IWFM PFI Handback Handbook setting out issues to consider
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With over 700 private finance initiative (PFI) contracts in the UK nearing expiry, facilities management (FM) professionals face the significant task of ensuring a smooth handback process to public sector owners. FM teams must prioritize asset condition, information management, and service continuity to protect public value while managing contract obligations effectively. The impending changes in public procurement regulations further emphasize the need for strategic planning and collaboration as the government aims for improved value and social impact.
IWFM PFI Handback Handbook setting out issues to consider
- 1. IMAGES: ALAMY, GETTY IMAGES, ISTOCK A s hundreds of the UK’s Private Finance Initiative (PFI) contracts approach their expiry dates, FM professionals will have the challenging task of managing the handback of these assets to their public sector owners. The importance of early preparation, and the critical role of FM teams in ensuring a smooth transition, are not to be understated. With the Infrastructure and Projects Authority (IPA) recommending that expiry planning should commence at least seven years before the contract’s end date, many projects are now entering this critical phase. The scale of the task is significant. There are more than 700 contracts in the UK, with 550 in England alone. This represents an initial capital expenditure of £57 billion and £46 billion respectively. PFI contracts have shaped the nation’s schools, hospitals, prisons, and other critical infrastructure. As these contracts expire, FM teams play a crucial role in ensuring a smooth transition and protecting value for money for the public sector. Key FM responsibilities Asset condition and maintenance One of the primary concerns for public sector bodies is the condition of assets at handback. FM teams must ensure that PFI assets are maintained in line with contractual obligations throughout HANDBACK HANDBOOK 2025 sees the start of a multi-year spike in PFI project hand- backs that will see both FM service providers and public sector clients alike confronting the process of ending these longest and most comprehensive of FM contracts. Anthony Walker considers what will be required to smooth the process 26 FACILITATE JANUARY-FEBRUARY 2025 FEATURES/HANDBACK HANDBOOK 26-29 F-PFI-Handbook_01-JAN-FEB 2025_FM World.indd 26 26-29 F-PFI-Handbook_01-JAN-FEB 2025_FM World.indd 26 19/12/2024 10:42 19/12/2024 10:42
- 2. the contract term to avoid costly refurbishments or replacements post- expiry. IPA guidance emphasises the importance of conducting thorough asset condition surveys well in advance of expiry. FM professionals should implement a proactive maintenance strategy to address any identified issues, maintain detailed records of all maintenance activities and asset performance, conduct regular compliance audits to ensure proper servicing of plant and equipment, and develop a clear understanding of the contractual handback requirements and standards. Information management and transfer FM teams play a critical role in managing and transferring essential operational information to the public sector. This includes asset registers and condition reports, maintenance records and schedules, operating manuals and procedures, compliance documentation, and performance data and service level agreements. Early engagement with the client is crucial to determine their information requirements and establish a robust process for data transfer. Service continuity planning Ensuring continuity of services post- expiry is a key objective. FM professionals should work closely with the public sector to understand their future service requirements, develop detailed transition plans for each service area, identify any potential gaps in service provision and develop mitigation strategies, and consider TUPE implications for staff transfers, engaging with HR teams early in the process. Systems and technology transfer Many PFI projects involve bespoke FM systems and technologies. FM teams should audit all systems and software used in managing the assets and services, assess the compatibility of these systems with the public sector’s existing infrastructure, develop plans for data migration and system handover, and provide training and support to public sector staff on key systems. Commercial and financial considerations FM professionals must work closely with commercial and financial teams to review the cost structure of current services and identify potential efficiencies, “The expiry of a PFI contract presents an opportunity to reassess service needs and delivery models” One of the primary concerns for public sector bodies is the condition of assets at handback, which is why FM teams must ensure that PFI assets are maintained in line with contractual obligations The scale of the PFI contract handback is significant, with more than 700 contracts in the UK, with 550 in England alone, representing an initial capital expenditure of £57bn and £46bn respectively FACILITATEMAGAZINE.COM 27 HANDBACK HANDBOOK/FEATURES
