1 Under the Private Finance Initiative (PFI), the public sector enters into a long-term contractual arrangement with private sector companies to design, build, finance and operate an asset such as a hospital or school. There are now over 500 operational projects (nearly 400 of which are in England) with a combined capital value of £44 billion. Future payments across all PFI projects up until 2031-32 amount to £91 billion in today's money.1 Although public sector requirements are specified in contracts, it is inevitable over the course of 25 to 30 years of operation that changes will be needed to the services and assets provided. It is therefore important that PFI contracts are able to provide the flexibility required at a cost that represents value for money.