07 August 2003 | David Arminas
The government is to stop using private finance initiatives (PFI) for all IT projects, according to a major Treasury review.
PFI: Meeting the Investment Challenge also said that PFI will be restricted to major, high-cost, high-profile deals costing more than £20 million.
The Office of Government Commerce and the Treasury will hold consultations with IT suppliers this summer to draw up guidance for a range of model contract methods.
The idea is for more supplier consultation on objectives, plans and risk transfers. Part of the goal is to encourage more suppliers other than the major companies to bid for contracts.
Iain Monaghan, a partner in the information and technology department of international law firm Masons, called the report a "catch-up with reality. Many purchasers and IT suppliers will breathe a sigh of relief."
Purchasers and suppliers have long believed that PFI works best when the project is for a fixed design at the outset, such as a building, and not likely to change.
"IT requirements change too rapidly for PFI," he said.
The Treasury report also noted that nearly 90 per cent of the 563 PFI deals, worth £35 billion - including construction projects - were delivered early or on time.