Experience is one of the key factors in ensuring that a project runs smoothly and leads to better value for money, according to a review by the National Audit Office (NAO) of the performance of construction projects procured under the Private Finance Initiative.
However, high staff turnover on project teams and the consequent loss of "corporate memory" are highlighted as causes of poor project management.
The review, Performance of PFI Construction, published by the NAO today, is based on surveys of public sector construction projects with a capital cost of more than £20m between 2003-08 and follows a similar survey six years ago.
The NAO points out that PFI accounts for a small but significant amount of government investment, mainly in education, health, transport and defence. The capital value of forthcoming PFI deals is expected to be £13bn, of which construction is a significant element.
A total of 114 projects was examined including 51 school projects, 34 hospitals and eight office buildings. About 69% of the projects were delivered on time in 2008 and 65% were on budget.
Of those delivered late, 18% were late by more than six months. Although 40% of the delays over six months were attributed to issues such as under-performance by sub contractors, under-resourcing and negotiations with third parties, 6% was attributed to public sector initiated changes to the specification.
The survey also reveals that in 72% of cases where there had been a price increase it was because of public sector or third party changes to the specification.
Although these changes often improved the design or enlarged the project scope – in one case a helipad was added to a hospital design - the NAO warns that such changes to a project occur in an "absence of competitive tension" which poses a risk to value for money.
From Bubb's Blog
From Whitehall Watch
