By David Williams
5 October 2009
More than a third of Private Finance Initiative construction projects have exceeded budget, according to data released by the National Audit Office.
The NAO report, The performance of PFI construction, which studied building projects worth over £20m completed in 2008, found that 35% were blighted by extra costs and that 31% were delayed.
The report, published on October 2, followed on from a study carried out by the watchdog in 2003, and indicated that PFI performance had slipped in the past five years.
In 2003, the NAO found that 76% of PFI projects came in on time, and that 78% were on budget.
One contributing factor was the financial difficulties experienced by building firm Jarvis PLC. Of the projects reporting delays, 15% said they had been affected by Jarvis’s problems, reporting hold-ups of up to 36 months.
But the most common cause of delays was poor management from contractors, which was blamed for 42% of the schemes that fell behind schedule. The NAO also reported that fewer than half of those leading PFI project teams had previous PFI experience.
However, the PFI remains more reliable than alternative methods of financing public building projects, the report found. Sixty-three per cent of non-PFI projects were completed on time, and 54% to the contracted price.
‘Our long-held view on the PFI is that it is neither always good value for money, nor always poor value for money. In practice its value is contingent on a wide range of contract, sector and market specific factors,’ the report concluded.
5 October 2009
More than a third of Private Finance Initiative construction projects have exceeded budget, according to data released by the National Audit Office.
The NAO report, The performance of PFI construction, which studied building projects worth over £20m completed in 2008, found that 35% were blighted by extra costs and that 31% were delayed.
The report, published on October 2, followed on from a study carried out by the watchdog in 2003, and indicated that PFI performance had slipped in the past five years.
In 2003, the NAO found that 76% of PFI projects came in on time, and that 78% were on budget.
One contributing factor was the financial difficulties experienced by building firm Jarvis PLC. Of the projects reporting delays, 15% said they had been affected by Jarvis’s problems, reporting hold-ups of up to 36 months.
But the most common cause of delays was poor management from contractors, which was blamed for 42% of the schemes that fell behind schedule. The NAO also reported that fewer than half of those leading PFI project teams had previous PFI experience.
However, the PFI remains more reliable than alternative methods of financing public building projects, the report found. Sixty-three per cent of non-PFI projects were completed on time, and 54% to the contracted price.
‘Our long-held view on the PFI is that it is neither always good value for money, nor always poor value for money. In practice its value is contingent on a wide range of contract, sector and market specific factors,’ the report concluded.
