THE ARCHITECT AND THE PRIVATE FINANCE INITIATIVE

1
THE ARCHITECT ANDTHE PRIVATE FINANCE INITIATIVE

• David Taylor

2
PFI topics covered

• Introduction to PFI
• What it is
• What it does
• Why PFI
• Typical structure
• The architects role
• The client
• Key stages
• OJEU to Financial Close
• Design Development
• Fees
• Why bother?

3
PFI background

• Introduction to PFI
• What it is
• An overview of its nature and history
• What it does
• Scale of the initiative
• Active sectors
• Why PFI
• PSBR
• Off-balance sheet treatment
• Targeted capital projects and services
  initiatives

4
PFI bid process

• The Architects Role
• Routes into PFI
• Contractual Structure
• Organisational Relationships
• The Brief
• The Duties

5
PFI routes in

• Public Sector option appraisals for Outline
  Business Case
• Public Sector design/technical adviser
• Private Sector architect and lead designer
• Individually as PFI specialist, eg bid
  management

6
PFI contractual structure
7
PFI organisational structure
8
PFI the brief

• The invitation
• Project objectives
• Design standards
• Output specification
• Planning policy and guidance
• The Architect as lead designer
• Genuine design competition

9
PFI the process

• Key stages

10
PFI timeline

• Timeline
• OJEU to PQQ submission 1 month ( evaluation
  typically 1 month)
• ISOS varies 1 to 2 months ( evaluation,
  typically 2 months)
• ISDS 4 months ( evaluation, typically 3
  months)
• CFT 2 to 3 months ( evaluation typically 2
  months)
• PB to Financial Close 8 months to 1 year
• TOTAL 2 years plus !!

11
PFI fee recovery

• SPV at risk PQQ to Preferred Bidder (c.18
  months)
• Architectural fee reimbursement
• ISOS stage single capped sum (based on an
  estimate of absolute net cost)
• ISDS stage single capped sum ( -ditto- )
• CFT stage - single capped sum ( -ditto- )
• Preferred bidder stage time based subject to an
  overall cap
• Financial close all catch-up fees
• Post contract balance of fees as agreed
  post-contract schedule
• Success fee in recognition of fee risk taken by
  designer
• Overall fee

12
PFI participation

• Why Bother?
• Only source of (some) publicly procured projects
• Best value as opposed to cheapest
• Improved margins/risk pricing
• Enhanced public services
• Investment returns
• Investment disposal
• And
• Gleeson consultants advice

13
Development Fees
Equity Returns
FLEXIBILITY
Bid Cost Limitation
Construction Partners
Portfolio of Investments
Total Control
EARLY FINANCIAL CLOSE
Risk Transfer
Growing Reputation
Cashflow Balances