28. As with any complex acquisition project, for the project to be successful, the acquisition team must have sufficient, suitably skilled and experienced staff resources to manage the project effectively. The full range of in-house acquisition skills will need to be present within the project team. Further, it is recognised that the specialist nature of certain aspects of PFI procurement requires specialist skills that are not available in-house - particularly legal, financial and insurance. Individual projects should seek advice from the MOD PFU on the appropriate level of resources for the various phases of their PFI project.
29. Key learning from experience points on this topic are reproduced below.
a. In-house team:
• PFI projects take several years to procure and benefit greatly from stability in the procurement team, particularly for the phases between OJEU and financial close. Project teams should take this into account when planning resources, recruiting team members and preparing succession plans.
• It is essential to have senior team members who are dedicated to the project. Change in this group adds to the project timeframe and exposes the project to the risk of adopting different approaches. Further, there is a risk that bidders may seek to exploit changeover in the MOD team for their gain or to re-open negotiated positions. Where staff turnover in the team is unavoidable the effects can be mitigated to some extent by securing continuity of external adviser teams.
• During negotiations and from preferred bidder through to financial close the pressure on the team, particularly the project manager and the senior commercial officer, is considerable. A realistic assessment of the workload is essential to ensure that people understand the commitment they are making when they accept such positions.
• The negotiation team should comprise people with prior experience of negotiating large and complex deals. These would ideally, but not necessarily, be PFI deals.
• It is very important to plan for continuity of key team members through the transition and service demonstration phases. It is also recommended that the MOD's contract manager is brought into the project team at least at the preferred bidder stage in order to gain a full understanding of the agreement prior to taking on the contract management role.
b. External Advisers
• Identify at the outset the need for and scope of engagement of the External Advisers. At the initial stages of the project it might not be clear what assistance will be required later but teams should seek guidance so that they can plan and budget for the later phases. However there is a requirement for External Advisors to provide "comfort letters" at key project stages on the maturity of the project to proceed.
• Adequate budgetary provision should be made for External Advisors and sourcing must be made in accordance with MOD and wider Government policies and processes.
• Effective working practices should be established from the outset. EA engagement should be managed through specific tasking and regular performance reviews (it is important to maintain the discipline of holding such reviews even in the "thick" of negotiations). Build relationships on a social, as well as working, level and encourage the advisors to identify with the team objectives. It is also very important to ensure that there are open channels of communication and that the advisors are able to provide their advice in a non-adversarial environment.
Relevant Government policy/guidance:
• MOD PFU Guidance Note - Contract Management in PFI/PPP Projects
• Portfolio, Programme and Project Management Maturity Model
• Defence Instructions & Notices: PPP/PFI Legal Framework Agreement, 2006DIN04-110 dated Aug 2006
• Defence Instructions & Notices: Framework Agreement for Financial Advice & Support for PFI & Partnering Projects, 2007DIN05-003 dated 2007
• Defence Instructions & Notices: General Insurance Brokerage advice & assistance, 2007DIN08-020 dated 2007
• HMT Operational Taskforce Note 2: Project Transition guidance
• OGC Best Practice Portfolio
• Programme & Project Management Specialism Brochure
• Skills Framework & Skills Framework Assessment Guide
• Achieving Excellence Guide 2 - Project Organisation
• Achieving Excellence Guide 5 - The Integrated Project Team
• HMT Technical Note 3: How to Appoint and Manage Advisers to PFI Projects