Risk and Reward of the Private Finance Initiative in the UK

Lei Zhou; David J Lowe

Risk and Reward of the Private Finance Initiative in the UK

Research output: Chapter in Book/Report/Conference proceeding › Conference 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 language	English
Title of host publication	Proceedings of the Second International Conference on Construction in the 21st Century, Sustainability and Innovation in Management and Technology
Subtitle of host publication	Sustainability and Innovation in Management and Technology
Editors	Syed M Ahmed, Irtishad Ahmed, S L Tang, Salman Azhar
Publisher	Construction in the 21st Century
Pages	73-78
Number of pages	6
ISBN (Print)	9781732441675
Publication status	Published - Dec 2003
Event	2nd International Conference on Construction in the 21st Century: Sustainability and Innovation in Management and Technology - Hong Kong, Hong Kong Duration: 10 Dec 2003 → 12 Dec 2003 Conference number: 2 https://www.citcglobal.com/_files/ugd/0d72f4_4ceef690387d434aa5b6cef09ce3f603.pdf

Conference

Conference	2nd International Conference on Construction in the 21st Century
Abbreviated title	CITC-II
Country/Territory	Hong Kong
City	Hong Kong
Period	10/12/03 → 12/12/03
Internet address	https://www.citcglobal.com/_files/ugd/0d72f4_4ceef690387d434aa5b6cef09ce3f603.pdf

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Zhou, L., & Lowe, D. J. (2003). Risk and Reward of the Private Finance Initiative in the UK. In S. M. Ahmed, I. Ahmed, S. L. Tang, & S. Azhar (Eds.), Proceedings of the Second International Conference on Construction in the 21st Century, Sustainability and Innovation in Management and Technology: Sustainability and Innovation in Management and Technology (pp. 73-78). Construction in the 21st Century.

Zhou, Lei ; Lowe, David J. / Risk and Reward of the Private Finance Initiative in the UK. Proceedings of the Second International Conference on Construction in the 21st Century, Sustainability and Innovation in Management and Technology: Sustainability and Innovation in Management and Technology. editor / Syed M Ahmed ; Irtishad Ahmed ; S L Tang ; Salman Azhar. Construction in the 21st Century, 2003. pp. 73-78

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title = "Risk and Reward of the Private Finance Initiative in the UK",

abstract = "To date, the Private Finance Initiative(PFI) forms one of the key elements of the UK government{\textquoteright}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.",

author = "Lei Zhou and Lowe, {David J}",

note = "Sustainability and Innovation in Management and Technology, ; Conference date: 10-12-2003 Through 12-12-2003; 2nd International Conference on Construction in the 21st Century : Sustainability and Innovation in Management and Technology, CITC-II ; Conference date: 10-12-2003 Through 12-12-2003",

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booktitle = "Proceedings of the Second International Conference on Construction in the 21st Century, Sustainability and Innovation in Management and Technology",

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Zhou, L & Lowe, DJ 2003, Risk and Reward of the Private Finance Initiative in the UK. in SM Ahmed, I Ahmed, SL Tang & S Azhar (eds), Proceedings of the Second International Conference on Construction in the 21st Century, Sustainability and Innovation in Management and Technology: Sustainability and Innovation in Management and Technology. Construction in the 21st Century, pp. 73-78, 2nd International Conference on Construction in the 21st Century, Hong Kong, Hong Kong, 10/12/03.

Risk and Reward of the Private Finance Initiative in the UK. / Zhou, Lei; Lowe, David J.
Proceedings of the Second International Conference on Construction in the 21st Century, Sustainability and Innovation in Management and Technology: Sustainability and Innovation in Management and Technology. ed. / Syed M Ahmed; Irtishad Ahmed; S L Tang; Salman Azhar. Construction in the 21st Century, 2003. p. 73-78.

Research output: Chapter in Book/Report/Conference proceeding › Conference contribution

TY - GEN

T1 - Risk and Reward of the Private Finance Initiative in the UK

AU - Zhou, Lei

AU - Lowe, David J

N1 - Conference code: 2

PY - 2003/12

Y1 - 2003/12

N2 - 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.

AB - 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.

UR - https://www.citcglobal.com/_files/ugd/0d72f4_4ceef690387d434aa5b6cef09ce3f603.pdf

M3 - Conference contribution

SN - 9781732441675

SP - 73

EP - 78

BT - Proceedings of the Second International Conference on Construction in the 21st Century, Sustainability and Innovation in Management and Technology

A2 - Ahmed, Syed M

A2 - Ahmed, Irtishad

A2 - Tang, S L

A2 - Azhar, Salman

PB - Construction in the 21st Century

T2 - 2nd International Conference on Construction in the 21st Century

Y2 - 10 December 2003 through 12 December 2003

ER -

Zhou L, Lowe DJ. Risk and Reward of the Private Finance Initiative in the UK. In Ahmed SM, Ahmed I, Tang SL, Azhar S, editors, Proceedings of the Second International Conference on Construction in the 21st Century, Sustainability and Innovation in Management and Technology: Sustainability and Innovation in Management and Technology. Construction in the 21st Century. 2003. p. 73-78

Risk and Reward of the Private Finance Initiative in the UK

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