Savings plan

projects portrait1The Government has recently relaunched its initiative to make savings in existing PFI and PPP contracts. Mark Gumbley looks at developments.

Last summer, the Government launched an initiative aimed at saving money across existing PFI and PPP project by the introduction of a voluntary code of conduct between the contracting parties.

The code was re-launched recently by HM Treasury, with the aim of saving £1,500m across 495 existing projects. That amounts to an average of £3m per project!

The voluntary code of conduct was originally launched in July 2013 with the aim of making savings in public infrastructure projects and to encourage better working between the public and private sectors in public projects.

The code, which takes the form of a best practice guide, sets out how public bodies and their private sector partners (contractors, services providers, investors, etc) will work together to make savings in operational PFI/PPP contracts.

The code sets out eight key commitments for both public sector bodies and private sector parties.

Commitments on the part of both parties include:

  • providing, or agreeing on, a single local point of contact for each project who is to be responsible for co-ordinating the activities and collating the views of that party on the project;
  • engaging constructively and in a timely manner with the other party on specific PFI/PPP contracts; and
  • meeting with the other party on a regular basis to discuss what savings and operational efficiencies have been made and to identify opportunities for improvement.

The code also contains new guidelines on transparency, requiring private sector parties to provide public sector bodies with "clear and transparent information and evidence regarding a project's consumables, energy and utility usage and unit costs" and to provide "appropriate assistance to encourage building users to reduce consumption and waste."

In re-launching the code, with new ambition, HM Treasury highlights that in pilot projects, significant savings have been made in three distinct areas. These are:

  • energy saving schemes and insurance cost sharing with other authorities;
  • subletting / moth balling unused or underutilised space;
  • reviewing and renegotiating soft services.

Our own experience has shown that for our clients, the first and last of these are certainly areas where savings can be made, either through new carbon savings projects or by negotiating on the Services Specification to update and refresh the Services to more accurately reflect today's needs, and the needs for the coming years, rather than the needs that were envisaged when the PFI project was signed.

The code is available free of charge on the gov.uk website, which also includes a link to a list of organisations who have signed up to the code. The list is updated every two weeks and, so far, over 110 organisations have signed up to the code.

The code will apply to all operational PFI and PPP contracts where the parties to the relevant contract have signed up to the code. It should, however, be noted that the code is not intended to be legally binding.

Mark Gumbley is an Associate at DAC Beachcroft. He can be contacted on 0121 698 5354 or This email address is being protected from spambots. You need JavaScript enabled to view it..