University of Nottingham Business
School
Jubilee Campus
Wollaton Road
Nottingham NG8 1BB
Telephone: 0115-9515487
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E-mail: ron.hodges@nottingham.ac.uk
The Private Finance Initiative (PFI) was
introduced into the U.K. in 1992. Its birth and development can be linked to
the desire of governments, both Conservative and Labour, to use private finance
as a replacement for direct public-sector investment. The approval process for PFI
schemes is expensive and time-consuming and, until recently, few schemes had
reached the stage of completion leading to the promised flow of services to the
public sector.
This paper responds to the call from Broadbent
and Laughlin (1999: p. 110) for detailed longitudinal studies of the processes
that lead to PFI decisions. In particular, it provides an illustration of the
processes and techniques used to define PFI in terms of value for money and
risk transfer. The case study describes the introduction of a Communication and
Control (C&C) System into a NHS Ambulance Service Trust. Access to trust
documentation has allowed the author to review both the procedures that lead to
approval of the PFI scheme and the subsequent post-implementation report. Moreover,
following recent mergers, the trust is now fully engaged in proposals to extend
its PFI scheme to neighbouring counties. The case therefore provides a rare
opportunity to examine the impact of changes in PFI regulatory procedures, at
the 'micro' level, within a single organisation.
Key words: capital investment appraisal,
private finance initiative, National Health Service, ambulance services.
Acknowledgements:
This
research was supported by the BAA Special Interest Group on Public Services Accounting
Research funded by the Chartered Institute of Public Finance and Accountancy.