Contractor returns thousands to client for overcharging, other firms may be hit
A Balfour Beatty-HSBC consortium has been forced to repay thousands of pounds in fees on a £70m Blackburn Hospital PFI after it was accused of overcharging.
The £17,000 repayment, the first of its kind in the sector, comes in the wake of a National Audit Office (NAO) report, which found dramatic variations in the amounts contractors have been charging for minor maintenance work.
ºÚ¶´ÉçÇø magazine said the unprecedented repayment could trigger a spate of repayments for work on PFI schemes, with lawyers warning that existing contracts may be revised to scale back lucrative rewards for contractors.
The NAO report estimated that £180m was paid out by public authorities to PFI contractors for changes in 2006. It found that the cost to supply and fit an electrical socket ranged from £30.81 to £302.30, while the cost of fitting a lock could cost anything from £15.09 to £486.54.
Construction News said the blame for overpayment lay with public sector clients' 'lack of negotiating skills', quoting Edward Leigh MP, chairman of the NAO committee as saying: 'Public sector contract managers must be more streetwise...for all changes, they must be eagle-eyed that the contractor is not charging high fees. The public sector has allowed itself to be taken for a ride.'
Contract Journal quoted two PFI firms who blamed the charging on contract bureaucracy. 'You have to go through about 10 processes to change a bloody lightbulb on some contracts,' said one director. Another commented: 'Why can't our school heads be given a pot of money for small repairs so they can call us in and pay us directly. Too easy. Instead, there's all sorts of expensive, time consuming, box-ticking processes that have to be followed before the work can be done.'
But there was positive news in the report too. Around 90% of contract managers from the public sector said they were satisfied or very satisfied with the quality of work done when changes were requested. And although the timescales for small jobs were longer than conventionally outsourced work, those for larger works compared well.
The report recommended that public sector contract management teams should be better resourced to manage changes – implying at least one full-time person on the public sector side. While the employment of a quantity surveyor should also be considered on a part-time basis, specifically to check the cost of changes.
Source
Construction Manager