Private Finance Initiative Guide, Meaning , Facts, Information and Description
The Private Finance Initiative specifies a method by which the United Kingdom government provides financial support for "public private partnerships" known as Public-Private Partnerships (PPPs) between the public and private sectors.These projects aim to deliver all kinds of "public" works together with the provision of associated operational services. In return, the private sector receives payment, linked to its performance in meeting agreed standards of provision. The funding for these projects is given by central government in the form of what are known as PFI "credits". PFI is basically just a different way of purchasing. The local authority does the buying, just as it does at present.
Each PFI project is different depending on local circumstances. However there are some common threads that run through all projects.The local authority will sign a contract with a private sector "Operator". During the period of the contract the Operator will provide certain services, which are currently provided by the local authority. The Operator is paid for the work over the course of the contract and on a performance basis. The authority will design an "output specification" which is a document setting out what the Operator is expected to achieve. If the Operator fails to meet any of the agreed standards it will lose an element of its payment until standards improve.
The Scottish Parliament Building is one of the few major public projects that have not been constructed under Private Finance Initiative in recent years and, in view of the delays and cost overruns that occurred, almost certainly the last.
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