This week, the Infrastructure and Projects Authority ("IPA") published its latest suite of guidance regarding PFI projects.
The guidance, which comprises (1) a "PFI Asset Condition Playbook" (2) insurance guidance for PFI projects and (3) guidance on navigating the risks of PFI project distress, is intended to provide practical advice and recommendations to key PFI stakeholders including contracting authorities and private sector delivery partners. Please see below a short summary of each of the IPA's publications.
PFI Asset Condition Playbook
The PFI Asset Condition Playbook provides guidance for asset condition surveys in preparation for PFI contract expiry. Developed by a cross-sector Working Group, the Playbook aims to establish a baseline, market-standard approach to evaluating the condition of PFI assets, with the intention of ensuring consistency and predictability in survey outputs and aiding in the management and execution of numerous surveys across all sectors. The Playbook also highlights the importance of collaborative relationships between private and public sectors to achieve successful asset handovers and reduce the risk of disputes arising out of asset surveys.
Insurance Guidance for PFI Projects
The IPA's insurance guidance deals with the contentious Insurance Premium Risk Sharing Schedule (IPRSS), that being a mechanism by which some insurance cost savings over the lifetime of a PFI project can be re-distributed to the public sector and, although this mechanism does not feature in all PFI projects, it has nevertheless been subject to dispute on many projects. With that backdrop in mind, the IPA's guidance seeks to assist authorities, contractors, and insurance brokers in navigating the IPRSS by clarifying how the mechanism operates and the key principles which guide its interpretation and application (particularly by insurance brokers) in a contractual context.
Navigating the risks of PFI project distress
The IPA's guidance in relation to navigating risk in distressed PFI projects is designed to help contracting authorities, including senior leaders and PFI contract management teams, as well as private sector contract managers. The guidance aims to identify, understand, and manage risks associated with project distress, insolvency, and (potentially) contract termination and impart the importance of approaching those issues strategically. The guidance document is divided into parts, with a summary for senior leaders and contract managers, detailed advice for managing distressed projects and further information on insolvency and contract termination for financial and legal teams. The guidance emphasises the importance of professional advice and careful consideration of project-specific contract details.
Stay tuned for further blogs from our experienced infrastructure projects team which will unpack the IPA's suite of guidance in greater detail.
