Risk in Private Finance Initiative Projects::A Public Sector Perspective

The management of public sector risk is increasingly seen as a priority area of UK government policy. This has been highlighted recently by the Prime Minister Gordon Brown who stated that “the issue of public risk is one of the most challenging areas of policy-making for any government” (Strategic Risk, 2008). In response to these challenges, the UK Prime Minister has appointed a new body - the Risk and Regulation Advisory Council (RRAC) which is tasked with improving the way risk to the public is understood and managed. One area of particular concern with regard to the governance of public sector risks involves projects procured via the Private Finance Initiative (PFI). These projects involve long-term contracts, complex multi-party interactions and thus create various risks to public sector clients. Today, most PFI actors acknowledge the potentially adverse effects of these risks and make an effort to prevent or mitigate undesirable results. As a consequence, issues of risk allocation, risk transfer and risk management have become central to the PFI procurement process. This paper provides an overview of the risk categories and risk types which are relevant to the public sector in PFI projects. It analyses risk as a feature of uncertain future project-related events and examines potential pitfalls which can be associated with PFI risk management on the basis of a case study of a high-profile PFI hospital in Scotland. The paper concludes that, despite the trend towards diminished risk profiles during the operational phase, the public sector continues to be exposed to significant risks when engaging in PFI-based procurement.

Does the UK Local Finance Improvement Trust (Lift) Initiative Improve Risk Management in Public-Private Procurement?

The UK government introduced the Private Finance Initiative (PFI) and, latterly, the Local Improvement Finance Trust (LIFT) in an attempt to improve public service provision. As a variant of PFI, LIFT seeks to create a framework for the effective provision of primary care facilities. Like conventional PFI procurement, LIFT projects involve long-term contracts, complex multi-party interactions and thus create various risks to public sector clients. This paper investigates the advantages and disadvantages of LIFT with a focus on how this approach facilitates or impedes risk management from the public sector client perspective. Our paper concludes that LIFT has a potential for creating additional problems, including the further reduction of public sector control, conflicts of interest, the inappropriate use of enabling funds, and higher than market rental costs affecting the uptake of space in the buildings by local health care providers. However, there is also evidence that LIFT has facilitated new investment and that Primary Care Trusts (PCTs) have themselves started addressing some of the weaknesses of this procurement format through the bundling of projects and other forms of regional co-operation.

Public housing operating subsidies : hearing before the Subcommittee on Housing and Community Development of the Committee on Banking, Finance, and Urban Affairs, House of Representatives, Ninety-seventh Congress, first session, October 29, 1981.

Item 1013-A, 1013-B (microfiche)

The federal farm loan system, new method of farm mortgage finance, under national supervision; a practial manual upon organizing and conducting national farm loan associations, also joint stock land banks. Showing how farmers, investors, bankers and the public may obtain the fullest benefit of the system.

Mode of access: Internet.

To amend the Public Works and Economic Development Act of 1965 and the Appalachian Regional Development Act of 1965 : hearing before the Subcommittee on Economic Stabilization of the Committee on Banking, Finance and Urban Affairs, House of Representatives, Ninety-eighth Congress, first session, on H.R. 10 ... April 11, 1983.

Item 1013-A, 1013-B (microfiche)

The American annual cyclopædia and register of important events ... : Embracing political, civil, military, and social affairs; public documents; biography, statistics, commerce, finance, literature, science, agriculture, and mechanical industry.

Mode of access: Internet.

The Extraordinary red book; containing a list of all places, pensions, and sinecures; the droits of the Crown and Admiralty; rents of Crown lands; the expenditure of the Civil List; a list of commissaries and other persons indebted to the public; with a complete view of the finance and debt of Great Britain, the whole comprising the strongest body of evidence to prove the necessity of retrenchment that can possibly be laid before the nation,

Mode of access: Internet.

Public; a journal of finance, commercial interests and political science.

Financier; a journal of politics...

Loans by the Reconstruction finance corporation to aid public schools. Hearings before a subcommittee of the Committee on banking and currency, United States Senate, Seventy-second Congress, second session, on S. 5263,

Mode of access: Internet.