In the early days of PFI many believed that the private sector held the balance of power during negotiations leading to financial close. But several years on, have developments shifted that balance?
In any given project the balance of negotiating strength shifts as it progresses towards financial close. Thereafter, the power is determined by the terms of the contract itself. If you plotted this as a graph it could be called a negotiation curve. It would show how the authority holds all the cards to start with, probably just before the Official Journal of the European Community notice/invitation to negotiate is issued. Then, as the competitive process moves on, the balance starts to tip the other way. This could equally be shown by a pendulum that swings slowly at first, but then faster as it reaches its lowest point, before rapidly swinging across towards the private sector’s side.
