Project management and the private finance initiative

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5.1 Introduction chapter five Conclusions and recommendations This research was undertaken to determine for the first time the number of Project Management Faculty members involved in PFI, their roles and responsibilities, and their background, skills and experience. The aim of the research was to acquire a better understanding of these issues, as a prerequisite to engendering increased awareness of PFI within the surveying profession, as well as developing and expanding project management skills and competencies. In order to satisfy the aims of this research, the research has: • Reviewed the background to PFI and its implications for project management in the UK construction industry. • Examined the role of project managers in the PFI process. • Determined the extent to which Project Management Faculty members are involved in PFI and in what capacity. • Reviewed the background, skills and experience of Chartered Surveyors involved in PFI projects. • Identified instances of best practice project management in PFI projects. This final section of the report therefore draws together the main findings of the research, identifies key themes and makes recommendations as to how the management of PFI projects can be improved, and how the scope for more Chartered Surveyors to become involved the PFI process can be increased. 5.2 Project management opportunities in PFI Results from the online questionnaire survey showed not only that PFI work is an important part of Project Management Faculty members’ work, but also that there are opportunities for further growth in the field. For example, some 64% of respondents (the majority of whom are based in the public sector) worked for organisations that 29 chapter five Conclusions and recommendations Project management and the private finance initiative have been involved in PFI projects. However, a smaller proportion have actually been personally involved in one or more PFI projects (48%). Those respondents who are active in PFI tend to be working as consultants and executives, and also tend to be older. Similarly, the interviews revealed that those involved in managing PFI projects in both the public and private sectors were often drawn from a variety of professional and educational backgrounds, and none of the interviewees had formal project management qualifications. This was borne out in the online survey where, surprisingly, overall only 7% of respondents had a formal project management qualification. The figure for PFIactive respondents was less than 8%. 5.3 Managing the PFI process In terms of management structures in PFI, the interviews showed that: • All six case study projects have similar management structures which follow the conventional PFI model comprising the awarding authority, the SPV and funders; • All the organisations have a project sponsor, and this tends to be the Chief Executive in the NHS and a Project Board/Steering Group in the other public sector projects; • The Project Director oversees the project manager who is responsible for the day-to-day detail and is directly accountable to the project sponsor; and • The traditional boundaries between in-house and external consultants are becoming blurred within PFI structures. In terms of the skills required at the project director level, the role is to co-ordinate the involvement of the various stakeholders and bring in the requested skills at appropriate stages of the project. One respondent (project sponsor in the central government judicial sector) described the key skill as ‘Stakeholder Management’, because the project director is the co-ordinator and the buffer between the end users, contractors and the SPV. The interviews also showed that the project manager’s role is changing within PFI. Traditionally four separate project
management roles existed and were performed by different people, that is: • Employer’s agent and independent certifier, both traditionally working for the client; and • Technical adviser and SPV representative, both working for the SPV. However, more recently these roles have been combined into one function, which is possible because of the emergence of holistic or integrated PFI service providers. Furthermore, the merging of roles has become feasible because of an open book approach to reporting operated by the PFI parties and the protection available from warrantees. These changes mean that project managers are being required to take on activities for which they have not previously been responsible, and may require different skills that are not ‘core’ skills for project managers (see below). The project manager’s role also varied considerably from project to project. In some instances the project manager would be involved from the initial stage of invitation to tender (ITT), bidding and preferred bidder through to the operational phase; in other cases the project manager would just be brought in for the construction phase. Where the project management role is recognised as a formal role, the title will be ‘project manager’. However, when the awarding authority does not want a formal project manager because they have in-house project management, they tend to require a ‘project support role’, referred to as a ‘lead consultant’. The research shows that members also tend to be principally involved in the inception, bidding and construction stages of a project. These are the stages at which project managers’ specialist skills in construction and property can provide the most valuable input to projects based on their specialist skills. The operational stage of projects involved far fewer Faculty members. As far as internal and external project management was concerned the interviews showed that: • Within local authorities internal project managers were ranked as the best option providing that the person is competent; • The benefits of using internal project managers include: • they are generally lower in cost; • project management skills are developed and honed in-house; and • control over decision-making is kept within awarding body; • Small unitary authorities struggle to find the requisite skills in-house and do not field the most appropriate person; and • Where a NHS Trust is undertaking one large PFI project it is more appropriate to use external project managers. From the project sponsor’s perspective it was highlighted that one of the dangers of using an external project manager is that ‘loyalty’ is often missing. Moreover, the project manager for the client side is required to ensure that every deadline is met during the course of the project, and if deadlines overrun there will be cost implications. Consequently, an internal project manager was frequently deemed more appropriate to protect the interests of the client. As far as responsibility and drive in PFI projects was concerned, driving forward PFI projects varies by project stage. For example, at ITT the client is the driver; at bidding stage it varies between the public and private sector; at pre-contract and preferred bidder stage it is all three parties; at post-contract construction stage it is the SPV; at occupation it is the SPV and client. But opinion was split as to where overall responsibility lies, whether with the public sector, private sector or the partnership. Moreover, project managers are often not adequately skilled at driving projects forward. From the SPV and the client’s perspective, they both thought that they were the overall driver of PFI projects (i.e. the response depended on who was asked). Ultimately, all successful PFI projects require all sides working towards a satisfactory conclusion. Not only should the consortium and client work together, but also each party is dependent on the other party to aim for success. The influence of funding bodies starts only at the preferred bidder stage and is focused primarily on risk management, although funders also bring discipline in terms of due diligence to PFI. Project management and the private finance initiative chapter five Conclusions and recommendations 30
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