Last Updated:
18 Feb 2020

The Performance and Management of Hospital PFI Contracts

This report, which focuses on the stage of the contract once buildings are opened for use, not on the decision to use PFI as a procurement route, suggests that most contracts are performing satisfactorily or better and meeting the expectations of Trusts. However, risks remain and, while many Trusts have recently increased the resources they dedicate to managing PFI contracts, some Trusts are not devoting enough resources. Twelve per cent (9 of the 76) operational PFI contracts have no-one from the public sector assigned to contract management. It is likely that Trusts will be expected to make efficiency savings over the next few years, but their ability to make savings from their PFI contracts is very limited. Because Trusts pay an index-linked fixed sum, it is difficult for them to make savings without cutting back on services. Contractors who secure economies of scale through managing multiple PFI contracts are rarely required to share these efficiency gains with Trusts. The Department of Health is responsible for helping Trusts manage their contracts and, while good practice is spread among Trusts, there is a lack of central data on the performance of the PFI portfolio. The Department does not use the leverage over the market it possesses from having 76 contracts in force. With more information on Trusts' projects, the Department could use this leverage to update contracts on common issues or facilitate performance and efficiency improvements



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