46. One of the areas in which a number of different approaches have been taken is on the costing of lower value changes (also known as "Small Works Changes"). This concept was not incorporated in early PFI contracts. Over time, the value of these changes can become significant. Consequently, it is important that VfM can be achieved in relation to this type of Change; this has not always been the case in the past.22
47. In this context, it is essential that an approach to costing these Changes is agreed with the contractor and applied for the remainder of the duration of the contract. The recommended approach is to agree a schedule of rates for the cost and labour elements of these Changes. In order for this approach to be effective, the rates must represent value for money at the time that they are agreed and adopted. It may also be helpful to review these over time, and to share benchmarking information (where possible) across defence and wider Government. Independent sources of benchmarking data may also be available, for example through the Royal Institute of Chartered Surveyors or similar body. The question of whether a margin should be applied to Changes of this type is dealt with below under "Contractor Margin on Change" (paragraph 50 to 56).
48. In some cases, acquisition team members may feel that the desirability of testing the costs of Small Works Changes is outweighed by the need to process these as quickly as possible and that these Changes are of insufficient value to justify the time involved in checking quotes. This gives rise to concerns over whether best value will be achieved. The "Schedule of Rates" approach may go some way to resolving these competing considerations.
49. A further way of achieving VfM in processing Small Works Changes is to bundle them together when agreeing any adjustment to the monthly payment (often referred to on a PFI contract as the Unitary Charge) which may be required. This is an approach which has been used by acquisition team members in practice and is encouraged by the NAO and PUK. This means that the time and costs involved in calculating any adjustments to the Unitary Charge can be incurred just once in any year, rather than a number of times.
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22 See the report by the Comptroller and Auditor General HC 205 Session 2007-2008, dated 14 January 2008, pages 14-16, paras. 2.10-2.15. Prices charged by PFI Contractors to supply and fit an electrical socket ranged from £302.30-£30.81. Variations in pricing of Small Works have also arisen in the defence sector.