UKs Construction Industry

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Private Finance Initiative (PFI) is a device employed by United Kingdom's government to arguably to make the construction industry more competitive and more profitable. This does not come as a surprise since the UK construction industry provides a tenth of the UK's gross domestic product, employs 1.4 million people and is worth around 65 billion per annum.


Private consortiums, usually involving large construction firms, are contracted to both design and build a new project, and also to manage it. The contracts typically last for 30 years. The building is not publicly owned but leased by a public authority, such as a council or health trust, from the private consortium. The private consortium raises the cash to build the project. It is then paid back with interest by the government through regular payments over the period of the contract. PFI projects could be viewed as a means of enabling government services to be "outsourced" to private sector suppliers. PFI is not the same as privatization as the Government retains ultimate responsibility to the public for the service concerned. Outside the UK, PFI is more commonly known as Public Private Partnerships (PPP). (Weaver, 2004)
The policy has not been without its critics. As with any form of hire purchase, buying something on tick is more expensive than paying for it up front. The Edinburgh Royal Infirmary is often cited as an example of how expensive the PFI can be. It cost 180m to build and will cost 900m to pay for. Unions are opposed to PFI as they claim that one of the main ways that private companies profit from the PFI is by staffing the buildings as cheaply as possible. ...
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