A warning was issued today that services such as health and education could be affected as private financing initiative (PFI) and public-private partnership (PPP) agreements expire without proper management to ensure any necessary work is completed.
The engineering and project management firm says the public sector is facing a major challenge as hundreds of contracts to build schools, hospitals, offices and other facilities from the late 1990s onwards begin to finish over the next 10 to 30 years.
Hundreds of buildings could revert to public ownership without a clear understanding of the state of origin, with the risk of public sector enterprises paying for works such as replacing boilers and heating systems, which should have been paid for by private partners.
The National Audit Office has also previously stated that the public sector is not ready* for contracts, as many have not yet begun the transfer process to return the buildings to public ownership, which the Infrastructure and Projects Authority (IPA) states must begin seven years before the end of the contract to ensure a smooth transition.
Sonya McRobb is Associate Director at Faithful + Gould which launched alongside Atkins View new PFI/PPP expiration. It highlights that there are currently 530 PFI contracts approaching expiration dates over the next 30 years, with approximately 160 contracts expiring between now and 2030.
She said: “One of the biggest consequences for public sector organizations if they fail to act in a timely manner is the risk of recovering assets in worse condition than agreed. This could lead to costly business and – ultimately – there is a real concern that the public sector could end up To pay twice for these works.
“Actions need to be taken to avoid this type of worst-case scenario, but time is ticking and both private sector companies and public sector asset management teams need to address this issue head-on and as soon as possible.”
Sonia adds that due to the longevity of the agreements, it is likely that the specialized knowledge required to manage contract transfers will not be available to many contracting authorities. Additionally, earlier contracts have been found to contain more ambiguous wording, which is more likely to lead to disputes.
She says, “It is up to all parties to ensure that the contracts and everything are up to date in order to ensure a smooth transition process for all public sector contractors.
“However, transferring back into the public domain can be a long and complex process and it is common for those people who made the contract to no longer post. The earlier both parties focus on this issue and bring in qualified advisors and experts when needed, the better the outcome. to all concerned parties.”
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