Treasury dismisses RIBA’s PFI design proposals

The Treasury’s head of PFI has dismissed the RIBA’s proposal to hire designers before contractors on PFI projects.

Richard Abadie told Building that the RIBA’s idea was “not possible” because “there would be too much focus on contractors and price”.

Abadie said the Treasury had yet to come up with a solution to how the PFI design processes should improve because “the advice and feedback from the private sector is too wide-ranging”.

He has been approached with ideas including using standard designs across schemes or focusing on design after the financial close of a deal.

Abadie feels the RIBA’s proposal views contractors solely as builders, and would therefore lead to too much emphasis being put on a cheap price rather than good, long-term service provision.

In response to Abadie’s comments, RIBA president Jack Pringle said that he stood by the proposal and would be putting his views to the Treasury at a meeting in the near future.

Pringle said: “He might be convinced when he hears the full story. The more people we talk to, the more people agree with us.”

He added: “At the moment you have three design teams buried deep inside three consortiums being run by some builders, and it just doesn’t work very well.”

The more people we talk to, the more people agree with us

Jack Pringle, RIBA president

The difference of opinion comes at a time when the Treasury is talking to the private sector, including the Major Contractors Group, to come up with ways to avoid design wastage. This currently arises as shortlisted consortiums all have to draw up detailed designs, which in turn drives up bid costs.

According to a recent survey by the MCG, bid costs on hospital schemes rose from £7.7m in 2003 to £11.5m this year – although costs fell as a proportion of overall project value from 8% to 6%.

Contractors, including those represented by the MCG, object to the idea of being brought on board after the design has largely been decided on, and want to retain control of design teams.

However, Pringle said: “If the government wants good design it should be listening to the RIBA.” He cited Northern Ireland as an example of a place where his preferred method had already worked well.

Meanwhile, addressing delegates at a PPP financing conference in London on Tuesday, Abadie said the government had “no intention” of reimbursing bid costs. He said: “Government policy on that is firm.”

He added that bid costs were high because PFI projects were “long-term, fixed contracts and we want to be sure we are getting the best services”.

He also said the Treasury planned to issue new guidance on PFI project insurance by the beginning of next month. One of the changes to policy will see price protection judged against UK market movements rather than the postcode location of a building.