Public Private Partnerships The Worldwide Revolution in Infrastructure Provision and Project Finance
The Worldwide Revolution in Infrastructure Provision and Project Finance
1. The nature of partnerships INTRODUCTION In 1998, the British Inland Revenue service completed the process of relocating 2000 staff from 11 buildings in the Manchester area to a single site, and moved into new fully serviced offices in the city centre of Manchester. The building is ventilated (i.e. no air conditioning), has lighting that switches itself off when people leave, contains gas-fired heating with individual thermostatically controlled radiators, double glazing, building materials made from sustainable sources and building management systems that monitor the use of resources. It was also constructed under the UK government’s Private Finance Initiative (PFI) as a result of a 20-year design-build-finance-operate (DBFO) contract awarded to a private sector body as a partnership arrangement.1 The idea of designing a building to be environmentally efficient is not new. What is new is the realization that partnership arrangements such as the PFI are particularly good vehicles for bringing about this objective because they emphasize value for money over the life of the building, not just the cheapest cost, and encourage a focus on whole-of-life cycle costing implications. Rather than there being separate design, construction, financing, operations and maintenance arrangements as occurs with traditional public procurement, these functions are combined under one contractor. This integration (‘bundling’) within a long-term partnership framework provides financial motivation for the project company to think beyond the design stage and build in energy-reducing and waste-minimizing features that may cost more initially but result later in lower operating and running costs, and so deliver cost...
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