Partnerships for Schools

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Partnerships for Schools
?

• INSIGHTS FOR NEW ZEALAND

Presentation to Education Forum Stephen
Selwood November 2006
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nzcid members
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Overview

• PFIs in context
• UK experience
• Partnerships for Schools
• New South Wales New Schools Project

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Leveraging private sector investment

• Public service delivery spectrum
• DC Design Construct DCM Design Construct
  Maintain
• BOOT Build Own Operate and Transfer. BOT
  Build Own Transfer
• BOO Build Own Operate DBFM Design Build Own
  Operate

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PFIs in action

• UK Government deal pipeline to 2010 by department
• 26 billion 10-15 of public capital
  expenditure
• Source HM Treasury 2006

• Roads
• Rail
• Power
• Water
• Waste
• Schools
• Hospitals
• Courts
• Defence
• Housing
• Street lighting

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UK - Why PPPs?

• Capacity
• Infrastructure deficit required 5 times increase
  in public sector spend
• Poor Public Sector Procurement
• Vast overrun Scottish Parliament
• Average cost public sector overrun 40
• Private Sector Discipline
• Due diligence
• Project management expertise

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Value for money

• User Satisfaction
• Source HM Treasury 2006

• 2003 HM Treasury Research
• 88 on time or early,
• no cost overruns on construction borne by the
  public sector.
• Previous NAO research
• 70 per cent of non-PFI projects late
• 73 per cent ran over budget

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The Government can borrow cheaper?

• Nationalise whole economy?
• Whole process is driven by value for money
• Private sector due diligence
• Project management skills
• 1 to 2 margin represents risk transfer good
  insurance
• No service no payment
• Hidden costs public sector procurement
• Educational costs of delay
• Project cost overruns
• Administration costs

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Mixed start refined to best practice

• 230 new and refurbished schools to date
• 104 schools in the pipeline to 2010
• Early experience was mixed (refer links below)
• Best practice now includes specialist support
  agencies
• Links
• Audit Scotland June 2002 Taking the Initiative
  Using PFI contracts to renew council schools
• http//www.audit-scotland.gov.uk/index/02ar03ac.as
  p
• UK Audit Commission Report Jan 2003http//www.aud
  it-commission.gov.uk/reports/AC-REPORT.asp?CatIDP
  RESS-CENTREProdIDD7701D4F-C130-4BA6-B10D-6D0644B
  DAA98fromPRESSAC-REPORT
• Institute for Public Policy Research March 2003
  Public service reform in the UK the PFI
  experiencehttp//www.ippr.org.uk/articles/index.a
  sp?id335
• Schools PFI Post Signature Review Report by
  Partnerships UK for Dept Education and Skills
  http//www.teachernet.gov.uk/_doc/9263/Post20Sign
  ature20Review20Phase20220Report20-20May2020
  05.pdf
• PFI Strengthening Long Term Partnershipshttp//ww
  w.hm-treasury.gov.uk/media/1E1/33/bud06_pfi_618.pd
  f
• NZ Audit Office Achieving Public Sector Outcomes
  with Private Sector Partners 2006http//www.oag.g
  ovt.nz/2006/public-private/default.htm

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Centres of Expertise

• Treasury
• Policy guidelines
• Dept PFI Units
• Policy support unit within each govt department
• Project Review Group
• Approves PFI credit funding to local authorities
  and Govt departments
• Partnerships UK
• Practical advice support linking the private
  and public sector
• 4Ps
• Established by Local Govt Assn training,
  procurement guidance, contract development
• Partnerships for Schools
• Set up jointly by the Department for Education
  and Skills Partnerships UK, with the
  participation of 4ps, to coordinate the national
  delivery of the programme.

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Best Practice

• Enforcement of the standard PFI contract and
  sector specific standard contracts
• Project Review Group (PRG) - a panel of PFI
  specialists drawn from across government review
  and approve projects
• Second stage review of projects prior to the
  appointment of a preferred bidder
• Partnerships for Schools (PfS) and Partnerships
  for Health (PfH)

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Comments from the field

• The behaviour patterns of the children have
  changed and the children love the buildings
  they respect them
• Educational standards are up, attendance is up,
  the attitude to school has changed, vandalism has
  gone and the children appreciate the building.
• In the past, the school hadnt spent much on
  building maintenance. Now school delegated
  building related money is not siphoned
  sideways. The services are better than before,
  particularly on buildings maintenance.
• Source
• Schools PFI Post Signature Review Report by
  Partnerships UK for Dept Education and Skills
  http//www.teachernet.gov.uk/_doc/9263/Post20Sign
  ature20Review20Phase20220Report20-20May2020
  05.pdf

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Partnerships for Schools in United Kingdom
Victoria Dock Primary
Debden Park High
Balmoral High
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Benefits of PFI

• Advance school development and renewal
• Improved educational outcomes
• Leverage private sector investment
• Innovation
• Due diligence
• Whole of life asset management
• Spread risk
• Third party revenue

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NSW New Schools

• Constructed sooner
• Opened early
• Added value
• Child care centre
• On site manager
• Teachers teach
• Better value for money vs. public sector
  comparator
• New school delivery advanced 3 years

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Conclusion

• PFI has potential to add significant value
• Innovation in design construction and management
• Due diligence
• Whole of life asset management
• Spread risk
• Third party revenue
• Potential to expand funding
• Advance school development renewal
• NZ able to learn from international best practice