Yesterday, 20 December 2018, the latest NHS Greater Glasgow and Clyde healthcare PPP reached financial close. The DBFM healthcare project will procure two new facilities (the new Greenock Health Centre and Mental Health In-patient facilities at the Stobhill Hospital) from hub West Scotland under a single hub/DBFM contract. Under current plans, a third facility will be added to the contract under a pre-agreed change procedure during 2019.
We supported the NHS in-house team and were responsible for a range a financial transaction support activities including assessing financial submissions from the private sector partner, confirming that returns, margins and fees are consistent with benchmarks and confirming that the financial model is consistent with technical project details. On the day of financial close we supported rate benchmarking, financial model optimisation and completion activities.
We are helping NHS Highland procure two new DBFM/PPP hospitals from hub North Scotland. The new hospital in Broadford on the Isle of Skye will replace the ageing Dr MacKinnon Memorial Hospital, and the new hospital in Badenoch and Strathspey will centralise services currently delivered through several dispersed inpatient units that are not fit for purpose.
Within a wider redesign of health and social care services, the new hospitals will deliver a range of benefits including:
- greater numbers of people being cared for at home;
- reduced length of stay in hospital;
- co-location of specialisms and related services;
- equality of access to services;
- dementia-friendly inpatient facilities;
- more dignity and privacy for patients – 100% single rooms with en suite.
The two new hospitals will be developed under a single DBFM/PPP contract using the Scottish hub ‘compact PPP’ modality.
We will support the NHS in-house team and are responsible to assessing financial submissions from the private sector partner, confirming that returns, margins and fees are value for money and consistent with pre-agreed levels. We will liaise with technical specialists to calibrate the payment mechanism and Key Performance Indicators (KPIs), and will contribute to commercial negotiations.
This week, on 21 and 22 May 2018, we attended the first Colombia Investment Roadshow in London, a joint event whose organisers included British & Colombian Chamber of Commerce; the British Embassy in Bogotá; the Department of International Trade teams in Colombia and London; The Foreign and Commonwealth Office Andean Desk and the Prosperity Fund Colombia; The Colombian Embassy in London and Procolombia.
The purposes of the event were to present the key infrastructure projects in Colombia, to explain the investment environment and to support joint initiatives to address some of the challenges that are still experienced in the sector and in the country.
A series of speakers explained the economic backdrop and investment outlook in the country, and provided personal perspectives on experiences of developing projects there. Key projects in rail, rolling stock, Smart Cities, schools, healthcare, waterways, airports and water treatment were described in detail, including explanations of the procurement process and the roles of the main protagonists.
The main points we took from the event were:
- the prospect of imminent accession to the OECD provides evidence of the rigorous process of reforms, policy and regulatory improvements that have been implemented. Between 2010 and 2017 the economy grew an average of 3.8% a year and it has one of the highest levels of foreign direct investment in the region;
- the final peace agreement concluded with FARC in December 2016 brought to an end half a century of armed conflict, and saw the start of a 15 year implementation period;
- improved connectivity and the development of Smart Cities are key to the successful implementation of the peace agreement. A large transport infrastructure initiative has been launched to tackle infrastructure bottlenecks that are holding back development, especially in rural, conflict-affected areas;
- in 2017 the Economist Intelligence Unit singled out Colombia as being well-prepared for infrastructure PPPs in the region. Forms of PPP are being used for the Bogotá Metro, renewal/operation of the Transmilenio BRT system, Cauca road network, El Dorado II Airport and to restore navigability of the Magdalena River. Pilot PPPs are being developed for schools and hospitals in Medellín, Barranquilla and Bogotá.
At Caledonian Economics we look forward to building on existing relationships in Colombia and developing new ones, so that we can play our part in the continuing success of this remarkable country and helping create, as one speaker put it, “a piece of the peace”.
This week, our colleague Lynne-Marie participated in discussions about collaboration between the UK and Turkey on infrastructure developments in emerging markets. Here are her reflections on this event, held in the stunning surroundings of the Mansion House in London.
