Outsourcing the Risk Analysis Function in 'Private Finance Initiative' Projects

Abstract

The optimisation of risk transfer and risk management in ‘Private Finance Initiative’ (PFI) projects involves the accurate assessment of these risks. The manner in which risks are analysed and the extent, to which this function is outsourced in PFI projects, is examined in this article. The discussions are informed by an investigation conducted at Glasgow Caledonian University. Literature was reviewed, upon which a survey instrument was developed. A qualitative methodology was adopted, and involved a total of 90 interviews with diverse PFI participants in the UK. The ‘AtlasTi’ software was utilised in the analysis of data. The interviews revealed that the bulk of the risk analysis function in PFI is usually done in-house, while a minor part is often outsourced to technical, legal and financial cum insurance experts. Other disciplines consulted, albeit occasionally, include traffic engineering, environmental science, planning and surveying. The objective is to outsource those aspects where in-house expertise is deficient. When tasked with risk analysis, consultants were adjudged to usually render a good job.