SOUTH NORFOLK MP Richard Bacon has called for public sector clients in PFI projects to get access to expert advice early on, so that project teams can get a more realistic idea of the likely costs before the project goes out to tender.
Mr Bacon was speaking after Mr Jack Pringle, President of the Royal Institute of
Architects (RIBA), was invited to give evidence at the Commons public accounts
committee hearing on the collapse of the Paddington Health Campus scheme.
You can read the uncorrected transcript of Mr Bacon’s questions to Mr Pringle
here.
Q39 Mr Bacon:
Mr Pringle, as the President of
the Royal Institute of British Architects, we can safely assume you
study projects and project failure probably more closely than most.
This particular project seems to have such a large number of risks
which were basically ignored. What do you think could have been done
to have minimised the risk?
Mr
Pringle: A number of things could have been done and a lot of them
are obviously identified in the report, such as the client structure
and the management structure. I should not like to focus on those. I
should like to look at some of the areas that we have been looking
at more generally to do with PFI. Although it is said in the report
that as this project did not reach PFI bidding stage there are no
implications for PFI, that is not actually the case, because the
run-up to the project, the building of the brief et cetera and the
outline business case is predicated on a PFI model. So you have to
look at it in the round and one of the things that we are observing
generally and which this might be an example of is one of the
failures or the weaknesses of PFI, though there are plenty of
strengths of PFI and we are not knocking the system entirely. You
have a system in PFI where it is assumed that virtually all of the
design is going to be done by the PFI consortia and so design is
pretty much abstracted from the client side of the equation. We are
seeing that briefs which need to be tested by looking at early
designs, whether this will work for us in this way, whether there is
not a better way of doing it, briefs which could be tested by
affordability if an outline design were done at an earlier stage,
briefs which could be tested for their suitability to a site, even
getting an outline planning permission, is not being done in PFI
projects to their detriment.
Q40 Mr
Bacon: Are you
basically saying there is something in the nature of the process
itself that actually inhibits the preparation of a robust outline
business case?
Mr
Pringle: Yes. At the moment the PFI mechanism does inhibit initial
design exemplars being done to the site and we believe that these
could be done to the benefit of that. Indeed the Treasury now
believes that this is the case and the latest advice from the
Treasury is that more upfront designs should be done in order to
develop the briefs, test the briefs and to minimise the risks;
minimise the risk to the whole project, minimise the risk to the
bidding consortia.
Q41 Mr
Bacon: There is
something inherently odd, is there not, in going off to a potential
provider and asking them to build a hospital without yourself having
a fairly good idea, at least in outline, of what it is that you are
wanting back in terms of what it does. Not necessarily what it looks
like in terms of the material used to construct the cladding on the
outside but what it looks like in terms of roughly the space it
occupies, roughly its size and to a fair degree of specificity what
it is you want; effectively a design brief.
Mr
Pringle: That is absolutely right. The more design that can be done
up front, the better prepared the project is to go to the market as
well as also dialling out some of those risks that this project
seems to have tripped up on.
Q42 Mr
Bacon: I should like to
ask you about costs, because the putative costs obviously went up
significantly on this project and we have seen that on many
projects; famously on the Scottish Parliament, on Portcullis House
across the road and on a number of other projects, some of which
were notorious and dragged on for many years. In the case of the
Scottish Parliament, I always wondered, having looked at lots of
other projects, how anyone thought that £40 million would be an
adequate sum and £400 million sounded roughly more in the ballpark
of what it might end up being, which of course it did. Is it the
case that we are actually looking at spiralling costs or is it that
we are looking at inadequate information about what the real true
costs are?
Mr
Pringle: It would be wise not to get into the Scottish Parliament.
Q43 Mr
Bacon: No; no.
Especially with Mr Davidson here. The point is, is it simply that
they really spiralled, is it that the costs really shot up through
the roof or is it really that a better and fuller understanding of
what the costs, and those costs always had been as such, actually
were?
