Effective contract structures and value for money in PFI social housing projects

In the last 20 years the UK has witnessed a continuous evolution in the use of private finance for the procurement of public infrastructure and services. Social housing is the new frontier in utilising PFI in the provision of public service. Private involvement in social housing is complicated by the highly social nature of the sector. Given the often conflicting objectives between the public and the private sectors, the challenge is to structure PFI projects in such a way that they are viable to both parties. Due to the private sector need for confidentiality research to date has been severely constrained by having access to only one of the stakeholders resulting in only a partial understanding of the risk allocation and risk sharing procedures in PFI. This PhD research had the unique and unprecedented opportunity to access confidential data, including contracts, financial models on one of the first social housing PFI projects. The Grove Village PFI pathfinder has transformed the run-down housing estate from a crime-ridden place to a vibrant community. Empirical data accessed was utilised to build a detailed and exhaustive case study of the internal processes of the project to extract the key differences between the risk perceptions of different project parties and explain how competing objectives of the project parties were reconciled. The research revealed several facts in the development of social housing PFI projects that reduce value for money and developed mechanisms by which parties can reconcile the differences that exist between them. The research provides evidence on how PFI projects can maximise value for money for the various stakeholders involved.