By Mark Poppy, Property Training Manager, CIPFA
CIPFA's Introduction to PFI Exit Strategies event on the 12 May raised a number of issues which Section 151 officers need to have on their radar as it would seem that currently this is not seen as a priority. The Infrastructure and Projects Authority (the IPA) estimates it takes seven years to adequately prepare for expiry and – as the House of Commons Public Accounts Committee "Managing the expiry of PFI contracts" report published on 21 March report stated – "government has started to deal with the expiry of PFI contracts, but there remains a lack of urgency and overall plan."
CIPFA's event saw some key points and tips which will help those in the management of the expiry of PFI contracts:
Know where the documentation around the PFI is located - and has it been kept up to date? It is important to know where all the original documentation can be found and that any changes made are well documented and signed off. This is a major starting point.
Understand in detail the assets that you will be getting back. You need to fully understand the assets that will revert back to you and the condition they are in. Plus have you the planned maintenance schedules?
Have you conducted an asset challenge on what is coming back? Is it fit for purpose? What are you going to use the asset for? Is that still relevant? Does it fit with the current direction of travel for the authority?
Ensure this work is adequately resourced – this is not business as usual. This will be a major project for the authority and appropriate financial and human resources need to be allocated to do the work. This should not just be an add on.
The sector lacks the capacity and capability to deal with this – how do you plan to resolve this locally? This is likely to prove a real challenge as it is unlikely any staff will be around who were involved when this was set up. If you do not have the capacity and capability, where are you going to go? Who will manage this? How will it be funded are just a few questions that will need answering.
Are the appropriate communication channels in place, do those involved have the same narrative? As with any major project a communication plan is key between all the parties involved to ensure a common approach both internally and with external stakeholders and other interested parties.
Who will manage the project? Accountability and responsibility are cornerstones to a successful exit strategy having a named team with a senior responsible officer is vital.
Have you an agreed plan with SMART outcomes? A first step is to agree at an early stage a plan that all parties involved can subscribe too with specific, measurable, attainable, relevant and timebound goals. This will ensure that the exit process runs smoothly.
Need to ensure business as usual during this transition period. Services still need to be delivered during this period of time and the public and members will rightly expect no reduction in services whilst the exit is taking place.
Know what is included in the unitary charge.Having a clear understanding of what is actually included will assist in planning for the future budgeting.
At the webinar Bevan Brittan, National Audit Office, Peopletoo and CIPFA all emphasised the point that local authorities need to start planning for this soon or it will be too late. This lack of preparation will have strategic, operational and financial implications.
- CIPFA offers a more in depth course around PFI and PPI starting 24 June, the Certified PPP (P3/PFI) Practitioner (complex contracting) Foundation Level, or CP3P course. Find out more
- A further Introduction to PFI Exit Strategies webinar will be held on the 9 September with speakers from the Infrastructure Project Authority, National Audit Office, Bevan Brittan, Grant Thornton and Peopletoo. Find out more