As the first wave of Public Private Partnerships (PPP) projects begin the transition to expiry, approximately 160 projects across our public sector services are set to be handed back to public sector estate managers (in most instances) by 2030.
While there has been plenty of discussion in the PFI (public finance initiative) expiry space about the importance of working in partnerships, there has been limited discussion on how this can be practically achieved. With contracts worth up to £50 billion there is the potential for disputes arising between the parties involved in the handover, especially driven and exacerbated in some instances by limited or poor drafting in the original contract.
In September, Lord Hutton, Chair of the Association of Infrastructure Investors in Public Private Partnerships (AIIP) warned of the risks to disruptions to our public services unless action is taken by the Government to quash a surge in legal disputes over PPP contracts. As professionals working across the PPP ecosystem, we believe that all stakeholders have their part to play in this, not just Government. Good relationships require all parties to be at the table to work through and resolve issues if disputes are to be avoided.
However, establishing good working relationships for those working through PPP/PFI contracts is not just important for the wave of projects approaching expiry, but for the development of any future PPPs. Put simply, the impact of what we do now, and the approach taken to hand back processes, especially those with the potential for disputes, could significantly impact on the market created for future schemes. It’s in all our interests to get this right.
Getting it right now
The new Government has recognised that there is a need for private sector investment to maintain and retain our public sector services. Equally, the private sector has previously benefitted from investing in UK PLC with what were considered safer, longer-term returns helping to balance investment portfolios including many public sector pensions. Costly disputes will drive up the cost of any future scheme (by increasing risk attached to the schemes) or will drive investors elsewhere. Similarly, public sector bodies managing these contracts will be put off by the cost to manage these contracts. Getting it right now will not only shift the perception of PPP but will help set the framework for how new models will work.
Guidance
The Infrastructure and Projects Authority (IPA) has produced some excellent guidance for public sector parties and strongly encourages a joined-up approach. The White Frasier Report published in 2023, which amongst other things recommended improving behaviours through the likes of the Nolan principles, enhanced monitoring and auditing by public authorities and creating more transparency in dispute resolution.
Its recommendations included the introduction of a “reset” approach between parties to strengthen performance and relationships. We believe it’s over simplistic to assume parties will agree to a ‘reset’; and that upfront work to facilitate this is necessary, even where relationships may be relatively amicable. This means that a ‘reset’ will require investment in the relationships to develop the trust necessary for partnerships to succeed.
Why invest in these relationships?
The varied nature of each organisation’s business/purpose means the objectives of the parties will significantly differ. Working together to find common alignment can help to drive common benefits. Rather than each party hiring technical advisors, we would advocate a transparent multi-party approach, with one set of independent advisors. This might require some upfront investment in time from each party, but we believe will provide better value for money across all parties; not just in the reduction of advisor fees but by reducing the likelihood of disputes through an unbiased, transparent and collaborative approach.
This isn’t dissimilar to the way we might set up a project; whereby agreement of the objectives and desired benefits between stakeholders drives a similar approach. Formalising this through a Joint Relationship Management Plan is one approach to achieving this. Simply agreeing to a joint survey does not provide parties with the necessary tools to drive collaboration, trust, understanding and common end goals benefiting the end user. Developing a greater level of understanding of each parties’ objectives can enable this.
RLB’s Joint Relationship Management Plan Workshops
RLB’s Joint Relationship Management Plan (JRMP) workshops provides a supported process of collaboration and confidence-building which aims to avoid costly disputes and help drive towards the desired outcomes of all. We believe there is a need to bring parties together through a more formal approach and to build on those relationships as part of a ‘reset’ approach.
Through a short series of workshops, we seek to create collective alignment with the parties to smooth the path into expiry; and by creating a supporting framework we facilitate an approach that empowers all to manage this process jointly. It enables them to understand and create common ground as well as differences.
By getting relationships and objectives aligned, the journey to hand back will start off on the right foot, helping to maximise the chances of a successful hand back for all parties.
RLB’s approach using our bespoke Joint Relationship Management Plan Workshops with our technical outputs and advice are designed to develop stronger relationships and lead to better outcomes. To find out more or to get in touch with us, please contact Jamie Marsh or Sonia Mcrobb
FURTHER INFORMATION:
