Collaborative working will boost value of PFI
16:59 10 Mar 2004
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Pan-industry think-tank Be has submitted a paper to the Treasury in an attempt to improve the Private Finance Initiative (PFI) through collaborative working.
Chief executive Don Ward said: "PFI is undoubtedly effective. It has better aligned the remuneration of the supply chain with the value that the demand chain seeks from its facilities.
"There is a great opportunity to improve the value PFI offers by more explicit adoption of the principles of collaborative working.
"However, the collaborative approach will only deliver sustained value if it is adopted with the philosophy of mutual involvement, trust and benefit at its core," he said.
In its submission, Be, the body formed from the merger of the Design Build Foundation and the Reading Construction Forum, concedes that PFI is a key mechanism for procuring UK public services and has grown significantly in importance around the world and in the UK.
But, despite praising the government over its commitment to further improve and invest in the process, it believes more can be done.
Ward said that the area most in need of improvement was the team selection process.
"At present this is wasteful and time-consuming because of the high number of design iterations inherent in the selection process," he said.
"A new set of metrics is required that will enable clients to select the best team much earlier in the process on the basis of sound quality criteria."
Ward referred to a recent Treasury report, which highlights how government sees PFI improving, but claims it was silent on the benefits of collaborative working.
Now, after drawing on the experiences of its members and the clients of its Collaborative Working Centre, Be has assessed PFI against the defining principles of collaborative working.
It has concluded that the ideal collaborative PFI process would consist of the following elements:
- Identify and develop a business need based on outcome measures.
- Appoint the best team capable of predictably delivering these outcome measures.
- Agree a target unitary payment.
- Value engineer with pain-gain share to arrive at an optimum solution.
- Deliver and operate the solution with continuous improvement over the period.
Be is adamant that this will be possible while still satisfying EU and Treasury rules and hopes that talks with the Treasury and other client departments will address the need.