Risk transfer and value for money in PFI projects

Risk transfer is an essential element of the private finance initiative. It also makes an important contribution to value for money estimates. Indeed many PFI projects only achieve value for money because of the risk transfer contribution. A participant observation study was carried out to assess how risk was evaluated in a PFI project. Issues related to the lack of an evidence-based approach to risk assessment, the potential dominance of a very small number of risks and difficulties of imposing penalties on the contractor are discussed.