A.51 A number of respondents expressed concerns over the lack of transparency of the build up and management of the lifecycle fund and in particular, the risk that excessive returns may be achieved by the private sector at the end of the contract. Many of these respondents felt that these issues could be overcome through greater transparency of forecast and actual lifecycle costs, through some form of open book management of lifecycle maintenance.
A.52 Many of the responses expressed a desire to have greater flexibility on the hard facilities management service specifications and the timing of hard facilities management repairs. Some responses suggested that an open book approach could lead to greater transparency as well as more efficient pricing. Alternative suggestions to improve flexibility included the use of shorter contracts, the introduction of benchmarking and market testing provisions, a pain and gain share mechanism between the public and private sector parties or for lifecycle spending decisions to be based on annual surveys. Others considered that flexibility could be improved through simplifying the approach to variations.
A.53 Some of the responses suggested that costs had often been driven by the 'gold plating' of hard facilities management service specifications and hand back conditions and that removing this could lower prices for the public sector.
A.54 There were conflicting views on whether the private sector had been able to price the lifecycle provision effectively. A number of responses provided the view that the private sector had become sophisticated at pricing hard facilities management services and as such they were accurately and competitively priced already by the private sector. Some of these responses did, however, note that there were some elements of hard facilities management services that were more difficult to price. Others held the view, however, that it was difficult to price facilities management services accurately over a twenty-five year concession. Many of these respondents also suggested it was currently too early to make judgements about the appropriateness of lifecycle pricing in current contracts, as large expenditure would be required at later stages and that there were insufficient projects at this stage to identify a trend.