Tizard also says that the value for money indicator used to determine how a project is delivered will begin to point away from typical PPP deals. "Where the value for money equation has been marginal it could mean that some projects, which otherwise would have been PPP, may be funded in a more traditional way," he says.
Industry sources say that in the short term without funding projects could be put on hold. However Tizard adds that PPP is still "one of the most secure investments" because it is government backed.
Other industry sources argue that though the crunch has driven up the price of debt, limited funding options and caused the restructuring of financing, the PPP market will weather the crisis. A spokesman for Carillion said: "There is no change to our strategy or outlook. Some of the pricing on some debt has increased but not enough to affect the PPP model or its viability."
Jonathan Cripps, head of project finance at Eversheds, agrees saying, "Infrastructure is a bit of shining light among economic turmoil." He added that the asset class had shaken off its dull image and become "a rather nice safe haven in turbulent times."
Cripps said that any changes to the market would be corrected in time but that, "PFI deals are clearly not subprime deals. We have had nearly a thousand PFIs in the UK and no more than a handful has got into difficulty of any sort of noteworthy description. That is a long way from the causes of the credit crunch."