For schools stuck in expensive PFI contracts, the hand-back cannot come soon enough, but this is a process for which planning must begin years in advance. Andrew Chubb advises


“I win!” This is the catchphrase of Harvey Specter, New York’s “greatest closer” and a leading character in my current guilty pleasure, Suits, a series set in the world of high finance.

No fewer than nine series of the drama depict the lives of a top firm of New York lawyers and their wealthy corporate clients as they scheme, duck, dive, bob and weave their way around contracts, lawsuits, and company takeovers.

Paradoxically, the characters are all brutally honest with each other about the depths of their duplicity and the lengths to which they will go to win. Because it is all about winning. There is no middle ground – just winners and losers.

A season of Suits would make a good basis for understanding the PFI woes that many school leaders have faced and continue to face, such as:

  • Why has it cost so much to put in a few extra electrical sockets or put up a new wall?
  • Why are we still paying for that Biomass boiler that has never worked since we opened?
  • Why are there still roof leaks after we have complained about this for years?
  • Why did our students have to sit their mock exams in a freezing cold gym?
  • Why can’t I get out of this catering contract that is costing me an arm and a leg and at best only serves mediocre food?
  • Why has our unitary charge gone up so much this year?

There is a simple answer to all these questions – PFI contracts. As one former senior facilities management executive told me, these contracts are all about cold, hard, cash.

To spell it out: the less that your PFI contractors can get away with spending on your site, the more profit they make for their shareholders. Moreover, the contract length itself exacerbates a charging model that wrongly justifies inflated costs for service delivery which in turn protects profits further. These simple truths can often become muddied through the mixed motives of the various players involved – the local authority, local contractors and so on – but at root, the resolution (or sadly all-too-often non-resolution) of problems ultimately comes down to cold hard cash – who wins it and who loses it.

In broad terms, PFI in its various forms is the way in which schools (and indeed hospitals, prisons, housing associations and some roads) were constructed using private finance and then leased back to the end-user (in this case, your school) through a series of contracts with the main financiers.

As I explained in an article for SecEd last year about how to challenge overly expensive PFI contracts (Chubb, 2022), these contracts fall into four main areas:

  • Hard facilities management (FM): Pays for the planned, preventative, and reactive maintenance of all your site – boilers, electrical systems and so on.
  • A “lifecycle fund”: Linked to Hard FM, this funds replacement components as needed (for example boilers, floorings, roofs, and fixed furniture).
  • Soft FM: Pays for the work traditionally undertaken by a site management team – day-to-day caretaking, porterage, cleaning, and grounds maintenance.
  • Catering: When a contractor runs your canteen services.

Every school built under PFI has at least the first two contracts – hard FM and lifecycle – with soft FM and catering also taken out by many schools.

I wrote in some depth in my previous article about general principles of how to manage PFI contracts successfully (Chubb, 2022).

Efficient and effective management of these contracts however is never more essential than in the period approaching “hand-back” – the point at which your site is handed back to you by the contractor, hopefully in the same condition as the day you took occupancy.

Here’s one example to illustrate my points about “cold, hard, cash” and “winners and losers”.


In the public interest?

A little-known fact is that, for a large number of PFI contracts, any monies left in the lifecycle fund (into which an average-sized secondary school will have contributed millions over the years) normally revert to the contractor – not the school or even the council.

Thus, throughout the contract, and especially in the last few years, the contractor has an interest in spending as little money as possible on your site, while you want them to spend as much as possible. Cold, hard, cash. Winners and losers.

With this somewhat depressing truth in mind, what steps can the average already massively overworked CEO, CFO, or principal take to manage the situation?

The article I cited above contains, I believe, some useful general information on how best to get a grip of your PFI contracts.

Since I wrote that piece, much has been written helpfully by both the Department for Education (DfE) and the Infrastructure and Projects Authority (IPA) on specific steps that need to be taken to manage hand-back (see IPA, 2022).

They point out, quite rightly, that the process needs to start at least seven years before the end of the contract. In essence, it looks something like this:

  • Hand-back (HB) minus 7: Carry out a full condition survey of the site. Interrogate the Lifecycle investment plan and agree the schedule of works to be implemented from HB minus 6.
  • HB minus 5: It is likely that a final contractual benchmarking or market-testing process will have been scheduled. This gives a focus on the cost of your FM contracts to ensure that you are receiving best value. At this stage, it might be appropriate to consider an early termination of the FM contract, either in part or in full, to the benefit of both parties (although the negotiation would, of course, still produce relative “winners and losers”).
  • HB minus 4: Optimise all contracts, review all documentation including “as-built” diagrams, the asset register, and statutory compliance.
  • HB minus 3: Further negotiation on investment from the contractor based on condition requirements. All outstanding issues to be resolved and both documents and components transferred. Analyse implications of this for future Hard and Soft FM contractors.
  • HB minus 18 months: Use all the work carried out to this point to create a new service specification and project-manage the tendering process.
  • HB 0: Ensure systems are in place to manage new contracts to ensure “business as usual”.

Even if this timeline is followed to the letter, it is nonetheless immensely challenging, as few of us will have been trained to manage this extremely complex process. Indeed, in my own experience as a CEO in this situation, I felt I was always “running to catch up” – battling to identify Donald Rumsfeld’s famous “unknown unknowns” and generally feeling like I was failing at both.

As stated above, over the past few years much has been written about PFI, and hand-back in particular. But just as understanding the offside rule doesn’t necessarily mean you can be a great footballer, so understanding PFI and the exigencies of the hand-back process doesn’t mean you are necessarily able to deal with it.

So, when faced with the challenge of managing all this, what should you do? Well, in addition to watching a few episodes of Suits to understand the mentality of the people at the top of the “contractor tree”, I would suggest the following:

  • Read the documentation on hand-back provided by the IPA (2022).
  • Obtain the “lifecycle model” produced at the time of commissioning your new building. This should give you a profile of what should have been spent on your site – which you could then in turn challenge (as appropriate).
  • Obtain the “costs of variation” or charging model presented by the contractor for any works to be carried out, and then compare these to the current general (i.e. non-PFI) market costs for these variations. This should enable you to challenge those costs, with a view to obtaining better value for money.
  • It is worth noting that it can be difficult to obtain the information in points 2 and 3; sometimes contractors and indeed local authorities cite “commercial confidentiality” or some other reason for not wanting to hand over this information.
  • Finally, engaging some professional help to manage the whole process gives you the best chance not only of saving both time and money, but also of ensuring that your building is returned to you in the best possible condition and that you can run it efficiently and effectively post-contract expiry.

The turning point for my own PFI-induced misery was this final point – by employing professional help I was able to save in the first year alone around three times the cost of that support, with on-going savings over the length of the contract running into seven figures. It also gave us a better building and freed up vast amounts of my time.

That experience inspired me to co-found ProjectPFI after my retirement as a MAT CEO, and it has been a huge pleasure over the past two years being able to give hope to colleagues who find themselves at their wit’s end trying to control these contracts.

The good news is that contrary to what you may have been led to believe up to this point, you can indeed hold contractors successfully to account and, just like some of our Suits characters, be a winner too.


Further information & resources

Related articles