There is some disagreement on whether risks have been allocated appropriately

1.11 Our survey identified that in some projects there is disagreement between authorities and contractors on whether risks have been allocated to the party best able to manage them. Only two-thirds of contractors shared the authorities' view that risks had been allocated appropriately. 79 per cent of authorities thought the risk allocation was totally satisfactory but only 53 per cent of contractors had this view (Figure 4). Contractors told us that risk allocation was an important area where there were often problems. For example, the Business Services Association told us that risk allocation is the biggest area of concern in many PFI projects and is often misunderstood by the public sector.

1.12 All the contractors who were dissatisfied with the risk allocation thought that risks had been inappropriately transferred to them rather than inappropriately retained by authorities. Examples of inappropriate risk allocation in the view of contractors are shown in Figure 5.