This week, enthusiasts convened in Dublin at the second global PFI summit to hear delegates from Iceland to Chile explaining how it is taking over the world.
European countries are leading the way, encouraged by the fact that the UK has found a way of rebuilding its crumbling infrastructure without having to raise taxes. Ireland is furthest ahead, with a schools programme that includes a £97m six-project package being built by Jarvis.
In Italy, Bovis Lend Lease is working with architect Nightingale Associates on a £9m hospital project, and other potential deals include £100m of PFI healthcare in Milan. In the Netherlands, UK consultants are advising on a £3.5bn high-speed rail link that runs from Belgium to Amsterdam, and Portugal now has more PFI roadbuilding than the UK.
Further afield, home-grown architects are involved in prison schemes in Chile, Iceland is using UK expertise to set up a pilot PFI school, and firms are pitching for a £90m military training academy in Oman. Meanwhile, South Africa and Australia are talking about starting major programmes, and Japan and America are expected to take steps soon.
And despite troubles in the UK with union opposition, public uncertainty and the threat of European legislation (see factfile) these countries are looking to use our experiences as a model. "If other countries want to embrace PFI, they need to look to the UK to see what we've got right," says Chris Liddle, chairman of HLM Architects, which is in the frame for the Chilean schools contract. He is enthusiastic about what British firms can offer as opportunities increase. "What we've done over here, we can now ship out," he says. "PFI is a great export that British firms can engage in." HLM has just cut its workforce by 10% as its UK PFI work dries up, but it is hoping to secure more overseas contracts.
More and more UK firms are actively promoting the idea abroad, rather than waiting for new PFI markets to open up. With one eye on potential work, senior executives from Nightingale Associates recently travelled to conferences in South Africa, Australia and the United States to preach the PFI way. When Jarvis invited a delegation from Chile to visit the firm's latest projects, the South Americans even brought along their president.
The government has encouraged all this with a mix of trade missions – such as last year's trip by British Trade International to promote PFI healthcare in South Africa – and British-financed projects abroad, like a £180m Ministry of Defence scheme in Cyprus. According to John Spanswick, managing director of Bovis Lend Lease Europe, there is more going on behind the scenes. "There's some evidence the Italian government has been talking to the UK government and the Spanish, Portuguese and German governments as well," he says.
We need the British very much and we were pleased to have them on board
Daniel Loschacoff, PPP Knowledge Centre, the Netherlands
In terms of actual work, however, demand is highest for British consultants, with the overseas market leaning heavily on them for advice. "There are big opportunities for legal and financial advisers and finance providers," says David Metter, chief executive of PFI financier Innisfree. "And it's natural that the players who've been involved here move into other areas." The Royal Bank of Scotland, for example, was invited to join Icelandic contractors in a bid for an experimental school outside Reykjavik, and HLM was paid to compete in the Chilean schools bid.
Metter adds that contractor involvement is more difficult because people on the ground tend to be local, but it seems project management roles are increasingly available. Jarvis, for example, has been gearing up to play this part in Eastern Europe and South America.
The Netherlands has employed a circus of UK-based consultants to steer through the country's first public-private partnership scheme, the hugely ambitious £3.5bn Amsterdam-Belgium high-speed rail link. Alongside Innisfree, Siemens is now involved in the preferred consortium, while the original deal was overseen and advised by Charterhouse Project Equity Investment, European Capital, CMS Cameron McKenna and the Royal Bank of Scotland.
"We need the British very much and we were pleased to have them on board," says Daniel Loschacoff of the Netherlands' PPP Knowledge Centre. "Now we want to build up our own experience and not rely on them so heavily, but they are a long way ahead with real experience. I think we will always need them at certain points."
By learning from Britain's example and gathering advice from experienced firms, the flagship Dutch rail project has managed to move smoothly to financial close. In fact, it has dodged controversy in a way British politicians and builders can only dream about. "We tried to make it as open and transparent as possible, with the public involved right from the start," explains Loschacoff. The most sensitive issue was value for money, so the Dutch developed an early safeguard to check whether this was likely. This new system contrasts sharply with tests in the UK, which are not made until the end of the tender process and after considerable time and money have been invested. The Dutch innovation means reduced risk, according to Loschacoff, and is now used on all PPPs. And success so far suggests that the UK has something to learn from its European counterparts.
Some countries have borrowed another UK idea by setting up their own versions of the Treasury's PFI taskforce – the agency that drove PFI policy in the early days. Belgium, the Netherlands, Ireland, Italy and Greece all have similar bodies made up of government and industry figures, whose mission is to set the scene for growth. Since the Italian team was created last summer, it has pushed forward more than 50 projects totalling more than £4.5bn, as well as paving the way for legal changes to ease PFIs into existence.
Now that schemes are coming through the pipeline, the key for British firms trying to find a foothold abroad is getting it right. While governments around the world are enticed by deferred-cost public building, most have experience of the knotty debates PFI provokes: ideological arguments are still causing hold-ups in some countries, notably Australia and Germany.
Brussels threatens PFIOne irony of the success of PFI’s global expansion is that it has caused the European Commission to wade in with controversial plans for regulation. Draft proposals have provoked fears among British contractors that PFI is seriously under threat. The main problem of the proposed Consolidated Procurement Directive is that the preferred bidder stage of tendering would be axed. Instead, competitive dialogue would continue up to award of the contract. Delegations are regularly crossing the Channel to petition Brussels. The latest was led last month by John Bromley, European director of the Construction Confederation. So far, the Netherlands, Germany, Austria and Portugal are arguing with Britain against the measures. Opposing them are southern states like Italy which say increased openness will enable them to stamp out corruption. A draft judgment is expected later this year.
Taking the initiative: PFI deals abroadFinland The only mover in Scandinavia is starting with infrastructure projects
Iceland A school pilot project in Reykjavik is getting financial advice from the Royal Bank of Scotland
Ireland Balfour Beatty, Morrison, Carillion are involved in roadbuilding. Jarvis is moving into schools with six projects worth £97m
Portugal Now has more PFI roadbuilding than the UK with two schemes worth £100m
Cyprus Jarvis has been looking at a £180m Ministry of Defence project for the UK government
South Africa Since the British Trade International visit in 2000, architects including Nightingale Associates and HLM have looked at healthcare buildings
Chile Architect HLM is bidding for three major prison projects
Argentina Jarvis has been looking at a potential rail project
The Netherlands A range of British consultants are involved on the £3.5bn Amsterdam-Belgium high-speed rail link. Near the Hague a £250m waste-water treatment facility looks likely. Three school projects are also in the pipeline
Italy A £250m prison programme is being considered for the PFI treatment. A deal has been completed for a £78m tax police building in Bari. Bovis and Nightingale Associates are at work on a £9m pilot hospital scheme in Brescia. A hospital contract worth more than £100m in Milan also looks likely. The new government is also expected to create a legislative fast-track for PFI projects
Japan The 1999 PFI Promotion Act has got people talking. The Kajima Corporation took on building work in a MAFF office in the UK specifically to develop transferable skills
Australia Yet to be convinced, but experiments in Victoria and the Hunter region are a possibility
Oman A £90m military training academy is at the early stages