulting 11.4% and the N.S.W. schools project 7-10% (stage 1) and 22% (stage 2) (Fitzgerald 2004; Allen Consulting Group 2007; Auditor-General NSW 2006).15
Table 1 UK OGC Gateway Review Procurement Outcomes
| TRADITIONAL PROCUREMENT PERFORMANCE | |||||
| United Kingdom 2002-2006 | |||||
| Performance | Review | Objective | |||
| 1999 | 2004 | 2006 | |||
| Cost Overrun | 73-75% | 45% | 30% | ||
| Late Delivery | 66% | 37% | 27% | ||
| SOURCE | |||||
| NAO 2005 Improving public services through better construction | |||||
| Report by the Comptroller and Auditor-General HC 364-1, NAO | |||||
__________________________________________________________________________________________________________________________
15 The difference is explained by the greater opportunity that existed in the United Kingdom with early PFI projects, the opportunities for improvement in traditional procurement practices, the deal flow and economies of scale that exist in that market. Recent evidence suggests some convergence between the two jurisdictions (Audit Commission UK 2003).