Timing of preparation
3.15 Our survey results highlight that there is significant variation in preparation times from contract to contract. Around 57% of respondents have started or are planning to start preparing four or more years before expiry (Figure 13).41 Around 57% believe they are starting sufficiently early.42 The timing depends on many factors, such as the complexity of the contract, number of assets, handover provisions, resourcing and how the assets are treated on expiry. Preparations should start before it is contractually required, and the IPA's guidance recommends starting seven years in advance.43 Evidence from HE and the Department for Environment, Food & Rural Affairs suggests starting preparations more than seven years in advance to enable a full assessment of the assets and options.
Figure 13 Percentage breakdown of the number of months before contract end that survey respondents started private finance initiative (PFI) expiry preparations Fifty-seven per cent of respondents started preparing for expiry more than four years before contract end Percentage
Notes 1 Survey results to question 16: When did or has the authority started the process of preparing for contract expiry? Yes, more than 48 months before the contract expiry date - 43, Yes, between 48 months and 24 months before the contract expiry date - 13, Yes, between 24 and 12 months before the contract expiry date - 4, Less than 12 months before the contract expiry date - 1, No, we have not started preparation yet - 14. 2 Data does not sum to 100% due to rounding. Source: National Audit Office private finance initiative expiry survey |
3.16 Experience from expired PFI contracts suggests there is a risk that authorities underestimate the preparation time. Out of the 15 expired contracts included in our survey, three stated that in hindsight they would have started preparing earlier.44,45 In each case, unforeseen events such as disputes caused additional challenges which impacted the expiry timelines. Evidence from a lessons learnt exercise conducted by the Department for Work & Pensions on the PRIME (Private Sector Resource Initiative for Management of the Estate) PFI contract concluded that expiry preparations should have started earlier.
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41 Question 16: When did or has the authority started the process of preparing for contract expiry? Number of responses: Yes, more than 48 months before the contract expiry date - 43, Yes, between 48 months and 24 months before the contract expiry date - 13, Yes, between 24 and 12 months before the contract expiry date - 4, Less than 12 months before the contract expiry date - 1, No, we have not started preparation yet - 14, 43/75 = 57.33%.
42 Question 32a: From your experiences of end of contract management so far, please indicate whether you would have welcomed more or less time, knowledge, capability, resources or guidance in relation to the preparation and negotiation of the contract expiry in regard to time to prepare for the end of the contract: Number of responses: More - 18, Don't know - 8, About right - 34, 34/60 = 56.67%, from a survey response of 60 (as 15 have expired and are referred to separately in the report).
43 Based on a draft of the PFI expiry guidance document the IPA intends to publish in the future.
44 Question 32a: From your experiences of end of contract management so far, please indicate whether you would have welcomed more or less time, knowledge, capability, resources or guidance in relation to the preparation and negotiation of the contract expiry in regard to time to prepare for the end of the contract: Number of responses: More - 3, About right - 12, from a survey response of 15 (as 60 are operational and are referred to separately in the report).
45 Our survey sample included 18 PFI contracts that have already expired, and we received 15 responses.