Belfast roads improvement PFI deal praised by audit office

12 November 2009

The procurement of a major Northern Ireland highways private finance initiative (PFI) contract compares ‘favourably’ with similar deals elsewhere in the UK, according to the Northern Ireland Audit Office (NIAO).

A NIAO report commended the Department for Regional Development on the procurement of the M1/Westlink and M2 improvement schemes in the Belfast area, which were delivered through a PFI using a design, build, finance and operate (DBFO) contract.

The Department applied ‘elements of good project management’, putting in place sufficient governance structures and incorporating lessons learned by the Highways Agency in managing a number of DBFO projects in England, the report found.

‘The receipt of four bids created an environment which made it easier for Roads Service and its advisors to challenge the bidders,’ auditor general, Kieran Donnelly, said. ‘It also created a sufficient level of competitive tension, particularly between the two lowest bidders, which helped to drive down construction and operational costs and help achieve better value for money.’

The report said the winning bid of £186m for the so-called DBFO package 1 was ‘significantly’ less than the projected cost of £250m for delivering the schemes through a conventional procurement route.

However, it said the Roads Service did not complete an accurate calculation of the potential economic benefits of the schemes when assessing the various procurement options. The Roads Service chose the PFI route because it believed certain economic benefits would arise which could not be tapped through traditional procurement. But some of those benefits could equally have arisen through traditional procurement, according to Mr Donnelly.

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