Value for money optimisation and sustainability in PFI projects

Since 1992, the public sector in the UK has used Private Finance Initiative (PFI) to finance major infrastructure projects and to secure Value for Money. PFI is claimed to have successfully minimised construction risks and delivered projects with high certainty in the time, cost, quality, and client satisfaction. However, recent concerns on poor returns have increased pressure to demonstrate that expectations will be consistent vis-à-vis their ability to give long term VFM. This paper is based on a research to explore the VFM uncertainty of PFI projects and establish causes hitherto. The research investigated variations in costs, time, and client requirements from the strategic business case stage through to the operational phase. Data collection methods include a documentary analysis of full business cases of five PFI projects and published reports, and a questionnaire survey of 44 PFI projects in the UK. Analysis shows in many PFI projects; VFM results are not always constant because costs, time and client requirements change continuously in the project s lifecycle. Early warnings on VFM variations are not systematically exploited due to lack of consistent frameworks. The current PFI implementation framework is prescriptive of procedures and assumes the appraisers have the right information to carryout VFM assessment at all recommended stages. The study subsequently proposed a model, which seeks to improve the delivery of PFI projects by optimising value for money and sustaining it throughout the project s lifecycle