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CONTENTS 24.05.12

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New Civil EngÎneer

lst Floor,GreaterLondonHouse HampsteadRoad,LondonNWl 7EJ EDITORIALENQUIRIES Email: prefixplus@emap.com EDITOR1AntonyOliver (020) 77284541 antony.oliver DEPUTYEDITOR1MarkHansford (020) 7728 4543 mark.hansford CHIEFSUBEDITOR1AndyBolton (020) 7728 4537 andy.bolton NEWSEDiTOR1AlexandraWynne (020) 77284540 alexandra.wynne DESIGNER

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DISPLAYADVERTISING1FrancisBarham (020)7728 4525

RECRUITMENT1JonathanSnowden (020)77283829

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www.nce.co.uk ¹ 24.05.12 NEWCIVILEWjlNEER

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Comment

AntonyOliver

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The Association for Consultancy and Engi- neering's analysis on the performance ofPFI projects over the last couple of decades and its recommendations for future models for private finance once again highlight the vital importance of this form of project financing.

Certainly the on-going government review ofPFI needs ta get to the heart ofwhat consti- tutes success and how to maximise value for public cash. But as the ACE report points out,

"government must look ta retain the benefits that a successnùly procured PFI proj ect can deliver as it develops new fmancing models".

ln short, the Coalition must Hot be tempted to throw away such an overarching success stary on the basis of a few negative headlines.

Let's be dear, there has indeed been some variation in the performance of public projects procured under this model over the years since it kicked off in the mid-1990Sas something of a public financing miracle.

As a result, over the last 15years there have been more chan a few projects that justify the

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"The coalition mus! Dot be tempted to throw away SudAan overarching success stcry on the bases of a few negative headlines"

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National Audit Office and Public Accounts Committee's liberal Cliticism ofPFI and public private partnerships funding. ln the rush ta embrace the new wave of available cash, it is fair to say that maTIrpublic bodies got rather sucked into thinking it was free money.

Obviously, that was Hot that case. Bence, we saw a Humber of poorly planned and poorly delivered proj ects with clients buying more than they really needed on the basis chat it would be raid for tomorrow.

But involving the private sector in the construction, management and maintenance of infrastructure over 25 or 30year periods goes way beyond simplythe cost of construction.

And it is here chat we must emphasise the vital shift in approach that comes with private financing of infrastructure.

PFI is not simply about borrowing rooney to buy today what the state cannot afford.

Success is about bringing in new skills, new thinking, ne'.'!efficiencies and transferring

m peter planning

the risk oflong-term service delivery to those better able ta manage it

ln the past we seemed prepared to accept chat when the public sector invested in new roads, railways, schools and hospitals little, if any, funding was set aside to maintain the asset.

And given that, even in good économie times, public cash is always scarce, the result was simply that infrastructure failed to win sufficient funding to be properly maintained.

ln contras t, what successful PFI schemes do is lock in this commitment to asset management. Provided the deal is properly structured, public assets will Hot only main- tain performance over the 25 year PFI period but also be handed back at the end with value.

Of course it is cheaper to build chen walk away. But ifyou want a public asset to main- tain its value and usefulness to society then investment in maintenance is critical. PFI remains a key way to do this cost effectively.

Il Antony Oliver is NCEs eclitor