Project management and the private finance initiative

The Private Finance Initiative (PFI) is a method of procurement in
which private sector finance and management skills are used to
deliver public infrastructure and services in the UK. Research by
the College of Estate Management, sponsored by the RICS Project
Management Faculty, examined the extent to which Faculty
members were involved in the PFI process and in what capacity.
The research was commissioned to help increase awareness of
PFI among the surveying profession, as well as developing and
expanding project management skills and competencies. Based
on an online survey and telephone interviews, the research
shows that:
• PFI is an important part of RICS Project Management Faculty
members’ work, and there are clear opportunities for further
growth. Some 64% of Faculty member respondents work for
organisations involved in PFI, and 48% of members have
personally been involved in one or more PFI projects.
• Project managers fulfil a variety of roles in PFI but they are
principally involved in the inception, bidding and construction
stages of a project.
• Only a small proportion of those Faculty members actively
involved in PFI (less than 8%) currently have formal project
management qualifications.
• Key barriers to the more active involvement of Faculty members
in PFI include the fact that many practices are still not involved
or interested in PFI work and that individuals do not specialise
in PFI. This is exacerbated by lack of opportunities to acquire
PFI skills.
• PFI is increasingly seen as a partnership which should marry
the best skills from the public and private sectors, and project
management skills have a key role to play in this.
• Understanding the client, risk appreciation and process skills
are seen as key PFI skills. But project managers are frequently
not adequately skilled at driving projects forward.
• Public sector project management in PFI does well when it comes
to client understanding, process understanding and political
skills but is relatively weak in negotiating and management
skills. The public sector also lacks skills in whole life cycle
costing (including FM), construction, financial modelling,
stakeholder management, and people skills.
executive summary
Project management and the private finance initiative
• Private sector project management in PFI does well when it comes
to PFI and construction experience, financial modelling and
technical and legal advice, but is relatively weak in specialist
knowledge such as healthcare. Skills are also lacking in whole life
cycle costing (which includes FM), client understanding, and
people skills.
• Training and education uptake by Faculty members in key
project management skills is needed to bridge the gap between
the public and private PFI sectors. This should be underpinned
by learning from experience and improved skills transfer in the
public sector to recycle and retain the PFI knowledge base.
The importance of PFI in the UK
According to the latest figures (April 2003) from the Office of
Government Commerce statistics, 569 PFI contracts have been signed
in the UK, 418 of which are already operational. The combined capital
value of these contracts is £53 billion, although the value of
individual projects ranges from under £1 million to over £1 billion.
In the construction and property sector, the scope of PFI has been
wide-ranging, including roads, bridges, sewage treatment plants, waste
incinerators, hospitals, schools, prisons and office accommodation.
But despite the large number of projects procured to date, the
effectiveness of PFI is still subject to considerable debate.
There is evidence to suggest that, when applied correctly, PFI has
delivered benefits over traditional forms of public sector procurement.
But applied in the wrong way, PFI can also be inefficient and
wasteful of resources. Given the scale of PFI, it is therefore
imperative that both the public and private sectors should look
to manage PFI more effectively, by refining policy and processes
and adapting culturally with the acquisition of new skills.
Project management skills
are key to PFI
Reports and research from various bodies since the Bates’
Reviews of 1997 and 1999 have highlighted the importance
of skills within PFI in such areas as:
• Project management;
• Strategic planning;