Lessons from the Private Finance Initiative in the United Kingdom
AbstractThis paper examines the UK experience of PPP/PFI from a value for money perspective. It argues that a rounded view of overall performance has to consider the procurement process, the construction of the asset procured, and the operational performance that follows. Important changes have been made in the UK to the appraisal stage of the procurement process, raising the likelihood of PFI being chosen when it is most likely to deliver value for money. While PFI has evidently performed well in the construction phase, the UK experience suggests a number of prerequisites for achieving value for money in the operational phase. Good contract management is needed to ensure that the risk transfer paid for actually sticks. Provisions to manage changes to contracts in a way that preserves value for money are important. An ability to benchmark the cost and quality of services provided over the long term is also likely to enhance the value for money achieved.
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Bibliographic InfoPaper provided by European Investment Bank, Economics Department in its series EIB Papers with number 8/2005.
Length: 14 pages
Date of creation: 06 Jun 2005
Date of revision:
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private finance initiative; value for money; United Kingdom;
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- G. Dudkin & T. VÃ¤lilÃ¤, 2006.
"Transaction Costs in Public-Private Partnerships: A First Look at the Evidence,"
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Intersentia, vol. 7(2), pages 307-331, June.
- Dudkin, Gerti & Valila, Timo, 2005. "Transaction Costs In Public-Private Partnerships: A First Look At The Evidence," Economic and Financial Reports 2005/3, European Investment Bank, Economics Department.
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