The start of a new year is often when public sector teams take stock: looking at budgets, evolving priorities and, in some cases, changes in the team and structures (LGR – local government reorganisation – even beckoning for some). 

For those responsible for managing long-term outsourcing and infrastructure contracts like PFI (private finance initiative) and PPP (public private partnership) contracts, it is also useful to take a moment to pause and go back to basics:

How healthy is this contract, really?

PFI and PPP projects are frequently portrayed as inherently problematic. That narrative is rarely helpful. In our experience, these contracts can be very effective, but they do demand sustained attention, good faith engagement and active, informed contract management over many years.

Drawing on lessons from disputes that we have helped to resolve (and, just as importantly, from projects that have avoided them), the following New Year’s Resolutions provide a practical framework for reducing risk and improving day-to-day outcomes.

1. Protect the organisational memory

A recurring issue in long-running PFI/PPP disputes is the loss of records, even going back to the procurement and early life of the contract.

Electronic portals are switched off. Key correspondence is archived or deleted. Individuals who understood the original assumptions move on. When a claim later emerges, reconstructing what information was provided - and on what basis - can be costly and contentious.

Resolution:
Records, including those for the procurement, should be complete, accessible and retained for the life of the contract. Where portals are used for the procurement and/or the management of the contract, authorities should plan from the outset how records will be extracted, stored and maintained.

2. Operate the contract you actually signed 

Over time, custom and practice can quietly replace the written contract. Operational changes are made informally. Workarounds become normalised. This often only becomes an issue when key people leave or when a dispute arises and the contractual record no longer reflects reality.

Resolution:
Those operating the contract should understand its key commercial and risk provisions and operate in accordance with them. Regular refreshers, particularly when roles change, can prevent misunderstandings and ensure continuity.

3. If there are changes, record them properly

Long-term contracts will evolve - that is both expected and sensible. Problems arise not from change itself, but from change that is not formally documented.

Resolution:
Where provisions no longer work as drafted, the solution is to use the contract’s variation mechanisms, not to bypass them. Clear records of agreed changes protect both parties and reduce the scope for future disagreement.

4. Don’t overlook governance and relationships

Strong contract management is not purely technical. The most successful PFI/PPP projects tend to have one thing in common: a robust, commercial and transparent working relationship.

Resolution:

Reflect on your lines of communication and governance structures, particularly liaison or partnering committees. Where these forums have fallen through over time, re-establishing them can be one of the quickest and low-cost interventions available.

Contracting authorities should also review the transparency and information-sharing obligations and ask for information that they should be receiving. This might include visibility of the Helpdesk to track issues with the facilities and services being delivered. 

How we can help

Many of the issues above only become visible once a contract is under strain, often at a point when options are narrower and costs are higher and expiry/handback is getting closer. 

We regularly support public sector clients by:

• Reviewing Project Agreements and schedules for consistency and clarity
• Carrying out targeted compliance and ‘health check’ reviews
• Advising on governance, variations and performance management
• Supporting authorities to address issues early, proportionately and strategically

If a New Year review raises questions about documentation, compliance or next steps, taking advice early can make a material difference at any time of the project’s life, but particularly in the years leading up to expiry/handback. 

Next steps

If you’d like to discuss your contracts, please get in touch.