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”.
The Asian Development Bank has published our article on Scottish Education PPP models and how they could be applied in the bank’s sphere of operations. In this blog we:
- look at reasons why PPP is less widely adopted as a development model for education infrastructure compared to other sectors such as energy, transport and utilities;
- consider the benefits that wider adoption of PPP could bring;
- describe innovative structured that have been developed in Scotland; and,
- suggest how they might be structured and deployed in the region.
The full article can be accessed on Asian Development Bank Blog.
Our appointment as Transaction Financial Advisers by Aberdeenshire Council on the procurement of a replacement for Inverurie Academy and Community Campus came to a successful conclusion when financial close was achieved on 19 April 2018.
This is our second such appointment by the Council, having previously supported the procurement of Alford Community Campus which opened its doors to pupils for the first time in October 2015.
Photograph credit hub North Scotland
Both new schools were procured with our support from hub North Scotland under the hub/DBFM/PPP structure. They will variously serve pupils in early years, primary and secondary education and include a range of community facilities such as theatre, sports hall, swimming pool, community library and dance studio, with all-weather and grass playing fields.
We are very pleased to have supported Angus Council on the procurement of replacements for Muirfield and Ladyloan Primary Schools in the coastal town of Arbroath, which reached financial close on 24 November 2017. The new schools are being developed under a single Design-Build-Finance-Maintain contract with hub East Central.
Each school will have a capacity of approximately 335 primary pupils and 72 pre-school pupils.
We supported the Council’s in-house team in confirming that financial submissions from the private sector partner are within the various limits set by the Territory Partnering Agreement and we worked closely with the financing partners to achieve a successful financial close to the project.
This continues our long relationship with Angus Council which including supporting the initial feasibility study, and subsequently acting as transaction advisor, for the Forfar and Carnoustie schools PPP.
The Glasgow City Council procurement of the new Blairdardie and Carntyne primary schools reached financial close on 23 October 2017 . The new primary schools will be developed under a single compact PPP contract between the Council and hub West Scotland.
As the public sector Financial Transaction Adviser on this PPP we supported the Council’s in-house team and were responsible for assessing financial submissions from the private sector partner. This included confirming that returns, margins and fees are in line with the market and consistent with pre-agreed levels. We worked closed with technical specialists to calibrate the payment mechanism, and supported commercial negotiations.
On October 9 and 10 2017, Martin Finnigan participated an inter-institutional seminar on Control and Monitoring of PPP Contracts, at the invitation of Ministry of Economics and Finance of the Government of Uruguay and the British Embassy.
Presenting alongside Dr. Patricia Benavente (Peru) and Inspector of the Contract of UPPL No. 1 Bernardo Vidal (Uruguay), I delivered two sessions that explained the relevance of the Scottish PPP experience to Uruguay.
The event was attended by over 50 professionals with an interest in PPP in Uruguay including central government agencies, service delivery bodies, investors and funders.
I developed a theory of the forces the drive the evolution and development of PPP in an economy, and noted how managing a PPP pipeline demands the ability to adapt to foreseeable changes in the external environment, and cope with unexpected ones.
I also identified lessons we have learned in Scotland over 20 years of PPP, and interpreted these in the Latin American context. Finally, I presented our report on the management of operational PPPs in the social infrastructure sector.
We have been reappointed to provide financial advisory support to Dumfries and Galloway Council for the operational phase of the Smarter Schools PPP project.
Stranraer Academy, refurbished and extended
This project was signed in 2008 and all eleven schools were operational by 2010. The project was financed by a £127 million facility provided by HSBC and the European Investment Bank.
This reappointment continues our long relationship with the Council which spanned the project business case, tender preparation and evaluation, financial close, and project effectiveness assignments during the operational phase.
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.