The Audit Commission says building work on London's Guy's Hospital cost £151.8m - more than four times the original estimate of £35.5m made in 1986. It was completed three years and four months late.

The Treasury was forced to bail out the project, changing the original balance of the private/public funding package. This meant the government ended up paying 74% of the bill, instead of the 55% originally proposed.

Shortfall

There is still a shortfall of £26.8m which has been borrowed from other areas of the NHS budget.

The different members of the consortium set up for the Phase III building programme - Guy's and St Thomas' Trust, P & O Developments and engineers Austen Associates - are currently in dispute about the costs and the delay. Phase III will be used for mental health and day surgery patients.

Inadequacies

The Audit Commission, which presents the report to Parliament on Wednesday, said the budget overran for a number of reasons, including "inadequacies in the original costings", delays in building works, changes in building regulations and disputes over construction work.

It put the delay down to cost and funding problems, technical hitches and other problems.

Warning

Sir John Bourn, head of the National Audit Office, said changes in government guidance on NHS private finance initiatives would improve the planning and delivery of future projects.

But he called on health authorities and trusts to ensure they had clearly defined responsibilities for all partners in PFI projects.

They should also check costings were realistic and complete, that funding had been obtained and not merely promised and project managers were appointed early. He added that risks should be clearly identified and realistic time scales set out.

How not to do it

Health Secretary Frank Dobson said the delays and budget problems at Guy's were "a thing of the past".

Frank Dobson says Guy's problem is "a thing of the past"

"If ever there was an example of how not to do it, the Guy's Phase III development was it," he said.

Liberal Democrat MP Simon Hughes, the constituency MP for Guy's, said the report was "damning" and showed "the absence of accountability in this project from start to finish".

MP David Davis, chairman of the Public Accounts Committee, said the report showed the need for firm control on future PFI projects.