Project Management Essay Example | Topics and Well Written Essays - 2500 words - 9

Project Management - Essay Example There exists various ways in which the projects of PFI offer a better time value of money than the original traditional option of purchasing the asset and taking the entire responsibility of maintaining the asset. The operator of the private sector takes the fundamental risks which are involved in designing, operating and financing the asset hence the additional costs and damages that may be incurred thus the local authority is less likely to account for these costs. The local authority indirectly finances the depreciation costs of the asset thus the contractor has the capability of repairing and maintaining the asset in a good condition which is a major advantage over the traditional methods of procurement for it increases the efficiency and performance of the local authority (Hill, 88-126). Since the introduction of the PFIs in the mid-1990s as a tool of funding the private sector it has been very successful and it has most commonly used method to fund health and transportation services. The fundamental principle underlying the operation of the PFIs is the fact that risks and responsibilities that are connected with running the public service are delegated to institutions where they can be well managed. For instance procuring a new building for running a school using the PFI is very different from the traditional procurement method where since the Local Authority enters into an agreement and pays for the accommodation in the school building for a period of time. With reference to the traditional methods, the Local Authority uses funds that have been approved and provided by the central government but the building is designed by architects from the Local Authority however the private sector is limited to the bidding of the contract. The procurement process of the PFI is basically a negotiated process (Allen, 12-62). One of the major