PFI is being undermined by delays in bringing valuable deals to financial close. Perhaps the answer is to bring in an impartial project manager to resolve disputes
"Yes, we have heard that financial close has been set for the end of this month, but realistically it's not going to happen for another three." This and so many other comments in the same vein are continually bouncing around PFI deals. They all point to one thing - a lack of effective project management.
On many contracts there is uncertainty about when it is going to close and exactly what steps are required and by whom to achieve closure. Some deals can drag on for years. Momentum is lost and issues are forgotten. Dates that are set for financial close are often optimistic, prompting people to speculate on what the "real date" is. This real date speculation leads to uncertainty and slippage, which means additional costs.
I believe there is a need for a detailed programme to be prepared. This ought to include dates for issuing drafts of project documents and meetings to discuss them. The responsibility for such programming usually falls on the shoulders of the project company. But in many cases it does not have the appropriate project management skills.
Decisions reached on deadlines are too taken on an ad hoc basis, without looking at where the participants, collectively, want the deal to go. So what's the solution?
I think there is a need for an independent project manager to be appointed to work with all the parties in generating a transparent programme. This needs to show who is responsible for each of the tasks that need to be completed to get the deal closed by mutually acceptable deadline, and for as little cost as possible. Obviously, it will require money to appoint such a project manager, but in the long run the decision should save quantifiable amounts of time and cash.
Another key role for the independent project manager would be to act as a repository for key documents so that the participants can have "real time" access to redrafted versions of documents and other papers as soon as they are produced. The best way to achieve this would be to create and post documents onto an extranet or dedicated website with relevant participants being allocated appropriate access rights.
Dates that are set for financial close are often totally unrealistic, prompting people to speculate on the ‘real date’
Extranets have been used on several PFI deals and I would expect this trend to continue, with the warning that they need to be properly controlled so they reduce rather than add to the costs.
It would seem prudent for the public authority and project company to appoint the project manager jointly. The project manager should meet with all parties as early as possible to discuss the timing of the deal. Just as in any construction programme, items on the critical path need to be identified and there needs to be enough flexibility to adjust the programme if delay is unavoidable.
The independent project manager, which is without a vested interest in the deal, ought to take over the role of ensuring compliance with the programme. Rather than the parties blaming each other for delays it would be better to adopt a process managed by an independent and impartial third party. It would be able to show where the delay was, who was responsible for it, and suggest, or even direct, ways to get around it. Regular progress meetings between the project manager and the principals would be held to discuss the programme towards financial close with all participants present.
In addition to such regular overview meetings, the project manager needs to ensure that meetings on key issues, such as a redraft of the project agreement, occur when they are scheduled to take place. The project manager also needs to ensure that there are clear objectives and agendas for such meetings. Often parties turn up to meetings, discuss points for hours on end and then leave without any resolution. Sometimes, unnecessary parties are invited to meetings while on other occasions, key participants are left out.
People in the construction industry are fed up with PFI deals taking so long to reach financial close. Appointing an independent project manager to run a PFI deal using project management and document management skills may just be the way to streamline the process.
Peter Dzakula is an associate in the projects group at Kirkpatrick & Lockhart Nicholson Graham. Email him at firstname.lastname@example.org