Building for the Future: A review of the PFI Education Pathfinder Project

Today, John Dowdall CB, the Comptroller & Auditor General for Northern Ireland, published his report into the delivery of the first education building projects to be delivered through the Private Finance Initiative (PFI). The six “Pathfinder” Projects, comprising Balmoral High School, St. Genevieve’s High School, Wellington College (all in Belfast), Drumglass High School (Dungannon), and the Belfast and North West Institutes of Further and Higher Education, were undertaken against a back drop of a substantial capital and maintenance backlog and limited budgets. They were used by the Department of Education (DE) and Department for Employment and Learning (DEL) to explore the extent to which PFI could be used to complement conventional procurement to improve the educational estate. The capital value of the projects was £67 million; their total cost, in net present value terms, is £113 million.

The key issues addressed in the report were:

Was the design, build and operation of PFI schools/colleges comparable or better than conventionally procured projects? (Part 3)

Overall, the Audit Office found that the quality of design and build is similar and in some respects better in Northern Ireland than in England and Wales. For example, Aquinas Grammar scored very highly on the quality of its architectural design, particularly the utilisation of space (paragraph 3.10).

However, the review highlighted a number of important lessons which, if applied to both PFI and traditional procurements, could have a positive impact on educational attainment and achievement of associated departmental targets. These include the importance of taking into account, at design stage, environmental factors such as the adequacy of ventilation, acoustics, the provision of adequate day lighting and energy efficiency (paragraphs 3.1, 3.2, 3.16 and 3.17).

The report highlights the need for greater teacher input to design and specification. According to the report “the effective delivery of the curriculum is paramount, particularly in the context of raising educational standards, and teachers are best placed to advise on how this can be achieved” (paragraph 3.4).

The report concludes that, while there is room for significant improvement, there is no reason why, with adequate maintenance and free from major defects, the schools and colleges visited should not last for 50-60 years and beyond (paragraphs 3.22 and 3.23). .

Were lessons learned from the Pathfinder projects? (Part 1)

The Audit Office found that both the Department of Education and the Department for Employment and Learning were proactive in identifying lessons to be learned. And changes to subsequent procurements demonstrate that steps have been taken to implement these. For example, the report records that the procurement of schools and colleges through PFI is being organised as clusters where applicable (paragraphs 1.2, 1.15 and 1.16).

Additional resources have also been provided with the result that project management and planning procedures, including the use of advisors, have been refined. At an operational level, architectural and project management expertise and skills gained in taking forward PFI projects are being harnessed and developed. This has helped reduce procurement times and driven down consultancy costs. Specialist agencies, such as Northern Ireland’s Strategic Investment Board, are also providing support with current and future procurements (paragraphs 1.17 to 1.21).

Has the delivery of the Pathfinder schools/colleges been equal to or better than conventionally procured projects? (Part 2)

The delivery of the Pathfinder projects compares favourably with those procured through conventional contracts (paragraphs 2.1 to 2.3). NIAO noted that, while the initial procurement phase for the Pathfinder projects took longer, the construction phase was shorter than in conventional projects. However, it found that there was limited innovation in the PFI projects. In the one case where innovation did emerge, for example the introduction of a loyalty scheme to encourage student uptake of school meals, it has resulted in clear educational and management benefits to the school involved, Drumglass High (paragraphs 2.10 to 2.14).

In addition, the Audit Office found that in some cases the scope of the projects changed and alternative solutions, such as providing new build instead of refurbishment of existing buildings, were proposed by the private sector. In the Audit Office’s opinion these changes had an effect on the quality of the projects as contractors sought to deliver more costly new build solutions at refurbishment prices (paragraphs 2.4 to 2.9).

The report records that, on the whole, demand (long-term enrolment) was properly assessed in the fourteen school projects examined. However, there is a significant disparity between planned and actual enrolments in two PFI schools. In one school, Balmoral, the current enrolment is approximately 58 per cent of that originally envisaged by DE and the Belfast Education and Library Board when the PFI contract was signed. In light of this and projected reductions in school enrolments, including a 30,000 reduction from current levels in secondary schools, the Audit Office recommends that a more strategic review of long-term enrolments, incorporating inter-Board analysis, should be used to inform decision making (paragraphs 2.15 to 2.28) .

Notes for editors

1. Since its launch in November 1992, the Private Finance Initiative (PFI) has become one of the main methods by which the public sector procures services from the private sector. Its underlying objective is to use the best of both public and private sector skills to improve public services. In particular, this means the use by the public sector of capital assets provided, owned and managed by the private sector.
2. The Department of Education (DE) is responsible for the central administration of primary and post-primary education in Northern Ireland. Prior to the reorganisation of Northern Ireland Departments in 1999, DE was also responsible for Further and Higher Education. Central responsibility for this sector now rests with the Department for Employment and Learning (DEL).