The holistic realisation of PFI road project objectives in the UK

It has always been the case that the private sector has provided goods and services to the public sector. A widespread feature of the last two decades has been the shift away from the in-house provision of services by the public sector towards the contracting out of services to be provided by the private sector. These services are a contribution and an addition to the provision of services by the government to the public, but the services are supplied by the private sector employees.Private infrastructure provision is not a new idea. Bridges have been privately owned for centuries (Dupuit, 1844). Infrastructure concessions were first granted in France in the mid-seventeenth century (Winch, 2002). One of the first documented concessions was granted in 1782 in France (Walker and Smith, 1995). At this time the Perrier brothers founded a company that was granted licence to supply piped water in the Paris area for 15 years. The agreement did not survive the political changes that took place in conjunction with the French Revolution, as the city council cancelled the franchise (OECD, 2000; Walker and Smith, 1995).The late 1700s also saw the concept of toll roads increasingly common in the United States, many of which were constructed with some federal assistance in the form of land grants or subsidies (Levy, 1996).From the beginning of the twentieth century various governments increasingly incorporated the procurement of assets with strategic policies for development and therefore preferred the use of their own fiscal and sovereign resources of finance (Walker and Smith, 1995; Winch, 2002).Growing concern over state budgetary deficits and concerns over the inability of the public sector to manage complex infrastructure efficiently in an increasingly competitive environment, led to the reversal of the state ownership as a norm to provide infrastructure to the public at large (Vickerman, 2002a:2002b). Over the period 1970-1996, according to Debande (1999), large reductions in government investments were observed in OECD countries. Privatisation and public-sector expenditure constraints had given rise to a substantial reduction in both private and public sector investment. Some commentators, for example Birnie (1998; 1999), state that the Maastricht criteria and European Monetary Union (EMU) have played a role in the implementation of PPP/PFI, as governments throughout Europe have been forced to take action to enable conversion to the single European currency.In order to achieve infrastructure development and to reduce the associated government debt burden the public authorities and the national governments sought to involve the private sector and private capital to implement design and build infrastructure projects and to provide infrastructure services previously in the domain of the public sector (Debande, 1999; de Lemos et al, 2000; Heald and McLeod, 2002; Quiggin, 2002).As a part of the above trend, the Private Finance Initiative (PFI) was launched in 1992, as a legal framework for concessions in the UK to encourage private capital investment into the construction industry. In the PFI framework the public sector defines the output specification for the services to be purchased from the private sector with a predefined payment mechanism. The public purchases a service not an asset. After 1997, and the change of Government from Conservative to Labour control, PFI gained momentum in the UK and it is expected to continue expanding as a procurement instrument in the future (Eaton & Akbiyikli, 2005).