Private Finance Initiatives

Private Finance Initiatives (PFI) were developed to provide financial support for Public-Private Partnerships between the public and private sectors.


Partnerships, such as arrangements under PFIs, mean that the public sector benefits from commercial dynamism, innovation and efficiencies brought by private sector investors. These investors contribute their own capital, skills and experience. Private money can raise the level of public service provision in deprived areas or provide major physical or community infrastructure.


The most common form of PFI is design, build, finance and operate (DBFO). Under a DBFO contract, the private sector partner designs, builds, finances and operates the new facilities in return for an annual fee. The local council retains ownership of the assets but an operator is committed to significant capital investment in those facilities.

DBFO contract structure


Background research and further advice

HM Treasury, PFI: Meeting the Investment Challenge, 2003

Adair, Berry and McGreal, The effectiveness of the private sector finance in urban regeneration. The Royal Institute of Chartered Surveyors: Cutting Edge Conference, 1999

Links to Case Studies

You can find the following relevant case studies within the toolkit:

  • Downham Health and Leisure Centre, Lewisham
  • Swiss Cottage, Camden
  • South Bristol Healthplex, Bristol