1. In our discussions with consultees about behaviours in operational PFI projects, it quickly became clear that most PFI projects continue to benefit from reasonable relationships. SPV Owners and other private sector consultees were able to quantify this across large portfolios. From a public sector perspective, Government Departments and Public Authorities with portfolios of PFI projects shared a similar general view. However, it was clear to us that relationships in particular sectors have deteriorated. Consultees highlighted the health sector, in particular, as having become very adversarial. That experience is causing market participants to be concerned that these behaviours could spread more widely, leading to worsening relationships, associated behaviours and an increase in the prevalence of disputes.
2. In the context of relationships, both the public and private sector believe it is possible to have a dispute in a contract and successfully manage this through to conclusion, without damaging relationships. There was also acknowledgement that this can often not be the case and protracted or badly handled disputes, whether formal or informal, can damage relationships. We deal with disputes in more detail later on in this report.
3. There was a strong emphasis from SPV Owners, Management Services Providers and O&M Providers that they believe that good relationships underpin any flexible approach to effective PFI Contract delivery, especially where services are being provided by the SPV that go beyond those stipulated in the PFI Contract.
4. The overall picture gathered was one of a typical normal distribution with some very good relationships, a strong middle ground of reasonable relationships, some weaker relationships and then pockets where relationships and accompanying behaviours are poor. We spent considerable time with consultees to understand the underlying issues and causes from both a public and private sector perspective. We start with the private sector perspective then balance that with the public sector view.