Managing ongoing projects over a 20 or 30-year term has emerged as the greatest unsolved problem in private finance initiative (PFI) transactions, a report from the Social Market Foundation has claimed.

The report - sponsored by Bristol-based law firm Bevan Brittan - calls for greater attention to be paid to long-term management at the strategic and procurement stages.


Whitfield: misinformation

But it also warned that the contract is not the way to address relationship management. What is required instead is good knowledge transfer, mutual understanding of the parties' needs, and trust, the think-tank said.

The report also identified those factors considered to be important to ensure a stable and competitive market. These included cultivating existing bidders, since they have established skills and the possibility of future business would encourage them to perform well on existing contracts.


A visible pipeline of future work is also crucial in maintaining competitive pressures on bidders, the report added, arguing that more could be done to ensure this happened in sectors such as defence.


Bevan Brittan chief executive Stuart Whitfield said PFI had succeeded overall, with the principal exception of IT projects. 'If you look at non-IT PFI schemes in relation to traditional construction projects, there is no comparison - part of the problem is that the criticism [of PFI] is partly politically motivated,' he said.


Mr Whitfield added that the national media concentrates on the difficulties faced by high-profile companies such as Amey and Jarvis and wrongly concludes that PFI transactions in general have been a failure.


He said: 'There's quite a lot of misinformation, although that should not be interpreted as saying everything is perfect.'


Other key findings from the foundation's report included praise for the Treasury's new guidance on value-for-money assessment, and the difficulties in encouraging competition, especially in large schemes, as a way of getting value for money.