Your browser is no longer supported

For the best possible experience using our website we recommend you upgrade to the newest version of your browser.

Your browser appears to have cookies disabled. For the best experience of Construction News, please enable cookies in your browser.

Welcome to the Construction News site. As we have relaunched, you will have to sign in once now and agree for us to use cookies, so you won't need to log in each time you visit our site.
Learn more

PFI projects overcharged by contractors says watchdog

PFI bosses are being ripped off by contractors when they ask for changes on projects, a new report from an independent watchdog has said.

The report, from the National Audit Office, said that public authorities paid over £180 million for alterations to existing contracts, but were not given value for money, particularly on smaller changes.

For example, some authorities were charged up to £300 to fit an electrical plug socket, while others paid around £30.

In one case, a contractor put up a notice board for free, but in another, the authority was charged almost £150.

The report laid most of the blame not on contractors but on public sector management.

It said: “Larger changes were not always competitively tendered; the cost of making smaller changes was relatively high, varied widely across projects for similar work and took longer to process than in non-PFI projects; and almost half of the changes were completed later than the agreed timeframe.”

Edward Leigh MP, chairman of the committee, said: “Changes during a 25 to 30 year PFI contract are inevitable but they should not be costing the taxpayer an arm and a leg.

“Public sector contract managers must be a lot more street-wise. In the case of larger changes, they must insist on at least three competitive tenders.

“For all changes, they must be eagle-eyed that the contractor is not charging inappropriately high fees. The public sector has allowed itself to be taken for a ride.”

He said that public sector managers did not have the expertise to negotiate with their private sector counterparts.