Demand and political risk remain with the public sector (the need for facilities and services remains a public obligation). Construction and maintenance risk are usually transferred to the private sector. Historically, private construction companies have submitted bids, sometimes loss leaders, for public infrastructure projects and then relied on variation orders for design changes, additional work and delays to claw back costs and increase profits.
The issue is not whether this risk is transferred, but how it is priced. For example, risk as a percentage of the total construction costs in six hospital PFI projects ranged from 16.5%, 22.2%, 31.3%, 35.3%, 37.2% and 70.6%. Furthermore, only after risk transfer was included, did the net present cost of PFI hospitals become lower than the public sector comparator (Shaoul, 2005). The reason why risk accounted for beetween a third and two thirds of construction costs in four of the six projects is highly questionable. Yet, "…even after including risk, the margin of difference between public and private is tiny, typically less than 1% of total costs, and not enough to provide a criterion upon which to base such an important financial decision" (ibid).