MUCH has been made of the Government's Private Finance
Initiative since its launch five years ago. However, until recently there has been limited evidence of new public facilities which deliver the promised economic benefits.
Success has become apparent with the signing of a number of projects including Falkirk Schools, Edinburgh Royal
Infirmary, Law & Hairmyres
Hospitals, Kilmarnock Prison, and Ministry of Defence Housing in Lossiemouth.
Key lessons have been learned from these projects and merit study to ensure ''best practice'' is adopted to ensure continued success.
Earlier PFI projects lacked clarity and commitment from some parties in the public sector, resulting in delays during the bidding process and increased costs for the public and private sectors.
Some projects can attribute some of their success to continued support from The Scottish Office and the Treasury Taskforce, which played an important role in the recently completed Falkirk Schools project.
Lessons have been learned in schemes such as the Glasgow Schools project, where the council is ensuring that good project management results in quicker
commissioning of services and reduction of abortive costs.
Having considered the lessons of the past, a number of projects are progressing well. These will break ground in the development of the Private Finance Initiative, and include the Glasgow and Edinburgh Schools Redevelopment projects, Glasgow Energy Initiative, Edinburgh Rapid Transport, and a number of street
lighting projects.
There is a clear expectation that the public will receive improved, innovative and flexible services.
However, PFI is now expanding its scope into wider Public Private Partnerships (PPP). PPP is in its infancy and discussions between the Treasury, Government departments and leading advisers such as PricewaterhouseCoopers (PWC) are setting out the strategic framework.
However, the key drivers of change include the Comprehensive Spending Review, the introduction of Resource Accounting and the Selling Government
Services initiative. As a result, Government spending departments will be required to focus on what their core services are maximising the benefit to the
consumer and the use of assets.
After a difficult start, PFI is beginning to bear fruit. Many early criticisms were valid. However, the public sector is becoming more efficient and ensuring best value for money is achieved for the taxpayer.
The test will be in improving value for money and ensuring the procurement of flexible, efficient services and that schemes, in the light of new accounting guidance from the Accounting Standards Board, can still be structured so that the capital expenditure does not count against the Public Sector Borrowing Requirement.
In my view, PFI is becoming a clear winner for both parties.
o Paul Brewer is a Project Finance Partner at PricewaterhouseCoopers.
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