Mr
Pringle: It is our belief that some of those initial bids were
completely unrealistic, as the costs revealed themselves at a later
stage when they were properly analysed. That is not to say that some
costs do not get out of control as additional requirements are put
into projects and there are then the issues of change control. If
you stuck to the single point, testing the consequences of the
brief, in other words what any particular client in the public
sector wants from the buildings, can be most effectively done when
an outline design is done at an early stage. You can actually see
the consequences, the physical and the spatial consequences, how it
is going to have to fit on a site, whether there are transportation
issues et cetera, et cetera. Those can then be costed in the most
direct way and it is not being done in an abstract way and a cost
per bed way. The case, in terms of controlling costs, is well made
for an outline design at an early stage.
Q44 Mr
Bacon: I visited the
Belfast City Cancer Hospital where what they call the exemplar
approach was adopted and the early project design phase from the
client side was led by an architect working with a range of
different professionals who knew before they went out to bid that it
would cost £48.2 million and that is more or less exactly what it
cost. Is it actually the case that you can take an example like that
and read it across to any kind of project or were there things which
were special about Belfast that made it possible there, but which
would not be possible elsewhere?
Mr
Pringle: The Belfast example you give is a good pilot of the
proposals that we are putting forward for PFI generally and yes, you
can pretty much read it across. It is a good example of the sort of
certainty that you can get in almost any type of project if you do
that much more work up front.
Q45 Mr
Bacon: In your note to
the Committee you talk about better resourced clients and one of the
points you make, and I quote, is "Too often, at the moment, the
public sector gatekeepers are inexperienced and under-supported in
terms of professional, expert advice". Would not somebody in
response to that say "Well that is the whole point of having a bid
process constructed around PFI, because you have professional expert
advice available and it is available to the PFI bidders"?
Mr
Pringle: No, it does not quite work like that. They are indeed
expert; in fact there is an inequality of expertise on the client
and the PFI consortia bidders' side. Public sector clients are
generally inexperienced and that is not to say they are
unintelligent, it is just that there has not been a lot of public
sector work going around for the last 30 years and now there is a
huge amount of it suddenly on the scene. What we regularly find is
that good clients, well-structured, regularly get good projects and
public sector clients who are suddenly thrown into building projects
which they are not used to, often really struggle to manage the
complexities of these huge new capital projects which they are
landed with. That is another good reason for getting a really
comprehensive professional team on the client side to advise them on
their side of the consortium, PFI, contract on how they should be
proceeding, how they should be structuring their ideas, how they
should be structuring their approach to the whole thing. Their
inexperience needs support. One of the things we have done at the
RIBA is set a complete group of people up to do exactly that, to
give help, not to go in and be designers, just to help clients think
their way through these sorts of problems.
Q46 Mr
Bacon: We have seen in
the Ministry of Defence that smart acquisition at least aims to
spend more in the assessment phase early on whereby, effectively
before they get a long way into the manufacturing or the design
phase, they have a better idea of where it is they are going. Is
there an analogy that can apply or a comparison that can usefully be
applied between smart acquisition for weapon systems in the MoD and
smart procurement generally?
Mr
Pringle: It is the same thing. It does not matter what sort of
project you are doing: the better your preparation before you enter
into the real thick of the project, the better your outcome is going
to be. Again, that is what we are recommending.
Q47 Mr
Bacon: One thing I
really do not understand about this is the land issue. Common sense
would suggest that something as central as the land issue must be
sorted out very early on. How do you think that something so central
as land in this could only be identified so late in the day?
Mr
Pringle: Two reasons have brought that about from my reading of the
papers. One is the change in the brief requirements with the
alteration to the brief both from consumerism, which ups the space
standards per bed, and other changes to the brief. A bigger hospital
was required and then, as I understand it, the understanding of the
local authority's height requirements capped the limits of the
available site to contain a particular project and so they
essentially ran out of road, ran out of land.
Q48 Mr
Bacon: Do you think, if
an approach such as you are recommending had been adopted, that this
land issue could have been either solved or flagged up for the
significant issue that it was to a greater extent earlier on?
Mr
Pringle: Well I would like to think so, because what we are
advocating is better scrutiny of the brief, better development of
the brief, better signing off of the brief and of course if you are
doing early design work, you can very naturally test the capacity of
the land and you can talk with the local authority and you can even
obtain your outline planning permission at that stage.
Chairman:
Thank you Mr Pringle. It is very helpful to have an independent
voice.
SPEECHES: