PFI deals achieve what other procurement methods cannot

26 August 2011

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26 August 2011 | Adam Leach

The CBI has mounted a vigorous defence of the private finance initiative (PFI) as a way to procure new infrastructure in the UK.

A report, Building Strong Foundations, published by the business group this week said the method had enabled projects to be completed that were not previously possible.

“The UK’s Victorian hospitals and dilapidated school buildings needed investment and the public-private partnership (PPP) approach has directed funding to build and maintain infrastructure in a way that conventional procurement often failed to do,” it said.

This support follows recent criticism, that - in the Treasury’s own words - investment has been “timid, uncoordinated, wasteful in its procurement and insufficiently targeted”. The UK government announced a plan to save £1.5 billion from existing PFI projects in July.

The CBI said Britain’s growing and ageing population increases the need to improve the quality of the country’s infrastructure.

But in order to maximise value for money, both the private and public sector must learn from past mistakes. The public sector needs to ensure tenders don't put off companies from bidding and stifle competitiveness, and the private sector must become more agile, meeting the changing requirements of service users.

Neil Bentley, deputy director-general at the CBI, said: “The government must provide leadership and champion the use of PPPs to fund and deliver projects, otherwise the opportunity to use private finance will be lost. Companies and investors will increasingly look overseas for business and the UK will not get the new infrastructure it needs.”

Procurement teams also need to be incentivised to carry out projects quickly and keep to deadlines.

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