What to expect for PFI handback

PFI handback is a complicated process, whether you’re approaching the project from the public or private side – and the UK’s first PFI projects launched in 1992, so the first projects are only just starting to get to handback stage. 

We were recently involved in the expiry process with Victoria Dock Primary School, the UK’s first PFI primary school, which was handed back after 25 years. 

So what should you expect as you go through handback? We’ve put together some advice based on what we learned from the process. 

What should you expect? 

> UNDERSTAND WHERE YOU ARE

You need to comprehensively understand the contract and the current situation of your school, identifying potential risks and doing a ‘health check’ on your school. Early projects often lacked specificity around condition standards, lifecycle assumptions, document requirements and stakeholder responsibilities, so it’s vital to clarify everything to avoid uncertainty for partners and develop a contract risk register.

> WORK TOGETHER

Relationships and early engagement are key across the board. A key part of the process will be condition assessment/surveys. Implementing an early asset condition survey at least five years before expiry ensures asset condition is on track for handover and so de-risk the expiry process for all parties. This would be in addition to the final condition survey, which is typically completed 18-24 months prior to expiry. Having all parties involved in this step will help to  ensure everyone is in agreement and lifecycle works are completed before the end of the concession.  

During the Victoria Dock Primary School handback process, we found that engaging with the school staff early and throughout the process greatly helped with a seamless transition of ownership of the building. 

> GET YOUR PAPERWORK IN ORDER

Completing an estates review questionnaire will really help with your handback process. This is an information gathering exercise around the building’s compliance and maintenance, and includes documents such as legionella and fire risk assessments. You’ll need to have all your relevant information in good order, and in a format where you can easily access everything you need to know. 

> O&M MANUALS ARE ESSENTIAL

Operations and maintenance (O&M) manuals and asset registers are vital for ensuring continuity in building management after handback. You may have the basis of an O&M manual or an asset register, but has it been kept up to date throughout the decades of the contract? This can be a huge job, so ensure everyone in the partnership knows that this is a priority. 

> WHAT’S INCLUDED… AND WHAT’S NOT?

PFI contracts are long-term – and over that time, a lot changes. You’ll spend a lot of time on variations and derogation schedules – looking at items that fall outside of the contract, and responsibilities. You need to ensure all the information relating to changes is correct and is a true reflection of what’s in the building at the time of handover. 

What did we learn?  

As one of the first PFI school contacts to expire, the Victoria Dock handback project taught us a lot. Here’s some advice to make sure your handback goes seamlessly. 

> START EARLY

NISTA recommends PFI contract expiry planning starts at least seven years before expiry. This sounds like a long time, but leaving it until the last minute will increase your costs, as well as your stress levels. 

> GET EVERYONE ON THE SAME PAGE

Make sure everyone’s clear about their roles and responsibilities. If you’re outsourcing any work to an external agency, ensure they’re briefed well, and that they have access to speak to everyone they need to. There will inevitably be points of difference along the way – so it’s worth documenting those things that are agreed so you can concentrate on the gaps.  

> GO BACK TO BASICS

It sounds simple, but you need to make sure you have good foundations before starting the expiry process. Make sure your asset register is up–to–date and clear, that the relevant people have been involved in compiling it, and that everyone knows where to access the information. Without a reliable asset register, everything else becomes so much harder! 

> THE BETTER YOUR STANDARDS, THE EASIER IT WILL BE

If the building has been maintained well, handback will be much easier. With Victoria Dock Primary School, the facilities had been maintained to SFG20 standard – the industry standard for planned maintenance. This meant good practice had been followed throughout, which contributed to the longevity of assets and ensured the building was in great condition at handover.  

> THINGS WILL HAVE CHANGED SINCE THE CONTRACT WAS WRITTEN

PFI contracts span decades, so it’s understandable that things change over time, and you’ll need to take this into account. For example, with the Victoria Dock Primary School handback, the school’s IT system is now based on tablets, rather than PCs – something which wasn’t conceivable back in the 1990s when it first opened! All parties need to be flexible enough to work around issues like this. 

> ASK FOR HELP IF YOU NEED IT

Managing a PFI handback is a huge, time-consuming task which can take you away from your day job, and mistakes and inexperience can be costly. We can help you through the process from start to finish, or take on defined projects or tasks within the handback process, giving you an external, objective view on a project you may be too close too. Whether you’re a local authority, or a private sector partner, get in touch for a chat to find out how we can ensure your handback goes smoothly. 

Need help with managing your PFI school handback? Get in touch: info@sewell-advisory.co.uk