A lot has changed in the world of technology and energy consumption over the past 30 years, and while Addleshaw Goddard partner Paul Dight suggested that the Net Zero agenda in some ways has nothing to do with PFI expiry, he went on to point out that it does offer a significant opportunity to help authorities decarbonise their estate.
Therefore, as part of those discussions that parties need to be having several years ahead of contract expiry, they could and should also be looking at what opportunities might emerge to bring in some low-carbon features within the overall development of the project. As part of this, he warned that it is important to keep an eye on the future, and not simply be constantly referring back to the building requirements contained in the original contract.
The bottom line is that any extra-contract changes to assets, such as what Net Zero targets envision, will have to navigate the additional requirements of a sometimes rigid PFI contract; as one attendee put it, “as soon as PFI is involved the difficulty is squared”. Not to mention that some contracts have neither the “carrot or the stick” to incentivise these kinds of changes.
That being said, the intimate expertise built up over the decades of project management, plus the private sector’s involvement in the specifics of each project, present an opportunity for the public sector that is “not to be missed”, one asset manager said.
However, a cautionary note was struck by John McKenzie, technical director at Equans, who pointed out that changes to reduce emissions may need to be accompanied by appropriate changes in the way contracts are administered.
He used the example of replacing a gas boiler with a ground source heat pump during the latter years of a PFI contract, ready to hand over a more eco-friendly facility than the one originally envisioned. While this may be an admirable ambition, McKenzie explained that, as an FM provider, the ability to respond to a failure of the heat pump will be significantly reduced, as there are far fewer experts available to fix such problems. As such, it may no longer be appropriate for the PFI contract to insist on heating failures to be fixed within two hours (easy enough when plumbers able to fix gas-fired boilers are in plentiful supply).
Such issues therefore need to be carefully considered in consultation with all relevant parties, including FM providers.