• Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

PFI/PPP is mainly applied by governments to projects which require regular, on hands maintenance. However, PFI/PPP may not be used for any kind of projects.

Extracts from this document...

Introduction

Like any concept introduced, it comes with both advantages and disadvantages. PFI/PPP being one of the most controversial issues of today. One of the most common features of PFI/PPP is that costs keeps increasing and therefore not feasible at times to continue with the project and therefore the big question stands as 'should time, effort and money really be invested in PFI/PPP?' PFI/PPP is mainly applied by governments to projects which require regular, on hands maintenance. However, PFI/PPP may not be used for any kind of projects. These projects are large scaled projects and that have a certain degree of complexity. The UK Government has embraced the idea of PFI/PPP for many different reasons. The first most popular reason being PFI/PPP helps to deliver high quality public services and ensure that public assets are delivered on time and to budget. PFI/PPP introduces competition between contractors, its goal here being to establish the market mechanism into the process of providing facilities. Secondly, the private sector is known for lacking efficiency, by bringing forward PFI/PPP, the private sector is able to provide taxpayers value for their money. ...read more.

Middle

As mentioned before, where there are pros, there are cons. Some say that the advantages and disadvantages of PFI/PPP cancel each other out. Others beg to differ. The first argument that shows how complex a PFI/PPP may be to operate is the very famous example of Health Trust. Many find is unwise for the Health Trust to enter itself into such a long-term contract. Changes in individuals demand and unforeseen events that will occur in the future, may result in severe restrictions in resources used and provided if health authorities are tied down to a PFI/PPP contract. The PFI system is globally criticized for the commercial confidentiality that is commanded by the private sector. This makes it difficult to compare publicly financed and privately financed schemes. As mentioned before as a positive point that PFI/PPP motivates individuals and promotes innovation, this is also a complex issue. It is extremely complicated for private sectors to be motivated and spontaneous with ideas as large contracts become complicated and nearly 100% of the time involve a head contractor. ...read more.

Conclusion

It is a common principal that private companies always try to minimise their tax bills and attempt to hide their identity in some way. The problem here is that government departments feel that as they are the ones paying for the project over a number of years, they should be involved in the idea making process behind these plans. The last issue is that of contract complexity. The times set in a contract can be very problematic. Take a famous example of hospitals; if the contract is over a period of 30 years, then the government is forced to pay a yearly amount over that long period. Say 20 years down the line, the hospital needs a refurbishment, then the government is still required to pay for the old hospital for an extra 10 years until it meets the 30 years originally agreed. So for the next 10 years, the government would just be throwing away money. To conclude, the PFI/PPP contract is debated about the fact that such large time gaps should not be put on the contract. Emma Booker DP1 B&M ...read more.

The above preview is unformatted text

This student written piece of work is one of many that can be found in our AS and A Level Accounting & Financial Management section.

Found what you're looking for?

  • Start learning 29% faster today
  • 150,000+ documents available
  • Just £6.99 a month

Not the one? Search for your essay title...
  • Join over 1.2 million students every month
  • Accelerate your learning by 29%
  • Unlimited access from just £6.99 per month

See related essaysSee related essays

Related AS and A Level Accounting & Financial Management essays

  1. Sources Of Finance

    It is an agreement that allows the business to use the asset for a period of time, and then the business can purchases the asset for a less amount of the actual cost of the price. The disadvantages of using this type of financial source are: * This could cost

  2. A2 Business CourseWork

    If a product has no fixed price or time period (e.g. building works) the service must be completed in a reasonable amount of time at a reasonable price. For instance Tesco must provide products that use ingredients that are of reasonable quality and if customers pay online the goods must be delivered in a reasonable time.

  1. Financial Ratio Analysis.

    Creditors (long and short-term) are more interested in an entity's abilities to repay them than in its profitability. Whereas 'profits' might indicate that cash is likely to be available, cash flow accounting is more direct with its message. iv.

  2. Edexcel Applied Business A2 unit 11 finance task A

    Many plc use this source of finance as it allows companies to ease their cash flow. It may be more suitable then a bank loan as it is only short term therefore there will be lower risks for Thomas Cook Group.

  1. Sources of Finance

    No Obligation for Repayment: No obligation for the repayment of the finances in the initial phase of the business when the cash flow is quite slow. Whereas, in bank loans there are severe obligations and penalties in case a business fails to generate monthly interests and make the monthly payments to the bank.

  2. Calculation of Future Values Exam Question - Given the recent drop in mortgage interest ...

    Present value of savings = Rs. 63,000 Rate of interest = 8% compounded annually Time Period = 24 years 2. Present value of stock = Rs. 24,500 Rate of interest = 2% compounded annually Time Period = 24 years 3. Present value = Rs. 7,000 Time Period = 10 years 4.

  1. Edecel Applied Business Unit 11 Finance Task B

    The start of Thomas Cook's cycle would begin with them securing the hotel room and flights needed for their future customers, these would be on credit. They then sell these to the customers and take deposits/receivables. Thomas Cook need to ensure they get the correct balance between the hotels and flights they book and the correct amount of customers.

  2. Edexcel Applied Business Unit 11 Finance Task C

    However the Network project has a payback period of just three years, this means that the network project may be a better option as companies want the quickest return.

  • Over 160,000 pieces
    of student written work
  • Annotated by
    experienced teachers
  • Ideas and feedback to
    improve your own work