Risk and Reward of the Private Finance Initiative in the UK

Lei Zhou, David J Lowe

Research output: Chapter in Book/Report/Conference proceedingConference contribution

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Abstract

To date, the Private Finance Initiative(PFI) forms one of the key elements of the UK government’s strategy to deliver modern, better quality public services and to reduce public investment by increasing private sector investment. Prior to April 2003, 570 projects have been let within the UK as PFI contracts, comprising a total capital investment of over £52 billion. Almost every central government department and local authority has used PFI contracts. It is claimed that most PFI projects have two main benefits: value for money and risk transfer from the public sector to private organisations. The PFI approach provides not only an asset, but also the long-term services required to run that asset over the life of the contract. Further, while the approach brings high potential benefits to both the purchaser and the supplier, it also generates addition risks over the long term and is thought to significantly increase the workload of contractors. This paper reviews the development of PFI in the UK, analyses the potential benefits and risks of the PFI approach and examines the problems currently encountered with PFI contracts. It concludes the most main benefits to be derived from PFI projects are the promotion of a clear sustainable strategy and the development of long-term operation skills within the private sector.
Original languageEnglish
Title of host publicationProceedings of the Second International Conference on Construction in the 21st Century, Sustainability and Innovation in Management and Technology
Subtitle of host publicationSustainability and Innovation in Management and Technology
EditorsSyed M Ahmed, Irtishad Ahmed, S L Tang, Salman Azhar
PublisherConstruction in the 21st Century
Pages73-78
Number of pages6
ISBN (Print)9781732441675
Publication statusPublished - Dec 2003
Event2nd International Conference on Construction in the 21st Century: Sustainability and Innovation in Management and Technology - Hong Kong, Hong Kong
Duration: 10 Dec 200312 Dec 2003
Conference number: 2
https://www.citcglobal.com/_files/ugd/0d72f4_4ceef690387d434aa5b6cef09ce3f603.pdf

Conference

Conference2nd International Conference on Construction in the 21st Century
Abbreviated titleCITC-II
Country/TerritoryHong Kong
CityHong Kong
Period10/12/0312/12/03
Internet address

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