Tuesday, February 4, 2020

Construction law Essay Example | Topics and Well Written Essays - 1500 words

Construction law - Essay Example 2. This paper will look into the value for money delivered by PFI methods in order to determine if PFI is preferable in comparison to public funding. Synopsis of PFI 3. The PFI method relies on delivering infrastructure and / or services for the general public through the utilisation of private funds and resources. The provision is kept in line using public sector specifications so the public sector can be seen as exerting sizable influence on the overall process. Typically the private sector’s involvement is largely directed to financial support for public projects as per the PFI approach. However, the private sector can also be involved in the operation and maintenance of services that might have been built using PFI or other previous methods3. The basic contention behind PFI is to allow the private sector greater involvement in public spending projects so that the burden on the public sector is eased. Moreover, the involvement of the private sector ensures that public secto r projects are competitive enough while delivering optimal value for money goods and services. Advantages and Disadvantages of PFI Successful PFI Implementations 4. Advocates of PFI argue that projects implemented under the PFI arrangement show greater promise than conventionally public sector funded projects. Research indicates that conventional public infrastructure provision arrangements provided on time and on budget projects around 30% and 27% respectively. In contrast, PFI arrangements provided an increase of 76% and 78% for on time and on budget project handovers4. These statistics clearly highlight that PFI has the capacity to deliver better both in terms of budget variances and schedule variances. The inherent nature of the private sector makes it competitive since the public sector has little or no other competition for infrastructure and service delivery. It is often common that the public sector tends to see negative budget and negative schedule variances on projects sin ce no other benchmarks are possible. However, the private sector thrives on competition and escalating negative budgetary and negative scheduling variances indicate a failing business strategy. The need to remain relevant to the market ensures that private businesses are more efficient in terms of resource and time utilisation when compared to the public sector. 5. Similarly, other research into PFI arrangements showed that optimised deals were attained in every case studied. Moreover, research findings indicated that value for money in PFI projects was achieved 80% of the time5. Another notable aspect of PFI initiatives is the decrease in costs since private financers are looking for ways to reduce costs. Research indicates that public infrastructure provision becomes between 7% and 23% cheaper when PFI methods are applied6. Other research placed cost reduction at 11%7. It could be reasoned that cheaper infrastructure and service provision would lead to a lower quality. However, it must be noted from the research above that value for money is achieved in 80% of PFI projects which tends to dispel this method of reasoning. 6. Critics of the PFI approach contend that private involvement tends to make infrastructure and service provision too competitive such that value addition is minimised. However, such claims hold little ground in light

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