It can take a number of years to plan, approve and construct projects. HM Treasury have noted that:

[…] procurement costs and times in small projects did not decrease in proportion to their size, but remained at roughly the same level as for much larger projects […].

Small projects face the same costs of using third-party finance, employing legal and technical advisors, and conducting due diligence financial modelling in the same as for much larger schemes. As a result, these costs are relatively higher for small projects individually procured27

Financing terms which are agreed too early in the negotiation process may worsen if the process is lengthy, by which time the financial markets may have moved.28 An example of this is the 18 month delay in preparing and finalising the M25 widening project in 2009, resulting in the project incurring higher financing costs (as a result of the financial crisis) by £660 million. 29 Additionally, analysis of the procurement timescales shows that the time taken for a PFI project to be agreed and signed has increased in recent years. For large projects, it can take as long as five years between the date the project is agreed and the financing decision being made30, however these limitations were addressed in the design and features of PF2- see Section 5.2: Introduction of PF2.

There have also been instances where the decision to use private finance was made whilst private finance costs were relatively low, but had increased significantly by the time financial close was reached, by which point the relevant departments were not able to use traditional procurement instead.31

Delays in the procurement of projects may worsen financing costs