Analysis of factors affecting value for money in UK PFI projects

Purpose This paper aims to report findings from a study on factors that made value for money (VFM) in private finance initiative (PFI) projects vulnerable to variations. It seeks to identify the top influencing factors, rank them according to the relative strength of influence, and explore their interactivity. Design/methodology/approach The study uses a documentary review of full business cases of five PFI projects, published reports, and scholarly publications to identify the list of factors; and a questionnaire survey of 44 PFI projects in the UK to establish the ranking of importance. Findings The findings reveal that PFI projects are more strongly affected by client‐driven internal factors than external factors. Internal factors, such as design change in the development phase and requests for new works or services in the operational phase were also likely to act independently, while external factors, including conditions for approval, movement in construction costs and change in PFI guidelines, worked interactively. Practical implications The research findings add to the knowledge of priority factors that need to be addressed to enhance the achievement of long‐term VFM in PFI projects. Originality/value The study is one of the few studies that have investigated VFM of PFI projects from a whole life cycle and dynamic perspective. It reveals not only a list of main influencing factors of project VFM, but also interrelationship between these factors.