PFI project handback will pick up pace sooner than you may think – and concerns have been raised about the resource needed over a concentrated period of time to manage that process. With 200 contracts due to expire in the next 10 years, there is a significant need for clear process and protocol. See our earlier blog for discussion on the challenges and opportunities ahead.
The key to effective handback lies in three areas: managing expectations, collaboration and resourcing.
Let's look at collaboration and managing relationships and how the IPA plan to support contracting parties to build positive working relationships through information sharing.
If trust in the process is on one side of the handback coin, on the other is trust in each other. Collaboration between all parties is key. Collaboration is not alien to the PFI industry. The best projects function on strong foundations built on long standing collaborative relationships between authority, project companies and service providers.
Projects can overcome major challenges by working collaboratively. Where that relationship has broken down, when trust has departed, is often where lawyers are busiest.
However, we see time and again the power of collaboration over dispute in the projects industry. Recently we advised our client, hub South East Scotland, on its urgent project to establish and provide facilities management services for a number of mass COVID-19 vaccination centres on behalf of NHS Lothian. Working to timescales which were quantified in weeks and days, rather than years and months, the parties were tasked with delivering a unique project with unique requirements that included more unknowns than knowns for much of the process. The collaborative approach taken by all involved was a powerful reminder of the synergy that can be achieved through effective public/private partnership. The key is to take examples like the COVID-19 vaccination centres and put into practice the lessons learned for upcoming discussions on handback.
We also need to be able to identify where the relationship itself is not enough to overcome a challenge. In some cases, identifying those points of difference at the start of the handback process, will be a powerful tool for all. Where those sticking points exist, using the dispute mechanisms in contracts might help unlock an issue which is blocking successful collaboration. Having those difficult discussions up front, and healing the wounds from issues which have fractured relationships in the past, will help right the ship and, if carefully managed, could result in all parties once again pulling together for the finish line.
To address the need for collaboration, the IPA programme will employ structured engagement with the contracting parties and wider project participants to encourage the sharing of information and building of ongoing relationships to bridge the gap between the public and private sector. Successful relationship building will help strengthen the level of trust between the parties and create the potential for further commercial opportunities in the future. Whilst this structured approach will be welcomed, there will be no 'one size fits all' solution that will work for every PFI project and therefore a degree of flexibility will be required in order to make the handback process work in practice.
Despite the need for a level of flexibility between projects, the IPA are expected to publish a draft public-private PFI protocol to set an industry standard of behaviours that are expected of contracting parties in the expiry process. The protocol aims to encourage collaborative working, ensure transparency, promote effective resolution and encourage the sharing of lessons and best practice. As more and more projects go through the expiry process it is expected that the protocol will develop over time to adapt to market practice.
For more information on how to approach the PFI handback process, read our blogs on the other key themes: