Lessons from the private finance initiative in the UK

Purpose 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. Design/methodology/approach The research is based around 11 semi‐structured interviews conducted with stakeholders in key PFI projects in the UK. Findings 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. Research limitations/implications 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. Practical implications 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. Originality/value 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.