Testing times for testers

The basic function of the independent tester in health sector PFI contracts is to certify when the buildings or facilities are practically complete so that services and payments to the private sector can commence. The independent tester, or certifier, may also be involved on the pre- and post-completion commissioning programme and may have other duties as well, depending on the precise role agreed between the parties.

The certifier fulfils an important function: as an independent, third party to certify that a crucial stage in the PFI project has been reached. Thus, the risk of incorrect or improper certification of practical completion lies neither with the public nor private sectors. The standard form health sector PFI contract anticipates that the independent tester will be appointed jointly by the NHS trust and project company, although it is not impossible for one party to appoint and for the tester to supply a collateral warranty to the other. Although joint appointments are common, there may be detailed discussion about who pays the certifier's fees or in what proportion.

The large, multidisciplinary firms are, not surprisingly, rapidly becoming experts in this role. One of the crucial requirements of acting as certifier is to have a sufficient level of insurance cover and such things do not come cheaply.

Although the use of a certifier is now becoming widespread beyond pure PFI contracts – for example, they are also required in the standard documentation used for Local Improvement Finance Trust projects – some thought needs to be given to the costs involved for the parties. To some degree, this will depend on the level of involvement of the independent tester. At the very least, they must be kept informed of progress on site, must attend all relevant tests and inspections and obviously will be involved in carrying out a thorough and detailed final inspection before practical completion. This is on top of issuing the appropriate certificates and snagging notices and possibly being involved to some degree in the pre- or post-completion commissioning process. The fees involved can be significant, particularly if the PFI project itself is of a relatively low capital value – say, less than £10m.

Although it is still early days for the independent tester, a number of issues are already apparent. It is not unusual for the firm that is named certifier to be appointed as technical due diligence adviser for the funders. This has obvious time and cost advantages. There may, however, be potential conflicts of interest in the future between the advice that the technical adviser may give to the funders and the position of the certifier when it comes to saying whether or not the building is practically complete. Careful demarcation of roles within the firm itself would have to be maintained. Practically speaking, on site this distinction will have to be very carefully observed so as to avoid confusion.

How far should the funders be involved in the certifier's contract, itself? Should the funders be a party to the contract? This also needs careful consideration. Funders should be adequately protected through other documents forming part of the suite of contractual arrangements in any standard PFI contract. In addition, it complicates the duties that the independent tester owes to the parties if funders are involved. And at a practical level, it slows down the operation of the contract if the certifier has to include the funders as well as the trust and project company in its decision-making.

On a more general note, the level of the independent tester's involvement in the contract itself needs to be the subject of careful consideration. The standard PFI health sector project agreement suggests that the independent tester might also act as an expert or adjudicator in respect of disputes that arise. But this will lead to a conflict if these disputes are relevant to the carrying out of the certifier's duties. As suggested above, the certifier may well be involved in pre- and post-commissioning procedures as well as its central duty of certifying practical completion. On complex building projects, the certifier's role will become very significant indeed.

Now is the time to ensure that the definition of the independent tester's role is clear, so as to limit as far as possible the inevitable complications that seem to arise in all PFI projects.