T062 Procurment And Tendering Rics Apc

Front 1

What is PFI?

Back 1

Private Finance Initiative.

A government programme launched in 1992 to bring private sector project management and expertise into the public sector; the private sector is granted a concession to finance, design & build and operate major public projects such as schools and hospitals.

Front 2

What are the three types of PFI projects?

Back 2

1) Financially free standing Project undertaken and costs recovered by charging users e.g. toll roads and bridges.
2) Joint Venture Public and private sectors contribute but the private sector has overall control. Contributions and allocation of risk are clearly defined; and
3) Services Sold A significant part of the project is capital expenditure by the private sector and then sold back to the public sector. The public sector requires clear demonstration that this provides better value for money than option 1) and 2).

Front 3

What is the potential role of a cost consultant in a PFI Scheme?

Back 3

Act for the contractor, providing advice normally given to a Client; and become part of a Special Purpose Vehicle (public sector group) that acts as the end user representative.

Front 4

What sort of projects might PFI be used on?

Back 4

Its use is recommended where it offers clear value for money.

It is generally considered to more appropriate for larger projects – greater than £20m and where there is significant ongoing maintenance requirements

Front 5

What might be some of the problems associated with PFI?

Back 5

High bidding costs and takes longer to procure than traditional projects
Value for money
Design
Relationship between PFI client and contractor – gov often tries to maintain close control
Concession agreements

Front 6

What is Build Lease Transfer (BLT)?

Back 6

A facility is designed, financed and constructed by the private sector and then leased back to the gov for a predetermined period of time at a pre-agreed rental.
The facility is owned by the private sector partner during the lease period, at the end the government can renew the lease, buy out the private sector partner or walk away from the deal.
Operation and maintenance of the facility during the lease period is usually the government’s responsibility.
This provides gov with a way of financing large-scale infrastructure out on ongoing revenue rather than capital expenditure.
The primary disadvantage is that legal ownership remains with the private sector.

Front 7

What is Build Operate Transfer (BOT)?

Back 7

The facility is designed, financed, operated and maintained by a concession company, for the period of the concession.
Ownership of the facility is vested in the host government from the time of construction completion.
At the end of the period, the concessionaire’s involvement in the project ends and all operating rights and maintenance responsibilities revert to the host gov.
The concessionaire retains all toll income etc during the agreed period.

Front 8

What is Build Own Operate Transfer (BOOT)?

Back 8

A variation on BOT where ownership stays with the concessionaries until the end of the concession period, when it is transferred free of charge to the host government.

Front 9

What is Partnering?

Back 9

A different way of structuring business relationships.

Involves two or more organisations working together to achieve specific mutual objectives and deliver continuous measurable improvements.

Front 10

What is project partnering?

Back 10

All members of the professional team become involved in the partnering process at the design stage (including contractors).

Ownership of risk is spread between the parties and a collaborative approach is encouraged to delivering the solution and overcoming problems.

Front 11

What is Strategic Partnering?

Back 11

A long-term relationship for a number of projects or works that will last over a long period. Framework agreements allow this and are then implemented on a project-by-project basis.
Framework Agreement – an agreement between contractors/ suppliers and the employer. It provides and agreement to fix the T’s & C’s for future purchases. Subject to inflation agreements.

Front 12

What are the key characteristics of partnering?

Back 12

More trust is involved between parties
Extra incentives exist (regular work); impacts on prices, conflict/ disputes etc
Administrative burden is increased and therefore restricts it to larger projects

Front 13

What are the benefits of partnering?

Back 13

The overall construction and design programme is shortened because there is a prior understanding of the Client and their requirements from previous projects (relationships are also built up between the project team);
Conflict is reduced;
Improved communication and mutual objectives;
Pooling of resources and ideas should result in innovative solutions.
Improved customer satisfaction
Better value for client
Recognition of protection of profit margin for contractors and suppliers
Environment that encourages innovation and technical development
Improved buildability – early involvement of contractors
Better predictability of time and cost
Stability and better confidence

Front 14

What contracts can be used for partnering?

Back 14

PPC 2000 – the key stakeholders of the project – client, contractor, consultants and key specialists – sign only one single, integrated contract
NEC 3 Option X12 – partnering contract BUT does not create a multi-party contract
JCT Framework Agreement – strategic partnering contract
NEC 3 Framework Contract – strategic partnering contract

Front 15

What are Key Performance Indicators?

Back 15

Enable all those involved in the construction supply chain to establish how they are performing on a project
Allow organisations to benchmark their performance in those areas that are critical to the success of projects
There are nationally recognised KPIs that you can measure and compare yourself against

Front 16

What is an Integrated Supply Chain?

Back 16

Has the objective of understanding and working wholly in the interests of the project client, rather than their immediate client

Front 17

What advantages can they bring?

Back 17

Reduced real costs, but maintained margins
Incentive to remove waste and inefficiencies
Greater certainty of outturn costs
Better underlying value delivered to the Client
More repeat business with key clients
Better confidence in longer term planning
Therefore the project client gets a more responsive industry delivering facilities that better meet user needs, are delivered to time and cost and with minimum defects
This creates higher customer satisfaction and an improved reputation for the industry