PFI is back in the picture and big changes are happrning among the big consultants
PFI is firmly back on the government’s agenda. Over the past 18 months it’s been given the cold shoulder. You almost daren’t mention its name at parties for fear of being cast out. But now it’s back in the fold for one simple reason - it’s very much needed. So how do you make it relevant again? And, more importantly, politically acceptable? After all, the government needs private investment to bring about growth in the absence of much cash in the public coffers - so the key players are now eagerly waiting to see just how it is planning to reinvent PFI.
Nobody can accuse the coalition of ignoring construction. The familiar lobby groups have been wrong-footed by the unveiling of a definitive construction strategy accompanied by procurement reform, a transparent pipeline of works and Whitehall’s enthusiasm to embrace technology. And just this week, the Department for Business, Innovation and Skills has released its low carbon construction plan, backed by the prime minister, to tackle how to green existing buildings and new shiny ones.
So the government is thinking and saying the right things, but where’s the money coming from? Well, construction minister Mark Prisk told the UK Contractors Group annual lunch this week that PFI could reappear on the table, albeit with a warning that it will have to be skilfully scrutinised and made more transparent than ever before and definitely more so than those ever so wasteful years under Labour. You catch his drift?
Meanwhile, news is beginning to leak out that 100 new education projects may proceed down the PFI route via the Treasury and that mini-PFIs, in all but name, have been secretly bubbling away across other departments, in particular health, all this time. Surely you’re not shocked? Clearly there were political reasons for turning against PFI after the coalition’s election victory, but the consequences have been huge. It prompts the question: was all the heartache, business interruption and the many project casualties absolutely necessary? After all, we appear to have gone full circle, embracing this procurement method all over again.
The aecom effect
Whatever your view of Aecom’s takeover of Davis Langdon, the deal now means there’s a global player in town with expertise, a healthy balance sheet and access to international clients. In response, other larger firms are being forced to make tough decisions to remain at the top. Take EC Harris, for example: the industry is rife with rumour it is in talks to be sold or enter into a merger. Its canny chief executive, Philip Youell, accepts that while the aim is for the group to float, its competitive position is such that has to talk to potential suitors. US giant Hill International, meanwhile, has made no secret of its desire to snap up a firm of EC Harris’ ilk. And there’s the pile of cash the ambitious management team at Capita Symonds would like to throw at a deal. Not to mention the type of convergence of activity seen among consultancies practicing in the property, legal and engineering sectors. It’s a dynamic time, but with such volatility, expect the unexpected.
Tom Broughton is Building’s brand director