Abstract: Purpose – The UK Government has now adopted Private Finance Initiative (PFI) as a major vehicle for the delivery of additional resources to the health sector in order to achieve a greater investment in healthcare facilities. The purpose of this paper is to examine the trends and risk assessment of the PFI in the healthcare sector. Design/methodology/approach – The paper employed secondary data and interviews of key participants in two hospital PFI projects to highlight developments in healthcare PFI and the risk management of hospital projects. Findings – The results show that the use of PFI in the provision of healthcare is increasing in terms of number, capital value and size of projects. What emerged in the healthcare PFI project was a usage of a plethora of risk management techniques, albeit to varying degrees. Experience appeared to be the prime risk assessment technique employed, while risk avoidance was first explored before pricing and allocating any residual risks. “Risk prompts”, such as using checklists and risk registers were also useful in the identification of risks. Among all participants, insurance cover and sub-contracting appear to be the most prominent strategies employed for managing out the risks. Originality/value – The negotiations that precede the signing of a healthcare PFI project contract had an impact on the final choice of facilities or their specifications. The two contracting parties sought a balance between an optimal allocation of risks, choice of facilities and project price. Although the risk management techniques being used are generic in nature, there is still no evidence at the moment to show that these are appropriate for PFI projects. It is important that further investigation is undertaken to assess the level of current skills in risk management techniques to deal with PFI projects and the extent to which these techniques are appropriate to tackle complex healthcare PFI projects. (Emerald Group Publishing Ltd.)

The wherewithal of achieving best value in private finance initiative (PFI) projects and the associated problems therein are documented. In the UK, PFI has offered a solution to the problem of securing necessary investment at a time of severe public expenditure restraint. In PFI schemes, the public sector clients must secure value for money, while the private sector service providers must genuinely assume responsibility for project risks. A broad-based investigation into PFI risk management informs the discussion in this paper. It is based on 68 interviews with PFI participants and a case study of eight PFI projects. The research participants comprised of contractors, financial institutions, public sector clients, consultants and facilities management organizations. The qualitative software Atlas.ti was used to analyse the textual data generated. The analysis showed that the achievement of best value requirements through PFI should hinge on: detailed risk analysis and appropriate risk allocation, drive for faster project completion, curtailment in project cost escalation, encouragement of innovation in project development, and maintenance cost being adequately accounted for. Factors that continue to challenge the achievement of best value are: high cost of the PFI procurement process, lengthy and complex negotiations, difficulty in specifying the quality of service, pricing of facility management services, potential conflicts of interests among those involved in the procurement, and the public sector clients' inability to manage consultants. (Routledge)

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.