In my first job in the early 1980’s I worked in an office with an architect who had spent 15 years working in another practice on the Ninewells Hospital project in Dundee. Can you imagine it? 15 years on a single project! Ninewells was a famous example of one of those government funded projects that overran in both time and budget. The site was purchased in 1955 and the hospital eventually opened in 1974 with some sections not finished until 1975.
After experiences like that it was no wonder the government was attracted by the private finance initiative (PFI) approach to the procurement of public infrastructure projects. Complex and voluminous contracts dreamt up by lawyers and financiers, allowed private consortia to design, build, operate and maintain public facilities such as hospitals and the government could keep the capital costs ‘off balance sheet’. After dumping all the risk onto the private sector it should have come as no surprise that the private sector priced in this risk and healthy even excessive profits were made. The PFI has been responsible for producing some of the ugliest and most cheaply constructed buildings in modern times. The fees paid for architectural design were very low and, as the saying goes, ‘if you pay peanuts you get monkeys’.
The PFI was modified and improved in terms of design quality, risk transfer and more transparent accounting but this happened in parallel with the whole process becoming discredited and seen as poor value for money. So the PFI gravy train came to a halt.
But wait – the gravy train could be back on track (albeit heading in the opposite direction) as the shadow chancellor John McDonnell announced at the Labour Party conference last week ‘We have already pledged there will be no new PFI deals signed by us in government. But we will go further. It is what you have been calling for. We will bring existing PFI contracts back in-house’. So the lawyers and financiers will be back in business – this time preparing complex and voluminous contracts to unwind the existing ones that they created.
Why does designing and constructing buildings have to be so expensive and complicated?