Budgeting and borrowing revisions could save £62M on Sheffield City Council’s Highway Maintenance PFI project — the UK’s largest local authority PFI scheme — according to the council.
Cost reductions totalling £62M could come from budgeting for payments to the PFI contractor only as and when required, and from the council borrowing part of the £100M funding for the project itself rather than leaving the contractor to borrow all of the money, the council said today. It said it is still considering both these measures and claimed that the former could reduce final costs by £12M and the latter could save £50M overall.
“These are both sensible measures which will make it cheaper for the council and for Sheffield residents and so improve value for money,” said Sheffield City Council cabinet member for finance Bryan Lodge. “With interest rates being so low, it doesn’t make sense to set aside money before it is needed, and borrowing £100M would mean that, rather than asking the chosen contractor to borrow all the money on our behalf, we could borrow some of it ourselves, at a lower rate of interest.”
The council said that it was “close” to selecting a contractor for the project, which is the UK’s largest local authority PFI scheme, and that works on the highway will begin in spring 2012. Amey and CarillionMouchel were shortlisted for the project last summer. The 25 year contract involves the refurbishment and maintenance of roads and pavements and the completion of a backlog of repairs.