Operation pfi

The history of the private finance initiative (pfi) has been less than smooth. Since its launch in November 1992, the procurement method has been the brunt of many criticisms. PFI was brought in when government borrowing was high, the aim being to shift the funding of public buildings and infrastructure onto the private sector so the costs would not appear on the government balance sheet.

The scheme got off to a poor start with long hold-ups being suffered at the tendering and government approval stage. Contractors then lost vast sums of money through unnecessary delays. This process has been improved but the lack of standard contract forms is, even now, creating time and financial penalties.

Further problems have been felt on-site due to the changes in working relationships that pfi requires and workforce inexperience of these methods. Experience is reducing this effect.

With the new Labour government in 1997 came a Treasury Taskforce aimed at solving any problems with pfi. A recent report commissioned by the Taskforce confirms that by December 1999 over 250 pfi projects have been approved by government. While they cover a wide range of capital values, the projects have a total aggregate value of around £16 billion.