3rd October 2001 Facilities Management from a Funder’s Perspective Richard Hoile
22/05/02 Facilities Management in a PFI/PPP context What do bankers look for in a traditional structure? What will a credit committee expect to have demonstrated to it? How can FM companies manage their banks? … a funder’s perspective
22/05/02 Track record and experience Resources required to complete the transaction Resilience to cope with difficulties Does the FM company know what it is getting into? … a funder’s perspective
22/05/02 Turnover, Profit before Tax, Tangible Net Worth, Market Capitalisation. Credit Rating Is the FM company financially resilient? … a funder’s perspective
22/05/02 Can the FM company do the job? What is the nature of the work to be undertaken? Have sufficient resources been allocated? Is the price sufficient? Has the Payment Mechanism been modelled with realistic deduction and termination scenarios? How robust is it? … a funder’s perspective
22/05/02 Bank Sensitivity Testing Increase in Operating Costs by 10-15% Completion Delay Low and high inflation Low and high interest rates … a funder’s perspective
22/05/02 … a funder’s perspective Contractual safeguards required by banks Appropriate “second line of defence” controls Termination triggers SPV to manage contract Ability to introduce alternative providers Flexible contract (bundling of services) Price Benchmarking/market testing
22/05/02 … a funder’s perspective FM Company Protections Incentivised to make contract work but not “bet the company” Benchmarking and Market Testing Caps - Penalties for Service Deductions Termination Liabilities
22/05/02 … a funder’s perspective How can FM companies and Banks work together better ? Open and clean lines of communication with the Bank’s Technical Adviser Partnership approach to problem solving TA should add value Spot problems Anticipate and identify risks etc Address issues and problems as they arise with appropriate resources
22/05/02 Delivering PPP and PFI Projects Arranging Investing Advisory Richard Hoile