PF2 meaning

In this issue: Contract law PFI/PF2 contracts Construction industry news Daily and weekly news alerts New and updated content Construction trackers Contract law Compliance with a notification clause—does the other side know enough? (Drax v Scottish Power) In Drax Smart Generation Holdco Ltd v Scottish Power Retail Holdings Ltd [2024] EWCA Civ 477, the Court of Appeal examined the contractual rules on notices of claim. These notification provisions are commonplace in share purchase agreements and, with growing regularity, in other forms of agreement. In essence, such clauses state that, before one party can bring a claim against the other, the claimant must first serve a notice of that claim on the counterparty. Non-compliance with the notification clause can render the claim unenforceable and expose it to being struck out and/or summarily dismissed. What, then, amounts to compliance? In this matter, the Court of Appeal indicated that it is sufficient if the recipient is provided with enough information...

This Practice Note explores equivalent project relief (EPR) in PFI and PF2 schemes, outlining the purpose of these provisions, the composition of an EPR clause and key cases. EPR clauses usually provide that a sub-contractor may claim compensation, an extension of time (EOT) or relief from termination under the sub-contract only to the extent that Project Co has secured the equivalent remedy under the Project Agreement; in short, Project Co bears no greater liability to the sub-contractor than the Authority bears to Project Co. Note that in the 2018 Budget (delivered on 29 October 2018), the government announced it would stop using PFI or PF2 for new projects (see News Analysis: Budget 2018—what does it mean for infrastructure and housebuilding?). However, existing PFI and PF2 projects continue to run. What is equivalent project relief? To understand what equivalent project relief means, it is necessary to consider the background that prompted these clauses. As explained in Practice Note: Introduction to PFI and PF2, the structure of a...

Project documents This Practice Note offers an overview of several widely used agreements and papers in a PFI/PF2 scheme, though the precise suite adopted will turn on the particular project. In the 2018 Budget (delivered on 29 October 2018), the government stated that PF2 will not be used for new schemes (see News Analysis: Budget 2018—what does it mean for infrastructure and housebuilding?). That said, existing PFI and PF2 arrangements will remain in operation and, given the usual term of such projects, are expected to continue for many years... Project Agreement This is the core contract in any PFI arrangement. It records the full set of terms and conditions governing the relationship between the Authority and Project Co/SPV for the life of the project. Where Project Co/SPV is granted a concession (ie the exclusive right to supply/operate/exploit something to create third party revenue), the Project Agreement may be described as a concession agreement. Typically a substantial document, it is often divided into multiple sections for manageability. Under...

This Practice Note explains how a PFI or PF2 project can be terminated. It outlines the ways termination may occur, and examines the aftermath, the risks tied to bringing a project to an end, and the practicalities that parties should factor in. In the 2018 Budget (delivered on 29 October 2018), the government announced it would stop using PF2 for new projects (see News Analysis: Budget 2018—what does it mean for infrastructure and housebuilding?). Nevertheless, existing PFI and PF2 arrangements will carry on and, given the usual duration of these schemes, are expected to do so for many years. Both public and private sector participants have traditionally viewed ending a PFI as a ‘nuclear’ course, laden with risk and potential cost exposure. Yet pressure on public sector finances is considerable, and some authorities may regard terminating expensive PFI contracts as a credible option. Although termination entails dangers, the prospective benefits—leaving a politically unpopular, costly agreement and gaining greater control over service delivery—can be compelling. Specific drivers that...