As we near the handback phase of many PFI (Private Finance Initiative) projects, a range of new PFI-related roles are popping up across regions, disciplines, and organisations. But are these positions truly filling the market, or are we seeing a skills gap, with demand outpacing supply?
Key Issues Facing PFI Handback
Several factors are converging to create strain on PFI projects as they approach handback:
Public Sector’s Limited Need in the Past
Historically, the public sector hasn't developed the key skills needed to manage PFIs, as private firms handled delivery and operations. This reliance meant public bodies didn’t prioritise in-house expertise. As a result, roles that were once crucial to the public sector have shifted almost entirely to the private sector.
Movement of Key Personnel
Many individuals who drafted these contracts—some as long as 35 years ago—have retired or moved on. Their insights and intent at the time of agreement are often lost, as few have stayed in the same PFI role for an entire contract’s duration.
An Uncertain Future for PFI
With PFI’s future unclear, professionals have pivoted to more stable fields, resulting in a “brain drain.” This uncertainty makes it difficult to attract new talent or retain experienced individuals in a sector they see as potentially winding down.
High-Stress Environments
Managing PFI projects can be high-stress, with disputes and strained relationships detracting from core operational tasks. This pressure often increases as contracts approach expiry.
Budget Constraints
Overstretched teams face budgetary limits, leaving little room to hire additional help, despite looming deadlines.
Increased Attrition Rates
The added stress of contract expiration has made these roles more challenging, leading to higher turnover rates.
The Challenge of Attrition
The White Fraiser Report highlighted this issue, calling for additional resources for both SPV owners and the public sector to effectively manage PFI contracts. It warned that while improving compliance is important, it shouldn’t harm inter-party relationships or staff recruitment efforts. Similarly, the House of Commons Public Accounts Committee noted many authorities lack the skills needed to manage PFI contract expiry effectively.
Relationships in a Complex Landscape
Many PFI contracts rely heavily on informal agreements and relationships to ensure high service levels, which the formal contract terms might not fully capture. These subtleties can be lost with staff turnover, leading to challenges in retaining institutional knowledge. As expiry nears, projects often see a surge in work and complexity, coupled with aging assets and tighter budgets—all adding more pressure on already-stretched teams.
Risks and Consequences of a Skills Shortfall
Beyond the “why” of the skills gap lies the “so what.” Without experienced personnel, the risks become apparent:
Lifecycle Fund Management may suffer, with SPVs potentially struggling to allocate funds properly.
Asset Condition may deteriorate due to a lack of expertise in maintenance.
Business-as-Usual (BAU) Services could falter, with disruptions or even failures in daily operations.
Increased Penalties for Facility Management Providers due to non-performance.
Loss of Contractual Knowledge as thousands of pages of complex agreements become hard to interpret without experienced hands.
Is There a Solution?
There are some resources available. The Infrastructure and Projects Authority (IPA) has been recruiting for a central pool to bridge the skills gap, and the Local Government Association offers skills and training programs through Local Partnerships. However, these initiatives were launched in 2021 amidst numerous other challenges, and many of these issues are still felt across the sector.
A Call for Resilience
Resilience is essential in PFI project teams, especially as contracts reach their end. The importance of succession planning, early recruitment, and overlapping senior roles to prevent a leadership vacuum cannot be overstated. The message is clear: proactive planning, resilient leadership, and early team engagement are critical to navigating this period.
The handback phase presents both challenges and opportunities. Strategic planning and early resource management can help mitigate the capacity and capability gap. Regardless of a project’s stage, whether it's 12 years or 12 months from expiry, these issues demand attention.
