 Financial Partnerships Unit Market Issues Andrew Caskie Project Adviser, Financial Partnerships Unit

 Overview  Tranches 1 & 2  17 projects currently in procurement.  10 projects still to be advertised.  Mix of larger and smaller project values.  Non-Profit Distributing Organisation (NPDO) structure in procurement in Argyll & Bute. Two to follow.

 Private sector perspective  Market  Attractive projects across UK.  FPU committed to Scottish interest.  Schools PPP quarterly programme on website.  Openness – regular meetings with market.  SE Capital Investment Plan - early 2005.

 Competition - VfM  Value for Money best achieved through competitive bids.  3 consortia ideal for ITN.  Competition has been limited, but continually improving.  Competition not assured – no room for complacency.

 Nature of consortia  Initially larger firms heading up consortia. Some notable successes and failures.  Now growth in smaller local players grouping together.  Growing international interest – Germany, Denmark, Iceland, Singapore, America, etc.

 Construction  Constraints on capacity / programmes usually construction driven.  Content of projects crucial – balance between new build and refurbishment.  Market has strong preference for new build.

 Funders  Increasing role of bond finance.  FPU has no bias. Value for money is key.  Healthy development.  Programme impact should be monitored.  Pros and cons of both bank and bond finance.  Minimum bond value fallen from £100m to £80m.

 Funders (cont.)  Need to manage outstanding risks early.  Early involvement of funders.  Sign-up to SSSC v3.  Funders’ due diligence increasingly robust.  Is the project clean and safe – risk premia proportional to “danger level”.

 Facilities Management  SE guidance/protocol allows possibility of some FM elements to remain in-house.  Private sector seeking to provide wholly integrated solution –clear interface is needed.

 Facilities Management (cont.)  Recent cases submitted to exclude soft FM features from projects, through protocol.  Wider implications should be considered.

 Attractive projects  Not just based on scope:  Council behaviour is key.  Respect in partnership approach.  Advisers appointed in good time.  Committed, efficient and informed client.

 Questions?