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When public went private

PFI projects can work well, particularly in sectors like roads, housing and lighting, says Robert Bullard. Local Government Chronicle, 23 August 2007

The private finance initiative has been criticised on numerous grounds, whether for its lengthy tendering process and high costs, or because many local government officers lack the experience of engaging private sector firms.

But there is good news as well. According to The Economist, nearly 90% of PFI projects have finished on time and budget, compared with only 30% of non-PFI projects, and private sector contractors have shouldered the risk of building new infrastructure projects that otherwise may never have happened.

And lessons can be learnt from the projects that have worked well – in sectors such as roads, accommodation and street lighting.

Invest in and repair highways

It was a backlog on its road maintenance that persuaded Portsmouth City Council to sign a large and complex PFI project in 2004, which covers management of the street scene as well as the local highways.

“The backlog was worth £60m, but we were only getting round to doing £2m per year,“ explains the project’s client manager, Andy Finch. “We were never going to catch up.”

The £500m contract with Colas covers the rehabilitation, replacement and maintenance of the city’s roads, as well as road lighting, sweeping, drainage, signs and traffic signals.

No major problems have occurred during the PFI project’s delivery – which Mr Finch puts down to the consistency and commitment of staff from both sides – and the council is pleased with the results.

Particularly beneficial has been the way it has enabled the council to ‘piggy back’ road safety schemes onto the road maintenance being done by the contractors – which has meant fewer site visits, fewer disruptions to road users, and cost savings for the council. Local residents are also happy. Surveys twice a year have recorded a 22% increase in people’s satisfaction with the city’s road maintenance and satisfaction with street cleanliness is up 19%.

Making education cradle to grave

“We are not just replacing schools with schools,” says Clive Jones, senior finance manager at Telford & Wrekin Council, when describing the council’s £63m PFI education project. “It’s the first of several learning communities planned for the whole town.”

The 39-acre site in Hadley combines primary, secondary and special schools - with 420, 1200 and 120 places respectively - with a learning resource centre, sports hall, play area and other facilities for use by the wider community. “This is about education from cradle to grave,” says Mr Jones.

The wheel-hub shaped building and its facilities were designed to achieve all five outcomes in the government’s Every Child Matters programme, including learning enjoyment, high educational achievement and economic wellbeing.

“Everything has gone to schedule and to budget. It’s the best bit of project management I have ever seen,” says Mr Jones. He puts its success down to the council allocating sufficient people, with the right stills, to the project – something that he feels not all councils have realised in their own PFI projects. Mr Jones also points to the appointment of dedicated Client Agents to represent the interests of the education staff when dealing with the contractors, Interserve, as crucial to its success.

Build homes and communities

An estate in central Manchester with more than 1000 homes has been completely turned around in a PFI project run by Manchester City Council.

“The Plymouth Grove estate desperately needed remodelling,” says Bridget Guilfoyle, the project’s principal strategy officer. “Local residents approached us, wanting something to be done, just when we saw the PFI adverts.”

Because of the scale of the work that was needed, PFI was the only option. The project started in September 2003. Since then 436 homes have been demolished and 663 refurbished. Retail and community centres will be completed shortly, and neighbourhood management will continue for 30 years.

“PFI is difficult, especially with housing projects, where there are so many stakeholders,” says Ms Gilfoyle. “But it has been a very good result. It has given a sense of pride back to the people who live there.” The contractors are a joint venture between Nationwide, Gleeson and the Harvest Housing Group.

Ms Guilfoyle says the project’s co-ordinated neighbourhood management and its 24hour security service that operated for the first three years turned the estate into somewhere sought after to live. There used to be many empty and run down homes, now there is now a seven-year waiting list. “Crime had been a significant issue on the estate. But with all the investment in homes there has been more on-street surveillance - people now feel safer,” says Ms Guilfoyle.

Let there be street light

“People don’t realise how much benefit street lighting brings,” says Brian Loughlin, project engineer on Newcastle’s Street Lighting Project, a PFI partnership between Newcastle City Council and North Tyneside Borough Council.

“Its good for the whole community, residents as well as businesses. And there are spin off benefits for lots of council priorities: it increases the use of public transport, creates safer routes to schools, and reduces people’s fear of crime.”

Under the £250m joint venture, 52,000 street lights are being replaced, which is 80% of the existing stock, followed by a 25 year maintenance programme. Old yellow sodium lights from the 60s and 70s, many of which are now broken, are being switched with white lights, which should improve visibility and deter criminals.

The project’s delivery targets have been achieved, with 90% of local people are happy with the results. The scheme has also won awards for reducing light pollution and joint working.

Build on PFI experience

Leeds City Council has developed a single team for running all its PFI projects. The experience they have generated from a decade of work and 10 projects has attracted the interest of other councils, from home and abroad, and won them two Beacon awards.

“Many councils lack the experience of procuring big public projects,” says David Outram, head of the council’s public private partnership unit. “Councils may think they are ready, and know what they want,” he adds, “but often they are not, and delivery suffers.“

After the first PFI project in the 1990s, Leeds decided it would keep the PFI team to reduce the council’s reliance on external advisers and so it would be ready for other PFI projects. Currently the unit has projects worth £450m, mostly on education, but also in health, housing and highways.

“Councils have got to know what they want to buy,” says Outram, who believes his team have secured best value for money. “That then establishes confidence from the bidders, who can believe in your programme and see there are the resources to do the job.”

Find out more

Portsmouth City Council
Andy Finch, Client Manager. Tel: 02392 834620 andy.finch@portsmouthcc.gov.uk

Telford and Wrekin Council
Clive Jones, Senior Finance Manager. Tel. 01952 383758
clive.jones@telford.gov.uk

Manchester City Council
Bridget Guilfoyle, Principal Strategy Officer. Tel: 0161 234 4837 B.guilfoyle@manchester.gov.uk

Newcastle City Council/North Tyneside Council
Brian Loughlin, Project Engineer. Tel: 0191 211 5947
Brian.loughlin@newcastle.gov.uk

Leeds City Council
David Outram, Head of PPP Unit Tel: 0113 214 3929 david.outram@leeds.gov.uk

© Robert Bullard. Not for reproduction without prior permission
 

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