Risk Management and Governance for PFI Project ... - Title Page - MIT

operational, and mature operational. Furthermore, the NAO defines six key
business-management themes that apply at every phase of a PFI project, as follows (National
Audit Office, UK, 2006):
● The project fits with the business requirements of the Authority
● PFI is the appropriate delivery mechanism
● Stakeholders support the project’s progress
● There is good quality project management
● There is an optimal balance between cost, quality and flexibility
● Effective risk allocation and management is taking place
In this way, the framework configures a matrix with six stages and six themes, all of which
have concrete checkpoints. For example, at the cross section of the first phase ”Strategic
Analysis” and the first theme ”The project fits with the business requirements of the
Authority”, the NAO defines a list of key points to be considered when making an investment
decision for a PFI project, as follows:
● Have clear objectives for the project been set?
● Does the project meet policy imperatives?
● Was the project assessed as being priority?
● Has a preliminary evaluation of the benefits sought been made?
● Has long term commitment to the project been demonstrated?
● Are the project outcomes clear?
● Have the project’s wider socio-economic benefits been quantified?
● Does the proposed solution clearly meet business requirements?
In this way, the NAO’s framework provides the audit points in detail even in the
decision-making phase of the project. In Japan, however, there is no such specific framework
or audit manual. By providing detailed audit points at each stage, including the
decision-making phase, and defining the role of third-party organizations and the scope of their
evaluation, the accountability and transparency of the project would be enhanced, thereby
preventing sloppy risk management and opaque decision-making processes. In addition, it
would be also required to strengthen the function of the third-party organizations. As
mentioned before, there is an opinion that the problem of an optimistic demand forecast
sometimes stems from political pressure. Strengthening the audit function of third-party
organizations could also help suppress such a failure of the government.
Summary
This chapter considered the potential problems in the scheme of PFI, focusing on the
decision-making process and evaluation function, separate from the risk-actualized cases described
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