Private Finance Initiative (PFI) Consultancy

What is the Private Finance Initiative?

The Private Finance Initiative (PFI) is a way to fund public sector projects through private companies. It works by having the private company meet the initial costs of the project, instead of HM Government, local authority, or other public sector body. The private company then leases the project to the public sector body, which pays annual payments to the private company. PFI contracts can last over 25 years or more. 

Government guidance from the Infrastructure and Projects Authority suggests that the process for managing expiring PFI agreements should begin seven years before expiry so it’s not too early to engage with a specialist.

Who can receive PFI contracts?

Typical contracts are for the following public sector bodies:

• Schools
• Civic Offices
• Hospitals
• Leisure Centres
• Health Centres

What are the benefits of PFI Initiatives?

• The private sector provides and is paid for services during the period of the contract by the public sector
• The government does not have to lay out a large sum of money at once to fund a large project, so can pay for essential projects over many years
• PFIs can help to improve on-time completion of projects and transfer risks associated with construction and maintenance over to the private sector
• PFI can improve the relationship between public and private sectors whilst providing long-term benefits, such as resource and knowledge sharing

Why is it important to review your PFI agreement?

There are many reasons why it is vital for public sector bodies to review their PFI agreements, including the following:

• Rising costs causing stress on your budgets
• Upcoming break option or expiry offers opportunity to negotiate more favourable terms
• Contract requires variation to meet your changing needs
• Opportunity to benchmark or market test services

How to seek advice for PFI?

If you would like to receive more detailed advice and guidance on PFI, contact one of our expert public sector advisors today. We are seeing PFIs now reach the end of their concession period and the parties reviewing the future of the underlying asset.This may involve handback to the authority or a new arrangement with the provider where no such transfer is envisaged. We can offer our consultancy services involving a comprehensive review of PFI contracts and setting out recommendations that can inform discussions with the PFI provider. We can also offer handover services such as condition surveys, audit of FM services and more.