Involvement of Small and Medium Sized Enterprisesin the Private Realisation of Public Buildings

This paper explores the procurement of public buildings in local authorities in the UK under the Private Finance Initiative (PFI) and its consequences for small and medium sized enterprises. Following an outline of the development of PFI in the UK, the paper explains the peculiarities of local authorities’ involvement. Opportunities and problems of smaller constructors in such PFI projects are then analysed. Three case studies of smaller PFI schemes are reviewed including procurement process, contract agreement, project funding, risk allocation and innovations. Because of complicated approval frameworks and contract structures more and more projects are bundled in order to obtain a better value for money. Smaller constructors, therefore, can only act as subcontractors until simpler procedures and contracts are introduced by government bodies and organisations responsible....