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On-going change in relation to the management of public services has led to the development of many initiatives in the control of day-to-day resources as the New Public Management¹ (Hood, 1991, 1995) continues its reforms. In this context debates about control of capital expenditure have taken a less visible role despite some earlier and influential comment on the area (Perrin, 1978 for example). Perhaps as the flow of ideas for reform in the management of day-to-day activity have waned, recent attention has turned more systematically to the efficient use of capital resources or infrastructure. This has been accompanied by recognition of the poor state of some of the public sector infrastructure. This chapter is concerned with the implications of the changing approaches to the provision of infrastructure is the U.K. National Health Service (NHS). Its particular focus in the Private Finance Initiative (PFI) and the contractual implications this brings into infrastructure development.

Drawing on institutional work (Lawrence and Suddaby, 2006; Lawrence et al., 2011), this study aims to explore how the concept of value for money (VFM) is understood in terms of the private finance initiative (PFI) implementation in Malaysia.

In-depth interviews with 25 actors involved in the implementation of PFI projects at two public universities in Malaysia were conducted. The interviews focused on the ways in which participants in the projects make sense of VFM in their ongoing involvement with the projects. In addition, a review of publicly available documents was conducted to understand the ways in which the notion of VFM is reflected in the policies and procedures of the government. Data from the interviews and documents were analysed using thematic analysis.

It is found that the advocacy work of macro-level actors, as well as micro-level actors, has promoted PFI implementation to achieve VFM. However, to the micro-level actors, VFM is just a concept that carries different interpretations, depending on how PFI fits their everyday functional discourses. In addition, direct negotiation and lack of commercial appreciation are disruptive not only to the achievement of VFM but also to the public sector reform agenda of the country.

The present study contributes to the discourses on the concept of VFM that is assumed to be inherent in PFI. The findings are based on micro- and macro-level actors and cover both advocacy and disruption of VFM achievement.

The purpose of this paper is to explore the development of the public finance initiative (PFI) in a £2 billion investment to build new schools in Scotland in order to understand how the PFI negotiation process is evolving as the public and private sectors' experiences of PFI grows.

Semi‐structured interviews were conducted with officials from three different Scottish councils. Further insight was gained from attendance at a Scottish conference where presentations were made on the PFI process in building schools.

Council officials' handling of PFI processes has improved over time with more assistance being available to aid project organisers. However, the process continues to be very lengthy with significant sums being spent on professional advice. The balance sheet treatment of PFI transactions remains a crucial consideration.

This paper assesses recent developments in PFI schools' building projects in Scotland and provides some insight into areas where previously reported difficulties have been resolved and where problems continue to exist.

This paper summarises the main research findings from a detailed, qualitative set of structured interviews and case studies of private finance initiative (PFI) schemes in the UK, which involve the construction of built facilities. The research, which was funded by the Foundation for the Built Environment, examines the emergence of PFI in the UK. Benefits and problems in the PFI process are investigated. Best practice, the key critical factors for success, and lessons for the future are also analysed.

The research is based around 11 semi‐structured interviews conducted with stakeholders in key PFI projects in the UK.

The research demonstrates that value for money and risk transfer are key success criteria. High procurement and transaction costs are a feature of PFI projects, and the large‐scale nature of PFI projects frequently acts as barrier to entry.

The research is based on a limited number of in‐depth case study interviews. The paper also shows that further research is needed to find better ways to measure these concepts empirically.

The paper is important in highlighting four main areas of practical improvement in the PFI process: value for money assessment; establishing end‐user needs; developing competitive markets and developing appropriate skills in the public sector.

The paper examines the drivers, barriers and critical success factors for PFI in the UK for the first time in detail and will be of value to property investors, financiers, and others involved in the PFI process.

This paper outlines the concept of the Private Finance Initiative. It covers some of the basic PFI mechanisms and provides the reader with a general understanding of PFI and the purpose it serves. The paper will look at how the policy has been received specifically within the construction industry and the problems highlighted to date.

The National Health Service (NHS) hospitals in Britain are currently in a state of decay following many years of underinvestment in the estate. The NHS urgently requires billions of pounds of investment ranging from total hospital new builds to small refurbishment of existing facilities. The previous Conservative government put forward the Private Finance Initiative (PFI) as the procurement mechanism to address this problem. The new Labour government currently appear to be committing themselves to the same approach. PFI project sponsors have spent upwards of £30m bidding for around 30 major PFI schemes. Despite this, by the time of the UK election in May 1997 not one scheme had reached financial close and many sponsors were expressing their disillusionment with the process. Unlike PFI on other Government infrastructure and service schemes, each PFI hospital is tendered by a separate Trust with their own limited budgets. Many Trusts have demanded schemes without realising that they cannot afford them and whilst these schemes may work out cheaper than publicly financed hospitals over 30 years or more, charges are higher in the early years. This is primarily due to the market for loans, the conditions attached to these loans in terms of repayment periods and cover ratios, and the requirement of the sponsors to generate a reasonable return on their investment. This paper discusses the major issues and analyses some of the technical financial problems surrounding the PFI in the NHS. The authors draw on practical experience of financial structuring and modelling hospital projects to build a generic model to analyse NHS PFI economics.