- 3. IMAGES: GETTY IMAGES, ISTOCK assist in developing budgets for future service provision, support the assessment of any outstanding lifecycle works or maintenance obligations, and contribute to negotiations around final settlements and handback arrangements. Challenges and mitigation strategies Resource constraints Many public sector bodies face resource shortages in managing PFI expiry. FM teams can support by providing clear documentation and knowledge transfer to ease the transition, offering targeted training to public sector staff on key asset management and FM processes, and considering secondment arrangements to provide continuity of expertise post-expiry. Contractual ambiguities PFI contracts, particularly older ones, may lack clarity on expiry and handback processes. FM professionals should work with legal teams to review and interpret contractual obligations, seek early agreement with the public sector on practical interpretations of ambiguous clauses, and document all agreed approaches to managing handback requirements. Relationship management Maintaining positive relationships between all parties is crucial for a successful handback. FM teams should foster open communication channels with the public sector authority, engage proactively with subcontractors and supply chain partners to manage their exit and participate in regular stakeholder meetings to address issues and track progress. Future service provision The expiry of a PFI contract presents an opportunity to reassess service needs and delivery models. FM professionals can contribute by sharing insights on current service performance and areas for improvement, advising on technological advancements and industry best practices, and supporting the development of new service specifications and performance metrics. Opportunities for improvement Although PFI handback presents challenges, it also offers opportunities for FM teams to drive improvements: 1Modernisation: Identify opportunities to upgrade assets and systems to meet current standards and technologies. 2Sustainability: Incorporate energy-efficiency measures and sustainable practices into all future asset management plans. 3Data-driven decision-making: Leverage accumulated performance data to inform future investment and maintenance strategies. 4Innovation: Explore new service delivery models and technologies that can boost efficiency and user experience. Best practices for success To navigate the complexities of PFI handback successfully, FM teams should: 1Start early: Begin planning at least seven years before expiry. 2Adopt a project management approach: Treat handback as a distinct project with clear governance, resources, and timelines. 3Collaborate closely: Work in partnership with the public sector authority, fostering transparency and trust. 4Focus on knowledge transfer: Prioritise the capture and transfer of operational knowledge and expertise. 5Stay flexible: Be prepared to adapt plans as circumstances change and new challenges emerge. Conclusion The handback of PFI assets and services represents a significant challenge for facilities management professionals. However, by adopting a proactive, collaborative approach and focusing on key areas such as asset condition, information management, and service continuity, FM teams can play a crucial role in ensuring a smooth transition. As we enter a period of unprecedented PFI expiries, the expertise of FM professionals will be invaluable in protecting public value and setting the foundation for effective long-term asset management and service delivery. By embracing this challenge, the FM industry has an opportunity to demonstrate its strategic importance and contribute to the ongoing improvement of public infrastructure and services. Anthony Walker is director at surveyor firm Sircle A NEW APPROACH ANEWENVIRONMENT–THEPROCUREMENTACT2023 With the new Labour administration has come a fresh approach to public procurement; the government’s aim is to provide greater value for money, improved social value, and economic growth by opening up public procurement to new entrants including SMEs and social enterprises. The new procurement act received royal assent in October 2023 but will only come into force on 24 February – a delay allowing contracting authorities time to prepare for the new public procurement policies, processes and systems. The act replaces several existing acts, consolidating them into a single piece of primary legislation. Its introduction will enshrine a new political and legal outlook that will prove interesting to monitor in the months ahead. How private investment will support more new-built environment projects is yet to be addressed comprehensively, but several construction firms, many with well- established FM arms, have warned that government targets for net zero and infrastructure can only be met should the PFI model be replaced. 28 FACILITATE JANUARY-FEBRUARY 2025 FEATURES/HANDBACK HANDBOOK 26-29 F-PFI-Handbook_01-JAN-FEB 2025_FM World.indd 28 26-29 F-PFI-Handbook_01-JAN-FEB 2025_FM World.indd 28 19/12/2024 10:43 19/12/2024 10:43