A recent industry survey has revealed worrying figures around the amount of focus on preparing for the end of PFI contracts’ life, as well as concern over who will take responsibility of running the assets.
The Big Question survey, ‘How successful is the evolution of existing PPPs?’ asked 143 people on their view of plans for handback, alongside questions on the flexibility of projects and on-going work around Environmental and Social Governance (ESG).
Conducted in partnership with Affinitext and DLA Piper, the results showed that most respondents (63%) believe that planning for handback should start at least five years before the end of the contract. However, in stark contrast, only 18% said that is actually happening on the ground. Likewise, not one respondent said that this planning should be started under one year before handback but in reality 15% are leaving planning that late.
One responder commented that, “Some parties are clearly ahead of the game, but I sense that some parties [see it as] some way off with other more pressing matters […] in the in-tray,” while another said, “I suspect planning starts nice and early but is allowed to drift too close to the end date before decisions start being made.”
There was also a general consensus around the likely change of management post handback with 42% expecting that the majority of PFIs will be internally managed by the public sector. However, this prediction was not universally welcomed with comments including, “There is neither the budget or the political appetite in the UK for these to be managed out with the public sector. [But] I suspect that the assets will be transfer to the public sector and not maintained properly.” Another respondent agreed saying, “I can’t see there being much choice in this. The public sector will be forced to take these back in-house whether they want to or not.”
However, it wasn’t all bad news with the survey showing a brighter picture for the evolution of existing projects. When asked about the focus on ESG, 53% said there was “some effort” to instil policy and 15% selected a “huge drive”.
Equity investors were credited as the main drivers for pushing a project’s evolution gaining 40% of the vote but with local government and central government only gaining 12% and 8% respectively.
It was a far more mixed picture for the respondents’ views on the main blockers for evolution; with public sector project managers gaining 23% of the share and funders and central government both on 18%.
To view the full survey results along with a report on the Big Question debate held after the survey, please click here.