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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 Private Finance Initiative (PFI) is a recent development in the UK in which private sector organisations, design, build, finance and operate assets to deliver a service to public sector clients. The initiative is expected to bring the private sector's finance, management skills and expertise into projects which would normally be undertaken by the public sector. Equivalents of this initiative, also found outside the UK, include DBFO (Design Build Finance Operate), BOO (Build Own Operate) and turnkey projects. Two important considerations for a project to receive an approval for the initiative are that it must represent value for money and there must be sufficient transfer of risk to the private sector. This paper, based on a questionnaire survey, provided the perceptions of clients, contractors and financial institutions on risk associated with PFI and how these determine their approach to PFI schemes. The analysis shows that design changes and the level of information on functional, performance and output requirements for PFI schemes are of major concern to the parties involved in this procurement route.

The Private Finance Initiative (PFI) introduced in the UK in 1992 has provided the framework for the completion of a large number of capital projects managed by public sector bodies. The objectives of the PFI included the promotion of greater efficiency and cost control in the management of large‐scale projects, the transfer of risks to the sector or organisation best able to manage them and the use of management skills available in different sectors of the economy to improve the effectiveness of publicly funded projects. Success and failure cases of the PFI discussed in this paper give some implications to policy‐makers in emerging economies in various areas including risk management, cost of capital measurement and transfer of risks. Overall, there is a need for a greater focus on long term budgets in making decisions about PFI and other methods of public service provision. The question of long term planning is likely to be more complicated in emerging economies with rapid growth rates. For many emerging economies, PFI is a new premise with fundamental differences from conventional public finance, not only in principles, but also in the contract process, risk consideration and decision making.

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.

The Private Finance Initiative (PFI) is designed to introduce new resources into the national infrastructure. It introduces the idea that the public sector can provide services by purchasing them from the private sector rather than by direct provision. There have been considerable disagreements about how to account for these transactions. Key in this has been differences of view as to whether PFI transactions involve purchase of assets and thus whether the transaction should appear on the balance‐sheets of the public sector. This seemingly technical question has generated considerable debate and disagreements between the UK government and the Accounting Standards Board (ASB). Closer investigation into this disagreement demonstrates a range of alternative views and tensions. Describes and analyses these different views and the inter‐ and intra‐relationships and tensions between these parties using an interests‐based, political framework for this contextual analysis. Demonstrates how accounting standard setting, in cases such as accounting for PFI, if only analysed at the technical level, misses a range of social dynamics that are central to understanding the role of accounting in the development of society.

This paper aims to analyse the findings of the relevant studies, to summarise what has been done in this area, to direct future research and to improve private finance initiative (PFI) practice. PFI is a new form of contracting out public facilities to the private sector, where facility management was integrated with construction. There have been a large number of academic papers published on this subject; however, there is a lack of a systematic review of the PFI-related studies.

The literature search focused on international peer-reviewed and published literature, with relevance to PFI. The search of literature, following the method of Tang et al. (2010) and Al-Sharif and Kaka (2004), involved the titles, keywords and abstracts, from some major electronic databases (Web of Science, Engineering Village, Science Direct (Elsevier) and Springer Link) of publications published between 1992 and 2011. The data were classified into six categories for further analysis.

As a new way to procure public facility management, PFI projects have unique characteristics in comparison to conventional construction procurement. The review of the literature regarding PFI is important in terms of summarising the key findings and suggestions of studies for industry practitioners, as well as forecasting the future academic research trends in this area. The number of research works on PFI increased quickly in recent years; however, the review discovered there were still some issues not yet covered in the literature.

This review is not exhaustive in nature, as the criteria in selecting research papers only included English-written, peer-reviewed journals from some major electronic literature databases. This is the limitation of the research. Further review on a wider range of literature is recommended for researchers.

Since PFI was introduced to the construction industry to fund infrastructure 20 years ago in the UK, it has gained interests from scholars. In this new form of contracting out public facilities to the private sector, facility management was integrated with construction. There have been a large number of academic papers published on this subject; however, there is a lack of a systematic review of the PFI studies.

Within the UK the Private Finance Initiative (PFI) has developed into a mature process for the procurement of improved infrastructure and associated facilities management (FM) service delivery. The role of FM within this process provides enormous opportunity to ensure maximum value is provided in terms of both value and performance of the final design and delivery of support services. As the first wave of PFI schemes are now becoming operational, this paper aims to explore these opportunities and identify what, if any, lessons have been learnt for the future development and success of the PFI and the value it can provide to both the taxpayer and private investor.

The paper aims to define and measure value for money (VFM) within the concept of private finance initiative (PFI), and investigate the principal factors in which opinions are formed.

Literature review of texts, published papers, and reports are used to identify relevant parameters to the research. The sources support the arguments of opinion within the paper.

PFI is still perceived by the government as the most cost effect means of procuring public infrastructure. The positive aspects of PFI are the competition generated by the concept, and improved risk management. Negative aspects include the lack of agreed formulae by all stakeholders by which to benchmark VFM, and an increasing sceptical electorate to the PFI concept of providing short and long term VFM.

By virtue of PFI being a dynamic, changing, and complex means of procurement, this research will be valid in its own right. However more up to date government policies must be consulted to take the determination of VFM in any further research.

The research and conclusions will provide add to the current debate as to the viability of PFI, with VFM the main key point as to the ongoing success of the governments strategy this method of procurement.

The paper adds, to the “VFM” drivers that have been identified by identifying principle factors in creating VFM. This will be a sound basis for the justification of VFM in PFI.

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.