How to approach PFI expiry
Authorities are advised to treat expiry as a present priority, initiating preparations at least seven years before contract end. Early action maximises leverage, minimises risks, and ensures sufficient time to resolve issues that may otherwise escalate as the contract end date approaches.
Complex process
The complexity of expiry stems from the intertwined legal, commercial, operational, and technical elements. Authorities must manage:
- Detailed asset condition verification against contractual obligations.
- Service continuity planning for life beyond the PFI.
- Complex negotiations on handback and potential disputes.
- Transition of operational knowledge and systems from private providers.
Each element requires careful coordination, with the risks compounded by the scale and bespoke nature of PFI arrangements. Expiry is not a single event, but a multi-phase process requiring sustained attention.
Governance
Strong governance frameworks are essential to steer expiry preparation. Authorities should:
- Appoint a Senior Responsible Owner (SRO) with authority to make strategic decisions.
- Establish a steering group comprising senior stakeholders to oversee progress, resolve issues, and maintain strategic focus.
- Create formal reporting mechanisms to senior leadership and elected members to maintain transparency and ensure political backing where necessary.
Governance should be agile, allowing rapid escalation and resolution of issues that could jeopardise expiry outcomes.
Project management
Effective expiry management demands efficient project management. Authorities should establish a dedicated project team with clear milestones, objectives, and timelines. Key steps include:
- Defining a detailed expiry roadmap with critical activities.
- Applying project management disciplines: risk management, change control, and formal reporting.
- Setting up cross-functional working groups to align legal, technical, commercial, and operational expertise.
A programme management office (PMO) structure can provide oversight, drive accountability, and maintain momentum across the many workstreams involved.
Resource
Authorities should build a dedicated expiry team well ahead of time, composed of:
- Contract managers with detailed knowledge of the PFI contract.
- Technical specialists to assess asset conditions.
- Legal experts to advise on contractual obligations and disputes.
- Commercial advisors to negotiate terms and manage financial aspects.
- Operational planners to design and implement post-expiry service delivery.
Where internal capabilities are limited, authorities must budget for and secure external expertise. Failure to allocate sufficient skilled resources risks undermining the entire expiry process. Embedding expiry into the authority’s wider asset and service management strategies ensures a coordinated, sustainable approach.
Implementing PFI expiry
Authorities must actively manage the transition phase, ensuring assets are returned in the agreed condition, services continue seamlessly, and future arrangements are established. A disciplined, proactive implementation approach is essential to achieve the intended outcomes.
- Contract awareness
- Relationship management
- Asset management
- Commercial approach
- Future services planning
Contract awareness
Success begins with contract knowledge. Authorities must:
- Review and understand handback clauses, maintenance standards, and dispute resolution mechanisms.
- Identify any gaps or ambiguities early to avoid exploitation by contractors.
- Document all interactions and maintain a clear audit trail.
- Implement a formal contract management plan specifically for the expiry phase.
Authorities should not assume contractors will highlight obligations; it is vital to proactively enforce all rights under the contract.
Relationship management
Constructive relationships with PFI contractors are critical. Implementation should emphasise:
- Regular structured meetings to maintain open communication.
- Clear documentation of agreed actions, responsibilities, and timelines.
- Escalation protocols for resolving disputes efficiently.
- Using independent advisors or experts where credibility or objectivity is needed.
Asset management
Preparing for asset handback is a major focus. Authorities must:
- Conduct early independent condition surveys (ideally 5-7 years ahead).
- Identify and address maintenance deficiencies early to avoid “last-minute fixes.”
- Develop an asset register detailing each asset’s contractual requirements.
- Agree clear handback inspection processes with contractors.
Where disputes arise, authorities should be ready to initiate dispute resolution procedures while ensuring continuity of operations.
Commercial approach
Authorities should define their commercial strategies well ahead of expiry:
- Negotiation Strategy: Clearly outline the authority’s position on handback obligations, service continuity, and potential financial settlements.
- Value Protection: Actively monitor that assets are maintained to the correct standard to avoid costly post-expiry refurbishments.
- Exit Costs and Liabilities: Understand any financial implications of expiry, including staff transfers (TUPE), remediation works, and legal costs.
Proactive engagement maximises authority control over outcomes.
Future services planning
Authorities must look beyond expiry to secure long-term service delivery:
- Decide whether to reprocure, insource, or redesign services.
- Build transition plans aligned with service redesign timelines.
- Involve service users and stakeholders early in future planning.
- Prepare contingency arrangements for unforeseen service gaps or disputes.
Global’s tips to prepare for a smooth PFI handback
To ensure a seamless handback process with regards to fire safety and asset integrity, consider the following steps:
Latent defects and defective premises
Our team can identify hidden fire risks within a building that may not be immediately visible. By examining structural components, materials, and fire protection systems, we uncover potential vulnerabilities that could compromise the building’s fire safety. We then provide remediation strategies to address these latent defects.
The Defective Premises Act 1972 holds builders, developers, and landlords responsible for ensuring buildings are properly constructed and maintained. It allows homeowners, tenants, and visitors to claim compensation for unsafe work that causes harm.
