Managing services by PFI contracts or by other means? A comparative analysis from the UK school sector

Sooby, Yasmin (2021). Managing services by PFI contracts or by other means? A comparative analysis from the UK school sector. University of Birmingham. Ph.D.

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Abstract

This thesis focuses on the processes of managing contracts in schools, and, more specifically, compares the experiences of doing so under the Private Finance Initiative (PFI) arrangements with those encountered in other non-PFI schools. The comparative study has been chosen particularly to examine the causation between contract design and outcomes and to understand which variables are the most influential in the process of contract management. As well as analysing samples of contracts, interviews were conducted with personnel from a set of schools and their local authorities to gather primary data on experiences of negotiating and managing services such as cleaning, catering, and small repairs.

The findings highlighted a number of flaws in the design of PFI contracts which created difficulties for the schools to manage, not least of which was the inability to access alternatives, so weakening the schools’ negotiating position. Several of the PFI contract mechanisms also seemed designed to punish opportunistic behaviours and served to ensure that the schools failed to achieve value for money. Financial penalties for shortcomings/failures by contractors for schools were found to be generally weak and ineffective, as was the limited amount of benchmarking and market testing undertaken. Particular problems were also identified in relation to PFI contracts regarding asymmetric information around the life cycle costs of school buildings. All such issues seem to play a part in making it very difficult for schools to negotiate market-competitive prices and to deter opportunistic behaviours from PFI contractors. In contrast, the experience in non-PFI schools was that it was easier for staff to achieve the desired outcomes. Shorter contracts and break-out clauses meant that non-PFI schools had easier access to other potential suppliers and so were usually in stronger negotiating positions. Since contractors for non-PFI schools are not responsible for the life cycle of the building, the problem of asymmetric information around the price of services was found to be less acute. However, the research did find that both PFI and non-PFI schools could be affected by similar factors and in analogous ways. In this respect, a range of economic, political and social factors was identified as being likely to influence outcomes within both categories of schools.

The findings from the research make significant contributions to our understanding of procurement, contract design and management of infrastructure-related services. In particular, they provide a clearer picture of the experiences of public sector procurement teams in managing contracts and in the determination of the outcomes achieved in practice.

Type of Work:

Thesis (Doctorates > Ph.D.)

Award Type:

Doctorates > Ph.D.

Supervisor(s):