The collapse two years ago of one of the U.K.’s largest contractors stalled numerous projects, including two flagship National Health Service hospitals that were already in trouble. The failure of Carillion plc played havoc with the hospitals' construction schedule and budget. Because the projects had been procured under the Private Finance Initiative, banks and insurers took the biggest financial hit, according to a new report by the U.K. National Audit Office.
Carillion had design/build contracts with two separate companies. Each firm had roughly 30-year PFI deals to finance, design and build the two hospitals and then provide facility management services for their operational phase.