Saturday, January 23, 2016

Parkinson's Law meets PPPs via Sir Humphrey

Then UK Treasury has been under years of pressure to show that Public Private Partnerships (PPP) and the associated Private Finance Initiative (PFI) actually save any more relative to plain old public delivery. That same PPP mania spread to to the Republic of Ireland and left some of the country's best farmland paved over for underused toll motorways.

Anyway, as part of the general effort under George Osborne to generate all sorts of miraculous savings that will pay for new infrastructure while cutting taxes, there's an updated "code of conduct" for existing contracts on how savings can be generated. Except that it's not a guide to generating any actual savings -- it's entirely a process for discussing how it might be done. Example, for the private operator side of the contract --

Ensure constructive engagement with their PFI/PPP partners, including the public sector, through the reasonable interpretation, taking account of professional responsibilities and obligations, of all existing rights and obligations set out in the project documents so as to facilitate a clear understanding by the public sector and its stakeholders of the costs and benefits of efficiency and savings opportunities.

The entire document (a mercifully short 3 pages) is the same Yes, Minister blather just updated to the mid-2010s. Though as usual for Yes, Minister, there's a sentence in there that tells the truth for anyone who knows where to look:

It is recognised that due to the multi party nature of PFI/PPP projects it may not be possible for individual signatories to deliver efficiencies and savings on behalf of their partners. The commitments set out below should therefore be interpreted and applied by each party in the context of the involvement and role of that party in each transaction.

In other words, since there are so many players in these projects, it's difficult to generate cost savings because everyone can define their own area so narrowly. If only there was a single operator of the entire project who could take the national perspective!

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