In this article, Trail Group’s CEO Warren Wright looks at some of the issues around PFI handbacks and how we can help public sector organisations prepare and future proof the building assets they will be inheriting.
There are still over 500 operational PFI schemes in the UK across different sectors – including schools, hospitals and other public buildings and many of these are due to be handed back to the public sector over the coming years.
PFI contract handovers will peak at around 50 projects per year.
PFI agreements typically have an operational phase of 25 to 30 years, and some have been very successful. A significant number are due to expire every year and will peak at around 50 projects per annum between 2035 and 2037.
The Importance of Collaboration
Successful handbacks require collaboration between the public sector authority and the private service provider.
Both parties must ensure that the building assets are handed back in compliance with all contractual obligations, which includes proper maintenance and core elements being replaced as part of the agreed building lifecycle programme.
The Need to Plan Well Ahead
According to the Infrastructure and Projects Authority (IPA), the public sector body should start planning for the contract expiry around seven years before the end of the contract. This proactive approach will allow sufficient time to address any issues and ensure a smooth transition.
The IPA has published a guidance document – ‘A Guide to PFI Expiry Health Checks', which provides valuable advice for managing PFI handbacks. In Scotland, The Scottish Futures Trust has provided similar guidance.
The PFI company and the facilities management provider should be aware of this guidance and make preparations for working with the public sector body towards contract expiry.
5 Key Steps to Take
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Define the Contract Expiry Date
Clarity regarding the date of contract expiry is critical, although it may not always be explicitly outlined in the project agreement. Determining whether it is the date services commenced or the completion date of building works is essential for calculating handback timelines accurately.
2. Assessing Handback Condition
Carrying out asset surveys is central to determining the building condition for handback.
While the PFI companies typically self-monitor service delivery during the contract term, interim surveys carried out by the public sector body will provide up-to-date insight into the condition of the asset and are important for planning for handback obligations and standards.
3. Future Asset Utilisation
Public sector clients must have a strategy in place for the future use of the assets – and any services to be provided from those assets – following contract expiry. Planning for this transition will ensure that assets continue to serve their intended purpose as efficiently, safely and cost effectively as possible.
4. Early Action is Key
Starting the handback process well in advance, ideally seven to ten years before contract expiry, allows time documentation to be shared and for remedial works to be carried out, mitigating potential disruption to operations.
This advance planning is particularly critical for assets like hospitals which operate 24/7, limiting opportunities for access for any upgrading works required.
5. Specialist Support
For public sector clients to understand the condition of their assets, they are likely to need to procure specialist technical advice. Trail Group and its specialist divisions can support both the public sector authority and the private service provider.
This is now even more important as Building Regulations and building safety legislation continues to evolve and become more onerous for property managers.
Trail Group’s expertise in undertaking the remedial works required will help to ensure that the public sector will inherit built assets that avoid service interruption, that are futureproof and most importantly, safe for everyone.
Navigating PFI project handbacks requires proactive planning, collaboration, and access to specialist expertise.
By adhering to the guidance provided and procuring specialist advice, public sector bodies – from NHS Trusts and emergency services to education authorities, can ensure a smooth transition and inherit assets that are safe, well maintained and enhance our communities.
This will be a fantastic legacy from all of those involved in PFI projects, demonstrating what can be achieved with collaborative partnerships across the public and private sectors.