This paper identifies the theoretical stimulants and impediments associated with the implementation of PFI/PPP (Private Finance Initiative/Public Private Partnership)projects. A current defect of this procurement approach is the unintentional constraint upon the innovations incorporated into the development of PFI projects. A critical evaluation of the published literature has been utilized to synthesize a theoretical model. The paper proposes a theoretical model for the identification of potential innovation stimulants and impediments within this type of procurement. This theoretical model is then utilised to evaluate four previously completed PFI projects. These project case‐studies have been examined in detail. The evaluation demonstrates how ineffective current procedures are. The application of this model before project letting could eliminate unintentional constraints and stimulate improved innovation within the process.The implementation of the model could improve the successful delivery of innovation within the entire PFI/PPP procurement process.

Earlier studies on risk evaluation in private finance initiative and public private partnerships (PFI/PPP) projects have focussed more on quantitative approaches despite increasing call for contextual understanding of the bankability of risks. The purpose of this paper is to explore the perspectives of UK PFI financiers’ regarding the bankability of four critical risks (construction and completion risk, operations, supply and offtake risk) in PPP projects.

Multiple case study strategy was adopted to investigate the phenomenon within real-life context of PFI/PPP projects in UK. Using purposive sampling approach, the study examined school and road PFI/PPP projects through interviews, documentations and focus group discussions.

Results from the study unravelled 36 suitable bankability criteria and some mitigation strategies for evaluating the four critical risks in PFI/PPP during due diligence appraisal. Further evidences from the study also show that, financiers’ bankability criteria, when paired along with corresponding risks and mitigation strategies within with a single framework, provides a quick and effective view of bankability of risks in PFI/PPP funding application.

In order to ensure generalisability of findings, only projects with similar nature were selected from just two sectors of the UK economy (road and education sectors). The context of the study is also based on UK’s PFI/PPP and Construction Industry, as such, other geographical regions in Europe and beyond have not been contextualised in this study. Due to the significance of finance in PFI/PPP contracts, only the perspective of project financiers have been explored in this study.

This study provides a less complicated but useful understanding of how risks in PFI/PPP projects may be packaged in a bankable manner to secure the confidence of project financiers. By presenting a qualitative framework, the study addresses concerns of over quantification of risk analysis in PFI/PPP appraisals and provides a relatable approach useful for non-finance oriented PPP practitioners.

This study addresses the social concerns of too much complexity and ambiguity in PFI/PPP structuring especially regarding factors that could make a project acceptable to lenders.

The study proposes a “Bankability and Risk Qualitative Framework”, which presents bankability information on critical risks in clear manner and represents critical parameters for winning financiers’ funding approvals for PFI/PPP projects.

The UK private finance initiative (PFI) public policy is heavily criticised. PFI contracts are highly profitable leading to incentives for PFI private-sector companies to support PFI public policy. This contested nature of PFIs requires legitimation by PFI private-sector companies, by means of impression management, in terms of the attention to and framing of PFI in PFI private-sector company annual reports. The paper aims to discuss this issue.

PFI-related annual report narratives of three UK PFI private-sector companies, over seven years and across two periods of significant change in the development of the PFI public policy, are analysed using manual content analysis.

Results suggest that PFI private-sector companies use impression management to legitimise during periods of uncertainty for PFI public policy, to alleviate concerns, to provide credibility for the policy and to legitimise the private sector’s own involvement in PFI.

While based on a sizeable database, the research is limited to the study of three PFI private-sector companies.

The portrayal of public policy in annual report narratives has not been subject to prior research. The research demonstrates how managers of PFI private-sector companies present PFI narratives in support of public policy direction that, in turn, benefits PFI private-sector companies.

In Private Finance Initiative (PFI) projects, value for money (VFM) tests and accounting treatment are distinct but related issues. VFM analysis should be concerned with total risk, not just with the sharing of risk, which dominates the accounting treatment decision. A framework is developed for logical thinking about what is meant by “best VFM” in the context of PFI projects. This involves consideration of the full set of alternatives, not an artificially diminished subset. The credibility of analytical techniques can be tarnished if they are misused to legitimate a predetermined decision. A reduction in construction risk may be a powerful source of VFM gains under PFI, but, under UK accounting regulation, this should not influence the accounting treatment decision. New complications about how VFM should be interpreted arise directly from the process of public sector fragmentation: affordability to the client is not necessarily the same as VFM for the public sector as a whole. Only public auditors, such as the National Audit Office, can gain access to PFI documentation on the conditions necessary for a comprehensive assessment of both accounting treatment and VFM. However, such studies require the kind of theoretical underpinning provided in this article, as otherwise the findings are likely to be ambiguous and hence vulnerable to rebuttal. In particular, VFM judgements must make explicit the basis of comparison on which they rest.