The private finance initiative and value for money

Abstract

Purpose

The paper aims to define and measure value for money (VFM) within the concept of private finance initiative (PFI), and investigate the principal factors in which opinions are formed.

Design/methodology/approach

Literature review of texts, published papers, and reports are used to identify relevant parameters to the research. The sources support the arguments of opinion within the paper.

Findings

PFI is still perceived by the government as the most cost effect means of procuring public infrastructure. The positive aspects of PFI are the competition generated by the concept, and improved risk management. Negative aspects include the lack of agreed formulae by all stakeholders by which to benchmark VFM, and an increasing sceptical electorate to the PFI concept of providing short and long term VFM.

Research limitations/implications

By virtue of PFI being a dynamic, changing, and complex means of procurement, this research will be valid in its own right. However more up to date government policies must be consulted to take the determination of VFM in any further research.

Practical implications

The research and conclusions will provide add to the current debate as to the viability of PFI, with VFM the main key point as to the ongoing success of the governments strategy this method of procurement.

Originality/value

The paper adds, to the “VFM” drivers that have been identified by identifying principle factors in creating VFM. This will be a sound basis for the justification of VFM in PFI.

Citation

Pitt, M., Collins, N. and Walls, A. (2006), "The private finance initiative and value for money", Journal of Property Investment & Finance, Vol. 24 No. 4, pp. 363-373. https://doi.org/10.1108/14635780610674534