PF2: Seize the initiative

The industry must act fast to refine the details of PF2 and drive it forward

While the PF2 proposals raise questions that still need to be resolved, it is with substantial relief that we herald its arrival. There is now a way to remove the uncertainty that has been hanging over the industry since the coalition government took office in 2010 and I am very pleased that we can start to work through the details required to turn PF2 into a reality.

That said, it was completely necessary for extensive consultation to take place on such a material issue for the government, private sector and tax payer alike. This was particularly important given the unfair reputation that had been attached to PFI.

As a business, we at Galliford Try have been consistent in our belief that PFI works but, like any other systems or processes, should be subject to continuous improvement for the sake of customers, financiers, contractors and stakeholders.

In our responses to the consultation by the Treasury, we clearly indicated that the key to achieving a successful improvement on PFI was to concentrate on dialogue but, crucially, the quality of dialogue and not the quantity. A shortened and centralised procurement route with early and substantial involvement from all stakeholders is central to success and to ensuring that parameters set are clear and acceptable to all.

Creating more straightforward and transparent contracts should not only save money but also see new facilities delivered more efficiently and with more confidence

We welcome public sector participation and, therefore, the increased role that the public sector will play. Our experience in working closely with public sector partners, whether through LIFT companies in England or through the Scottish Futures Trust’s hub initiative, is that only through such close and detailed work can a quality of dialogue and true collaboration be achieved, resulting in cost savings, efficiencies, and fit-for-purpose buildings that are completely aligned with the client’s requirements.

Another positive aspect of the PF2 proposals is the speeding up of procurement by introducing an 18-month time limit for deals to be concluded. Creating more straightforward and transparent contracts should not only save money but also see new facilities delivered more efficiently and with more confidence. While the principle is to be welcomed, there are a couple of concerns which will need addressing in refining the detail.

First, what happens if, through no fault of either the public or private sector, the 18-month deadline extends and the project is lost? Who picks up the bill? Second, will the requirement for projects to be ready and, therefore, deliverable in 18 months further slow projects coming to market? I think there is a compromise to be struck here on both counts.

The government’s drive towards a centralised procurement is, again, a significant step forward. This will nurture greater expertise in the public sector, better efficiency in pipeline management and improved communication to the private sector, thus allowing it to be better prepared for the pipeline when it comes.

Centralised procurement will nurture expertise in the public sector, better efficiency in pipeline management and improved communication to the private sector

The industry has previously been left frustrated with the lack of clarity and workload in the PFI arena and the announcement of PF2 is a welcome way forward. However, we all need to recognise that this is the start of the development of the detail needed to get PF2 off the ground and we
all need to get behind it to drive it forward. PF2 will have a considerable part to play in the economic recovery and we, collectively, need to tackle it at pace.

As people use the new arrangements so refinements will inevitably take place and we can maintain this model of continuous improvement, thereby avoiding the hiatus created when PFI stopped.

PF2 must be part of the continued development of our national infrastructure for the foreseeable future and we owe it to ourselves, to our clients and to our communities to make it work in the best way possible for everyone.

Ken Gillespie is group managing director at Galliford Try

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