A criticism of certain systems Acriticism of systems such as BOOT and PFI is that only the larger contracting firms

with large financial resources or sufficient financial backing can underta ke them. Such systems also tend to utilize the services of a major contractor and his subcontractors for long periods. Consequently if the use of these forms of contract by promoters should become too widespread, there may be an insuffici ent number of large contractors left for proper open competition to occur for new projects, and a promoter may have difficulty in obtaining satisfactorily experienced bidders interested in a project he wishes to undertake. The smaller contractors may be forced out of business as promoters use these systems or favour work packages too large for the smaller contractors to undertake. Also the best quality subcontractors and suppliers can become tied to one or another major contractor for long periods, and not be available to serve other contracto rs. The end result could reduce competition on price and quality between contractors which is still of importance in fostering the development of innovat ive methods and improvements in efficiency. An objection frequently voiced is that PFI projects must be more expensive than publicly funded projects, because the shareholders and commercial lenders financing PFI want a higher return on capital than is paid on loans raised by a public authority. However, shareholders usually provide only a small proportion of the capital required for a major project8 the rest being provided by loans from banks and other financial organizations on which the interest charges are only a little above the interest charges payable on public loans. Hence, the overall cost difference between private and public funding can be relatively modest. However precise evaluation of the cost differential is complicated because account has also to be taken of such matters as the administ rative costs in setting up PFI, the different sums involved to cover risks, project maintenance and supervision thereof over a long term of years. One estimate suggests the cost of private finance is about 3 per cent higher than public finance.9 A cost difference of this order does not seem particularly significant. A more significant factor in reducing project cost is the efficienc y with which promoters, designers and contractors carry out their roles.