Estimates suggest there are over 700 PFI projects in the UK, with over 150 due to complete in the next 3 years. The government’s new guidance suggests that handback planning should begin at least 7 years in advance of the contract expiry, giving public and private sector bodies little time to act. Those who will receive these assets at expiry must move fast in order to complete a successful handover. Specialist infrastructure consultancies will likely need to be employed in order to cover the scope of the works needed. With such a short amount of time remaining to transition numerous assets, complete pre-expiry conditions surveys, and finish any remedial works identified as a result of those surveys, it will be crucial to assess whether there is enough capacity in the consultancy space to facilitate a successful handback process.

Currently estimates suggest that there is a significant shortfall in the FM and property consultancy market of qualified, specialist candidates to fulfil the handback process in every case. This is concerning when considering that a substantial portion of PFI contracts will expire in the next 10 years and contracts typically lack the necessary “specificity in [the] handback criteria” according to the IPA’s own handback guidance. This leaves ambiguity as to the ‘contractually required condition’ the sites must be handed back in.

Tim Cooper, SPV Director at Bellrock, states, “as a sector, we’ll begin to see a need for more skills and more resources than are available in the current market. We’ll see the professionals with a broad base of PFI and FM experience being targeted for new roles: the ones who read contracts, that have ops experience, understand the implications of contract expiry and handback projects. Internally, companies will be targeting specific skills to grow their handback teams.” He continues, “the conversations we’re having now, they’re all about mitigating the risk profiles in these things.”

Handbacks will therefore require experienced professionals with a thorough understanding of the contract terms, including the condition of the assets, liabilities, and obligations. As Tom Dewar, Sector Head - Semperian Handback at Semperian Assurance Services recognises, “in addition to the business as usual operational management, a broad range of skills will be required to manage the expiry process and facilitate the transition of the assets, services, and people delivering those services to a post-PFI operating model.”

The likelihood is, many people don’t have an understanding of the breadth and complexity of the roles needed. Dewar provides a non-exhaustive list of necessary professionals: “Project Managers and Demobilisation / Mobilisation Managers with experience in managing complex PFI projects; people with legal expertise to undertake contract reviews and provide advice; HR specialists in TUPE to support high volume staff transitions; technical M&E, surveying, and compliance specialists, (to name a few); experts in property to valuate assets and negotiate significant transactions; Finance Managers to close out contracts and manage retentions; and Commercial Managers to implement strategy, manage disputes and ensure all obligations are settled.” Handback teams will also need diversity, bringing in professionals from various backgrounds to ensure effective collaboration within the team and with the external, private sector stakeholders.

“People don’t necessarily appreciate the broad range of skills required to run the handback process,” says Sarah Channin, Commercial Director PFI Expiry & Lifecycle at EQUANS. “There’s been a lot of focus on surveyors and other technical roles, but I think there will be a skills gap more broadly: in commercial, legal, HR, and other areas. This will be challenging, as PFI is a niche market and the number of people with broad knowledge of it are dwindling, and new professionals or specialists aren’t going to be getting themselves into PFI at the very latter stages of it.”

She continues, “Staff retention is another challenge for FM providers because clients aren’t having discussions early enough to give the workforce on the ground certainty for the future of their role but they will be aware that their contract is coming to an end.”

Given that the quantity of PFI project handbacks increases substantially from the early 2020’s, and continues for at least the next two decades, both the private and public sectors will need to begin setting up training and development programmes in the short term that will give them the necessary staff for the future. They will also need to review their hiring strategy in this area, and consider bringing professionals in from other areas with the technical skills needed for project delivery. Further to this, stakeholders on all sides should be considering hiring plans that would bring in retired professionals who originally worked on creating the PFI contracts in both the public and private sector to draw on their expertise. They could be the perfect candidates for short term projects to tie up the handback of assets in the next 3 years, and handover their experience to others for the years after that.

As featured in the Partnerships Bulletin.