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Eversheds comment: Is Edinburgh schools closure evidence of failure of PFI?

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    Commenting on the closure of 17 PFI schools in Edinburgh, Gregory Buckley, principal associate at Eversheds, says:

    “While it is disappointing to learn that defects have been identified in all 17 of the schools that were closed last week, the only indication of a failure of PFI is the fact that the defects have arisen in PFI schools. What is in danger of being overlooked is the fact that both the Edinburgh Schools Partnership and Galliford Try have made public commitments to rectify the defects for which they are responsible. Perhaps the success (or otherwise) of this rectification process is the greater indication of whether PFI has failed. The overarching PFI agreement should ensure Edinburgh City Council is not out of pocket, as mechanisms such as unavailability deductions should provide Edinburgh City Council with sufficient financial protection from the effects of the schools’ closures.

    “Nevertheless, this issue is perhaps a reminder for all PFI-contracting parties to look again at their PFI arrangements. Authorities and building contractors should be aware of the expiry of their defects liability period – after which the building contractor is no longer obliged to return and rectify any defects in its building works. FM contractors should also be live to their potential rights of recovery, particularly on the recovery of unavailability deductions levied as a result of defects within the original building works. This will normally be through an Interface Agreement entered into between the building and FM contractors.”


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