Caledonian Economics helps Local Authorities, Health Agencies and National Government develop and deliver excellent PPP projects. We work at all stages of the PPP process: PPP strategy development, business cases, financial modelling, transaction support, Operational PPP performance improvement, rescue of distressed projects, and Public Sector training and capacity building.
Many of the projects we have supported have been open and operating successfully for ten years or more. The senior public sector officials who have been responsible for these projects are uniquely experienced to comment on the most effective approaches to long term management of PPP projects.
We spoke to ten of these public sector professionals, asked about their experiences, and discussed what advice they would give to new projects, now and in the future.
In our new report on Operational PPP projects, we ask seven key questions about the effectiveness of PPP Management, and identify important lessons. You can read what we found out in our new report by downloading it here: Caledonian Economics Report on Operational Projects.
Senior public sector officials from central government departments in Beijing and several Chinese provinces including Jinan, Guangzhou and Hebei have taken part in our PPP Masterclasses this month. This follows events we have run previously for government officials in Latvia and Uruguay and of course many training and development events in Scotland.
Our bespoke events draw from a menu of knowledge areas that covers all financial and commercial aspects of Public Private Partnerships. They provide an ideal opportunity to learn and share expertise that equip participants will skills to develop robust projects which deliver real social and economic benefits.
Our Event Leaders include some of the most experienced PPP practitioners in the world. This professional team has worked at every stage in the PPP development process including sectoral strategy development, feasibility and planning, transaction support, operational performance improvement, and rescue of distressed PPP projects.
Please contact us if you would like to know more about how we can help you shape better projects.
Scotland has a great record of evolving PPP models to suit particular geographic, social and political conditions going back almost two decades. Meanwhile, recent developments in Wales are breaking new ground.
In two articles recently published on the FOMIN/Inter-American Development Bank and World Bank blogs, Martin Finnigan and Michael Walker explain some of the nuances and make the case for applying such models more widely.
Caledonian Economics would like to congratulate NHS Orkney, Robertson Capital Projects and the project team on reaching financial close and signing the contracts for the New Orkney Hospital and Healthcare Facility.
With colleagues from QMPF we have been working with NHS Orkney for several years to support the business case and subsequent procurement under a variant of the Scottish PPP/NPD model.
The new Rural General Hospital will have 49 inpatient beds covering acute, cancer & palliative care, maternity and rehabilitation and will host a variety of services including two GP Practices, Dental and support services. When it opens in 2019 it will provide a state of the art modern building which will enhance the services staff can offer, utilising technology and the improved facilities.
More details here: http://www.ohb.scot.nhs.uk/new-hospital-and-healthcare-facilities
This continues Caledonian Economics’ long association with Orkney, having previously supported Orkney Islands Council on the procurement of the new Kirkwall Grammar School and Theatre, Pickaquoy Leisure Pool and Stromness Primary School, using a unique variant of the PPP structure.
Infradeals published their 2016 and Global PPP and Infrastructure advisor league tables in January.
With 11 signed deals at a value of $453 million, Caledonian Economics ranked first Financial Advisers to the public sector side of social infrastructure deals.
We would like to congratulate NHS Grampian on achieving Financial Close (on 5 December 2016) with hub North Scotland Ltd on the project to build new health centres in Inverurie and Foresterhill (Aberdeen) using the hub/DBFM/PPP structure.
The total construction cost of around £22 million will be funded by institutional debt from Aviva, and subordinated debt from Currie & Brown Equitix, Galliford Try Investments, NHS Grampian, the Scottish Government and the Hub Charitable Foundation.
We advised NHS Grampian throughout the procurement up to and including financial close. Our responsibilities included assessing the financial submissions from the private sector partner, confirming levels of private sector returns, margins and fees, payment mechanism calibration, and support of commercial negotiations.
The Foresterhill Health Centre is being built within the site of Aberdeen General Hospital, adjacent to the Anchor Cancer Care Centre. It proximity will allow excellent liaison between Primary care and specialist services.
Inverurie Health Centre is home to the largest single General Practitioner practice in Scotland with around 21,000 registered patients, projected to rise to 30,000 by 2021. The new health centre will be a major improvement on the existing facility. At around 3,500 square metres, it will have space to incorporate community health services such as dental and community maternity provision. There will also be an energy centre as part of the development.