The Infrastructure Projects Authority (IPA) recently published A Guide to PFI Expiry Health Checks as part of the IPA’s wider PFI Contract Management Programme (which was established in 2020 by the IPA’s PFI Centre of Excellence and which seeks to improve operational performance across the PFI portfolio, together with particular objectives relating to the expiry of PFI projects).

The IPA developed the Expiry Health Check (EHC) process, to assist contracting authorities (CAs) with PFI projects in assessing their readiness for PFI expiry.  A number of EHC’s have already been undertaken by the IPA and the newly published guides set out the objectives, key aspects and approaches in relation to EHCs and the form of results from an EHC.

EHC objectives

The EHC process has been designed to:

  • Enable feedback to the CA and sponsoring department on the individual project’s readiness for expiry (together with specific recommendations)
  • Identify projects that may benefit from additional IPA support
  • Provide the IPA with an evolving data set to monitor PFI portfolio readiness and identify themes for feedback.

EHC key aspects and approach

EHCs are offered to projects at seven, five and three years from expiry (CAs can expect to be informed during quarter four of the preceding financial year of the intention for an EHC to be undertaken) and the EHC guide sets out a further more detailed timeline

Prior to each EHC, CAs are to provide various documents and information to the IPA, including:

  • the completion of a project summary and questionnaire template documents, current versions of these can be viewed here: EHC Project Summary template and EHC Questionnaire template. The questionnaire is intended to assist the IPA in developing an understanding of the contract, its performance and the extent of the CA’s preparation for expiry
  • the provision of key contractual and expiry documentation including the underlying contract, surveys, plans and reports
  • the EHC itself then involves a review of the provided documentation and a structured IPA interview with the CA which enables a more detailed exploration of the key issues and risk for expiry
  • following the IPA review and interview, the IPA drafts a report and, once moderated and completed, the report is sent to the CA for checking for any factual errors/omissions the CA is then offered a meeting to discuss the report findings and recommendations (plus discussions, where applicable, for further IPA advice and support).

EHC assessment of five themes for readiness for expiry:

The EHC and resulting report assesses readiness for PFI expiry across five themes:

  1. Contract management & expiry planning: contractual documentation (including previous variations), expiry planning, people & resources, governance and contract expiry terms
  2. Relationships: current relationships and cooperation on expiry
  3. Assets: current asset information, operational asset condition, maintenance & lifecycle planning & delivery and assets at expiry
  4. Commercial position: current commercial position, funding for asset condition during the contract term and contractual position on expiry
  5. Future services: future strategy and plans development, experience and capability for future services sourcing, knowledge of current services to support future services sourcing and transfer of staff.

EHC report “RAG” rating

The EHC output report identifies (on the IPA’s assessment) the key expiry issues and actions that will improve the CA’s readiness for expiry (and thus reduce risk) and the urgency of action is indicated in a five-tier “RAG” rating for the overall expiry readiness of the project and for each of the 5 themes.

The RAG ratings are:

  • Red: critical additional work required to achieve target readiness
  • Red/Amber: Major additional work is required to achieve target readiness
  • Amber: Moderate additional work is required to achieve target readiness
  • Amber/Green: Limited additional work is required to achieve target readiness
  • Green: at target readiness given the time to expiry.

If a project is rated red or red/amber, the IPA will discuss options to support the CA in taking immediate steps and initiate an assurance of action review about six months after the EHC to evaluate progress against the recommendations, make further recommendations (if needed) and re-assess the RAG rating.

EHCs Learning Report

As noted above, a number of EHCs have already been undertaken by the IPA and in December 2021 the IPA published an analysis of the first 52 PFI EHCs which were completed in 2021/22, see IPA Phase 1 PFI Expiry Health Check Learnings Report 20/21. The learnings report is well worth a read, by CAs and also the private sector entities involved in managing and operating PFI projects.

As set out in the learnings report, the overall expiry readiness of the 52 projects were rated as “amber” (notably, 19 of the 21 projects expiring before the end of 2024 were assessed as “amber” to “red”, indicating “an immediate need for action on these projects to minimise the loss of value and disruption to public services”).

Some other notable “takeaway statistics” and learnings detailed in the report include:

  • Expiry programme management: 25% of the projects assessed had not started to prepare for expiry and c.80% of projects did not have robust and approved plans for expiry
  • Resourcing and capability: 65% of projects reported they did not have a sufficient team to manage expiry. The IPA also found that there were insufficient people to manage the weighty combination of operational contract management, expiry preparation and future service provision
  • Relationships: 75% indicated relationships were collaborative. CAs believe relationships were likely to weaken as expiry approaches, with 40% believing there was a real risk of disputes
  • Asset condition: 80% of contracts assessed have asset condition requirements on expiry, however, c.70% of the underlying CAs believe the asset condition terms are not clear
  • Future services: CAs have a limited understanding of assets and services. Planning for future services is often too little and too late to inform the expiry process.


As has been widely reported (including in various NAO, PAC and IPA reports, and subsequently issued IPA guidance) and commented on, effective preparation for the expiry of a PFI project is key and preparations need to commence at least seven years in advance. The expiry process is going to be resource intensive for both the public and private sector and this is going to result in further challenges for resource-strained CAs.

Whilst the expiry of a PFI contract is a significant project in itself, expiry preparation also needs to be managed alongside business as usual/day-to-day contract management of the underlying PFI project and also the future provision of services to the asset, following expiry.

Our key message to clients is to start your PFI expiry planning as early as possible and ensure effective contract management is in place (not least as this will assist in expiry preparations and planning).

As part of PFI expiry preparations, CAs should be aware of the timing of each of their EHCs which will be offered by the IPA (at seven, five and three years from expiry) and prepare for these health checks as necessary.

Source – Olivia Blessington is a Partner at Bevan Brittan.