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Wednesday, June 17, 2009

Who is who in PPP; Sir Malcolm Bates

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Sir Malcolm Bates has died less than a week ago, on second week of June 2009. He has been icon of PFI development in the UK recommending establishment of a PFI Taskforce, which latter has evolved in to PUK, making several key recommendations in his two reviews of PFI for UK Treasury. His two reports become cornerstones of PFI development in UK and further behind the borders of UK.

Sir Malcolm Bates had been a non-executive director of London Transport, a non-executive director of BICC (the holding company for Balfour Beatty). Before that he was deputy managing director at GEC, now known as Alstom. Sir Malcol Bates served as Chairman of HHG PLC (which includes Pearl Assurance plc, National Provident Life Limited and NPI Limited). He also helped to make the General Electric Company (GEC) one of Britain's most successful and most profitable industrial companies.

This is a quote from UK Treasury report on PPP (2000) documenting impact of Bates Report of 1997

"In addition, the Government asked Sir Malcolm Bates, Chairman of the Pearl Group, to carry out a review of the PFI. His main recommendations in June 1997 were:

to create a Taskforce within the Treasury. The first appointments to the Taskforce were made in September 1997. Members with project management and financial skills and experience were recruited from the private sector on fixed term contracts. The Taskforce was charged with supporting departments to deliver good quality transactions, in particular by helping them test significant projects before procurement commenced. This was to include: checking that they were affordable for the public sector; that the output requirements were appropriately specified; that risk was allocated to the party best able to manage it; and that funding was likely to be forthcoming from the private sector. The Taskforce was also to advise on draft contractual terms and conditions, project resources and on whether proposed timetables were realistic, as well as then monitoring the progress of projects.

to establish standard contract conditions. It was recognised that standardisation of tender documents would sharply reduce legal fees and other costs, and the time required for negotiation with tenderers and financiers. The Taskforce standard terms were published in July 1999;

to prioritise projects better. Bates proposed that effort in the Treasury and elsewhere in the public sector should be focused on establishing quality transactions which would then become the basis for other deals. For local government projects, a project review group was set up to prioritise projects and agree to them proceeding to procurement.

to learn lessons. Although it was accepted that public sector experience of PFI was growing, those with that experience needed to be encouraged to make available their expertise for the benefit of future projects.”

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