PFI remains a critical part of local government service delivery. Many contracts are now entering their later years, drawing focus towards asset condition, building safety, and planning for contract expiry and “handback”. 

Recent guidance from the National Infrastructure and Service Transformation Authority (NISTA) reinforces a key point: while delivery risk is largely transferred, accountability for services, safety and outcomes remains with the contracting authority. This makes active contract management essential.

At the same time authorities (and contractors) are managing a loss of institutional memory from when these arrangements were put in place. There is a continued tension between managing the day to day, upskilling new staff and planning for the future with stretched resources and uncertainty about funding and, with LGR, what local government will look like in years to come.

Active contract management

PFI structures can give the impression that responsibility sits with the project company and its sub-contractors/providers. In practice, authorities remain responsible for monitoring performance, verifying compliance and escalating issues through contractual mechanisms such as the helpdesk and governance structure.

This requires a proactive approach. NISTA has recently issued new guidance[1], aimed at PFI contracting authorities, which sets out the following frameworks:  

• Understanding and applying the project agreement and output specification;
• maintaining clear records and performance data;
• accessing information to verify compliance; and
• building robust working relationships across all parties.

The added complexity with contract management of PFI arrangements is that there are many more parties involved than non-PFI contracting. There is the project company/SPV, the SPV sub-contractors who are most often doing the actual delivery, equity/investors and funders.  Whilst all parties ultimately want the contract to be a success, there are conflicting drivers and interests along with a larger cast of personal relationships to manage.  It is important that the authority understands clearly what its drivers are (and that there is buy-in internally on that) but also what the drivers of all other parties are and how that impacts delivery and management.

Lifecycle, asset condition and residual safety risks

A central issue as contracts mature is the delivery of lifecycle investment. NISTA highlights that lifecycle spend can peak between years 10 and 15, when major asset components require replacement.

However, where this investment is deferred or under‑delivered, risks increase significantly in the second half of these contracts. This is particularly acute in PFI schools and other occupied buildings, where authorities retain overarching statutory responsibilities for service users. Indeed, whilst PFI contracts transfer significant operational risk to contractors meeting output specifications, certain core responsibilities remain with the authority throughout. These include:

• monitoring statutory compliance;
• accountability for service continuity;
• governance and decision‑making under the contract;
• financial oversight; and
• expiry and handback.

These residual risks mean authorities must remain actively engaged and appropriately resourced, particularly in managing period of organisational or legislative change (see further below). Authorities should be:

• monitoring lifecycle plans against actual delivery, including reviewing lifecycle spend and reserve accounts;
• interrogate assumptions on asset condition; and
• ensure compliance records (e.g. fire, water, structural) are complete and accessible and that changes in law are implemented.

Expiry and handback: a structured programme

PFI expiry should not be approached as a late‑stage legal exercise. As reinforced at the Operational PPP Summit (OP3S) which Anthony Collins attended in late 2025, the message is clear: treat expiry as a structured programme in its own right and make it as collaborative as possible. Best practice is to begin planning up to seven years before contract end. Some areas to focus on include:

• data and documentation – ensuring asset registers, manuals, warranties and compliance records are complete and accessible to the authority;
• asset condition – understanding whether assets will meet contractual and statutory requirements at handback;
• governance – establishing dedicated roles and oversight; and
• managing disputes – particularly where condition or lifecycle issues are emerging.

Incomplete information and lifecycle/maintenance gaps at expiry can create immediate risks.

Continuity of services

Expiry is not simply about transferring assets. It is also about ensuring the continued provision of services. We will see the hand-back of hundreds of facilities over the next decade and they need to be maintained for future use. Authorities will find it helpful to consider:

• how assets will be operated and maintained post‑expiry;
• any immediate safety or compliance works required;
• workforce and capability needs (consider application of TUPE); and
• integration with wider estates strategies.

Expiry planning also needs to align with the Procurement Act 2023, which will shape successor service arrangements. Authorities should consider early how they will procure or deliver future FM and asset management services, ensuring compliance while embedding safety, sustainability and value for money.

Local Government Reorganisation

For authorities undergoing LGR, long terms contracts such as PFIs add to the complexity. Contracts, liabilities and risks will transfer to successor authorities, but effective management depends on early planning and clear allocation of responsibility. We recommend: 

• identifying all PFI contracts and key risks early;
• ensuring robust information sharing, particularly around asset condition and safety records; and
• using section 16 agreements (where there is not a single successor authority) to clearly allocate responsibility and financial exposure.

Learning from the industry

At OP3S, consistent themes emerged across the sector: the need for early expiry planning, greater scrutiny of lifecycle delivery, increasing focus on decarbonisation, and the importance of collaborative behaviours.

Perhaps most importantly, successful outcomes depend not just on contractual rights, but on people, data and proactive management.

Final reflections

PFI contracts may be legacy arrangements for the time being, but future PPPs are in NISTA’s 10-year Instructure Pipeline too, via revised models. There is an appreciation of how these can deliver public infrastructure but need active management. In summary:

• monitor lifecycle investment and asset condition closely;
• treat expiry as a planned, multi‑year programme;
• maintain a clear focus on safety and statutory responsibilities; and
• ensure continuity through organisational change and future procurement.

Handled well, PFI expiry is a controlled transition. Left too late, it becomes a significant risk.