Inquiry: Partnership on the precipice
Using private money to finance public healthcare buildings is nothing new in the UK, but as the concept is rolled out around the world, is it a sustainable model for achieving design quality and does it provide value for money? Here, four experts speculate on the future of Public Private Partnerships.
Dr Patricia Tzortzopoulos Fazenda, Academic fellow, Research Institute for the Built and Human Environment, University of Salford, UK
Public Private Partnerships (PPPs) have been widely used by the UK government to support planning, design, delivery and maintenance of healthcare infrastructure. PFI, the main way in which hospital building has been funded in the UK since 1997, is one of many PPP models, and was introduced to allow faster renewal of healthcare facilities than with conventional public funding.
It should also enable the best use of private sector expertise and skills for the benefit of the public sector, supporting design innovation and value for money. PFI is also thought to drive better lifecycle considerations by involving the private sector with the buildings for periods of 25-30 years.
Initial schemes suffered from imbalances in resources and skills between the public and private sectors, the costs of bidding were high, and there were difficulties in understanding risks. The planning and design processes have been scrutinised in terms of their ability to respond to users’ needs, due to the type and quality of the interaction between stakeholders imposed by contractual arrangements.
There have also been concerns about the potentially adverse consequences of architects having the contractors as their main client in terms of their ability to drive clinical innovation. Over time, high bidding costs have also reduced the number of bidders for schemes.
Learning from 10 years’ experience should result in lower costs through more effective processes, as well as innovative solutions, bringing the patient experience to the forefront. Such learning needs to be abstracted and transferred to other countries in which PPP models are being adopted.
Jonathan Wilson, Partner, David Morley Architects, UK
John Cooper’s and Ken Schwarz’s pieces in the April 2008 issue of World Health Design cover many aspects of the PPP/PFI debate in the UK. I think it’s worth adding that a key feature of the UK system is the requirement for bidders to produce a complete fixed-price design at preferred bidder stage.
Designed to drive risk out of the process, it comes at a huge cost, and makes a mockery of the culture of partnership that is supposed to underpin PFI. What is the sense in two, or in some cases three consortia working up detailed design proposals when all but one will be junked? It adds a further layer of cost to providers, already sweating under the yoke of a £5m-plus typical bid budget. The result will be either higher pricing, or the withdrawal of potential bidders altogether. Neither of these two consequences helps to achieve the original objectives of PFI – healthy competition
driving innovation and quality.
Underlying this is a profound disbelief in the potential of partnership. Perhaps it is here that the UK can learn from international experience. PFI is currently being rolled out in Portugal, Spain, Italy, Greece, Turkey, Canada and Australia: have any of these programmes been able to harness the idea of PPP without creating structures that embed mutual suspicion in the process from the outset? Can we refocus the enterprise on the principle of partnership – shared responsibilities – rather than divestment of risk? If so, creativity and excellence will be the victors rather than the victims they are today.
Peter Kemp, Director, Kemp Consulting, Australia
More than $10 billion-worth of major health projects are currently being procured in Australia. Well over half, including some of the largest, involve traditional procurement methods. PPP will only be adopted if it can be shown to add value.
It is argued that PPP combines the skills, ideas and experience of both the public and private sectors to develop innovative solutions, effectively manage risk and add value over the entire life cycle of infrastructure delivery.
Contractual targets ensure regular maintenance facility upgrades and effective delivery of operational services. Funding comes from operational budgets, not capital, enabling more projects to be procured in the short term and avoiding government borrowing. Historically, private operators have successfully provided public healthcare services, particularly through the not-for-profit sector such as the Catholic Church.
However, there have been some failures, with two public hospitals that had been constructed and operated by private for-profit operators reverting to public ownership, at considerable cost. Clinicians have forced a review of a recently awarded PPP hospital project claiming that the planning process was “fl awed” and that facilities did not meet current requirements.
More generally, Australia’s limited market size may reduce the number of bidders willing to risk the substantial costs involved. The process limits interaction with stakeholders, reducing opportunities for innovative solutions. Contractor-led design may result in loss of control over final outcomes and excessive costs to make changes. PPP is a viable approach, but not the only sustainable approach to healthcare procurement.
Tye Farrow, senior partner, Farrow Partnership Architects, Canada
Canada is in the early days of experimenting with PPP, and one of the greatest challenges it faces is the provision of strong guidance by an architect who can carry through the appropriate design by building on project knowledge and relationships.
In Ontario, for example, compliance architects are hired by an arms-length government agency to translate general programmatic and design information into output specifications; at that point, usually three DBFM (design, build, finance and maintain) teams prepare competing proposals, and the original architects remain only to ensure that the intent of the output specification documents is retained.
In the present model we often see construction and schedule innovation (short-term benefits) with little clinical design innovation (long-term benefi ts). A better model would see the architect hired by the owner to develop a schematic design that is bid on by DBFM consortia in terms of price and quality. Then, once the preferred consortium is selected, the client’s design team would be transferred to the consortium to complete the project. This model allows for clinical design innovation to be transferred, while reducing bidding time and costs.
Architects’ valuable contribution cannot be realised if they are asked to compete for commissions merely to produce output specification and act as compliance agents. Governments and citizens don’t knowingly aspire to mediocrity, but they need an architect advocate in an active role who can help them understand the consequences of their choices.