The IPA said the guidance would help them “navigate the legal, commercial, financial and operational risks that project distress brings to their business operations”.
The IPA said: “There are 527 PFI contracts in England that span across a range of sectors, including schools, hospitals, housing, street lighting, roads maintenance, leisure centres, libraries and defence. Future payments under these contracts are expected to total more than £100bn.
“Recent experience has shown that PFI project distress can, if unaddressed, carry significant jeopardy for contracting authorities and private sector partners, particularly if they are unprepared.”
This includes:
- potential disruption to services;
- major disputes and litigation costs;
- acceleration of contract expiry risk; and
- significant losses and unbudgeted termination payments.
The guidance note provides a combination of:
- technical information to SROs and contract managers (e.g. on project company financial distress, insolvency and contract termination);
- practical guidance on the issues SROs and contract managers should consider in preparing their legal, commercial, financial and operational strategies and action plans; and,
- directions to relevant IPA support.
The technical guidance can be viewed here.