Treasury imposes L20m threshold for PFI schemes

Treasury imposes L20m threshold for PFI schemes

THE TREASURY has placed a minimum threshold of L20m for all PFI in a major policy document recently published, and has scrapped PFI in IT projects.

‘PFI: meeting the investment challenge’ says that there should be “a general presumption” against using PFI below the L20m mark, as it has not produced value for money at this level. The document states that PFI is “unlikely to be the best procurement option for projects with a small capital value.”

This move has been welcomed by the Royal Institute of British Architects which said that there will be increased opportunity for involvement for small to medium sized practices as a result of the change. Simon Foxell, RIBA vice chairman of policy and strategy told HD: “We are pleased that the government is looking at other forms of procurement. There is a range of smaller architects and construction firms who can’t afford the expense of the PFI bidding process.”

However, Foxell added that RIBA remained concerned that local authorities may try to bundle projects together to get over the L20m mark.

Other reforms in the document include scrapping the use of PFI in future IT projects following research that suggested a move back to public sector procurement “brought operational benefits by allowing for better risk allocation, better response to changing business requirements, and more effective incentive structures.”

Copyright Wilmington Publishing Ltd. Jul/Aug 2003

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