'Evidence‚ for using PFI built on sand'
Centre for International Public Health Policy:
School of Health in Social Science, University of Edinburgh
A new report by Prof Allyson Pollock, David Price, and Stewart Player shows that Private Finance Initiative (PFI) schemes do not out-perform public sector projects by coming in on time and on budget, as the government claims. You can read the full report here
THE PRIVATE FINANCE INITIATIVE: A POLICY BUILT ON SAND
The private finance initiative: a policy built on sand, published by UNISON, nails the claim that the extra costs of PFI are offset by increased efficiency and it knocks out another of the government's arguments for its continued use to build hospitals, schools, and other major public sector projects.
677 PFI projects have been approved since 1992, but the treasury has not fulfilled its objective of a "sound evidence base" for a "rigorous investigation" of PFI.
The treasury claims evaluations show that 88% of PFI schemes are delivered on time, whereas 70% of non-PFI projects are delivered late and 73% over budget. This report shows that five research studies, cited as the source of the cost and overrun data, are fatally flawed and therefore not credible.
The UK treasury cites five research studies as the source of the cost and overrun data. Of the five reports:
Two were conducted by the National Audit Office and were surveys and consultations with project managers. They do not have any data on time and cost over runs.
A third study, cited by the NAO, was conducted by a private sector body, Agile Construction Initiative. It was not designed to evaluate cost and time performance and has no data on cost and time overrun performance
The treasury‚s own report contains no data to assess the cost and time overrun claim and its methodology is not in the public domain.
The fifth study was conducted by Mott MacDonald, a company which acts as a technical adviser on PFI deals. The report has no data to support treasury guidance. Numerous flaws in study design and methodology lead to a sample and measurement bias that renders the study uninterpretable. At the time of the study 500 PFI deals had already been signed at a value of £28bn. Mott MacDonald's sample, however, is based on just 11 PFI schemes and 39 non-PFI schemes - too few cases to make meaningful comparisons.
Dr James Lancaster
Centre for International Public Health Policy
School of Health in Social Science, University of Edinburgh
Medical Quad, Teviot Place
Edinburgh
EH8 9AG
44 (0)131 651 3963
james.lancaster@ed.ac.uk