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Editors Comment: If developers can sell on PFI contracts, who gains?

I have now heard of two developers which wish to sell on the maintenance side of their PFI work.
Editors Comment: If developers can sell on PFI contracts, who gains?
Obviously, these companies realise there is a residual value to the maintenance contract, but it is, I feel, against the spirit of the PFI operation.

With the integrated system where the developer knows it has to deal with the hospital, school, public building, then it is in its own interest to install quality equipment knowing that it will still be working down the line.

There is a disincentive to down-spec equipment because of price. Engineers know that somewhere down the time-line, cheaper equipment will break down sooner or not deliver the energy savings promised.

But if a developer knows it will sell on its maintenance work to another company, then history and practice almost dictates that to gain maximum profit, cheaper equipment will invariably be installed, with the FM company which buys the contract picking up the bill later.

But if developers are allowed to sell on a part of the contract, then this will inevitably be the case.

All big companies exist from one annual result to another. It is the way of the UK world.

Only the Japanese seem inclined to mortgage this year and the next five for better results from year 15 through to 25.

Our large British companies as a rule (I am not talking about the HVACR industry in its many guises which seems to be attempting to beat this trend ) seem to stumble from year to year while their chairman and directors concentrate on their own renumerations (pay to you and me) and hope rather than expect the firm will do well.

But while this happens we are locked into this annual cycle. Hence the need to sell on the 25 year maintenance as it makes the annual report look good for shareholders – this year.

From the public’s point of view, government has already mortgaged our future.

As a taxpayer I consider PFI (and its other guises) a confidence trick perpetrated on you and me to keep this government afloat. As a worker in the construction industry, I might see it differently.

We will be paying for today’s new hospitals and schools long after Tony Blair and Gordon Brown have gone to the Lords and possibly even after the duo are dead.

Perhaps, more worrying, is the fact that these hospitals and schools could have long outlived their usefulness before we have finished paying for them.

But, having paid, we deserve the best. This is what PFI, partnering and all the rest are about.

The best will not, in this climate, be delivered if developers are allowed to sell on PFI contracts.

Paul Braithwaite, Editor
1 October 2006

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