Private Finance Initiatives
A PricewaterhouseCoopers case study

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Page 3: Role of PricewaterhouseCoopers

Pricewaterhousecoopers 4 Image 3Financial advisers such as PricewaterhouseCoopers undertake the management of this procurement process.  The procurement process is effectively a competition between the private sector bidders interested in bidding for that particular project. It is the role of the financial adviser to ensure that the procurement process is run on a fair and open basis to ensure that the bidder that brings forward the best value for money bid is the one that wins the project.

PricewaterhouseCoopers is also experienced in helping to compile the submissions, arranging the finance to back the bid and negotiating the contract on behalf of the private sector.

The key components in negotiating a contract are extensive and it is important that they are fully comprehensive: [diag]

A number of different companies were involved in the disposal of waste in Hereford and Worcester and in 1998 a number of their contracts were up for renewal. The local authorities decided to review the management of the waste services and ensure that this public service was cost-effective and complied with environmental targets.

The arrangements for disposal of the waste were almost exclusively through landfill, with a very low percentage of the waste committed to recycling or other forms of recovery (5-6%) and no incentives to improve on these levels. In a bid to reduce the level of landfill, the Labour Government substantially increased taxes levied on this form of waste disposal.

This cost incentive, along with the requirement to meet environment targets and the benefits of an integrated contract, encouraged Hereford and Worcester local authorities to review PFI as a new means of procuring their waste disposal services. The local authorities were also keen to take advantage of ‘PFI credits’ which provided local authorities with a financial incentive to identify opportunities for a PFI.

PricewaterhouseCoopers | Private Finance Initiatives