On Aug 25, 3:42*pm, Bearded wrote:
Either
their programming / project planning of the work is inadequate
Or
performance against plan is inadequate

But I don't suppose LUL [or is the client TfL / the Mayor / whoever]
will be able to claim, as in a conventional contract.

Yes, of course they will: there are heavy contractual, financial
penalties for failing to provide the agreed level of service
("abatements"), which Tubelines will be paying to TfL.

Didn't everyone here conclude that the PFI deals were essentially
"heads I win, tails you lose" for the contractor - until of course
Metronet decided that the best way to manage financial and delivery
risk was to sub all the work to its own shareholders, who thought this
meant they would escape VFM scrutiny and be able to book handsome
profits upstream rather than in the JV.

Eh?

A 'classic' PFI deal is absolutely *not* "heads I win, tails you lose"
for the contractor. Anyone who says they are reads too much Private
Eye, Socialist Worker and/or Cameroonian spin. The risk of project
overrun, which is very real in most projects, is taken by the
contractor not the public sector. If the contractor does a good job,
they make a decent profit; if they do a bad job, they make a loss.

Metronet wasn't a classic PFI deal: rather, it was structured in a way
which made VFM-scrutiny-escaping and upstream-profit-booking possible[*], because the company was highly leveraged with taxpayer-guaranteed
money but not forced to obey public sector tendering rules in dealings
with its suppliers [**].

Of couse Tube Lines "tried hard" not to gloat at the time of the M'net
collapse, claiming that their tendering / programming / management
models and processes were all superior.

Obviously not superior enough to ensure on time delivery - and will we
ever learn if the job comes in on price?

If they deliver by the end of 2009, or even early 2010, then they'll
still delivered a massive upgrade project only slightly late. This is
an improvement on How These Things Usually Happen. If the job doesn't
come in on budget, then that's the shareholders' problem and not the
taxpayer's. This is an improvement on How These Things Usually
Happen.
[*] I'm assuming this was done by the shareholders not trying very
hard to enforce controls and tendering process at Metronet, rather
than anything more explicit or intentional, purely on the grounds that
most corporate execs don't like the concept of jail

[**] I support the concept of PFI in general. The Metronet setup, with
a private company run by some builders given a taxpayer-backed loan to
throw at said builders, with the value of the builders' shareholding
in the private company being worth far less than the value of
contracts they awarded themselves, sounds like something dreamed up by
Arthur Scargill and Bob Crow to discredit all private involvement in
public sector projects forever.

--
John Band
john at johnband dot org
www.johnband.org