financial partnerships unit current issues that impact on project affordability and vfm ben king...
TRANSCRIPT
Financial Partnerships Unit
Current Issues that impact on Project Affordability and VFM
Ben King
Financial Partnerships Unit
Overview House Rules Current Issues Q&A
House Rules – VFM / Affordability Should be tested and assessed at each key milestone
- OBC / OJEU / PB / FBC VFM
- Importance of defined scope / risk transfer interface Affordability
-First year AND every year / transparency & clarity
Public Sector must try and control / manage
Minimise the inevitable delay!
Insurance Pricing and Availability: VOLATILE / UNCERTAIN Public Sector want vs what Private Sector can deliver
(OGC side letter) PuK / HMT consulting (standardisation of deliverable
benchmarking arrangements for opex insurances) SE providing input
Importance of Balance Sheet TestBe aware of SPV / FSA issue
Best Value Funding Solutions Concession length vs Optimal Debt length
- RSG, Tenor and Tail of loan
- Lifecycle / Handback / Flexibility
Payment Arrangements Evaluating senior debt options
- Bank / Bond
- Level playing field & qualitative and quantitative.
Key element assessed in PB KSR
Funding competitions guidance
Phased / Interim Payments Economic benefit
- Risk transfer vs budget availability
- Lifecycle / Handback / Flexibility
Develop in competition – but limitations as full project scope unknown- Consider: contractual / financial / STUC implications
Relationship to RSG- Circular to Council’s
- Annex B clarified / ITN drafting
Must be a Council driven agenda
Calibration Project bespoke = flexible area Influences funders views on performance / termination Develop calibration model
so Council / Bidders / Funders understand implications of:
- performance & deductions
- Warning notice levels / Duration
- Repeat Failure tolerances
- Minimum deduction levels / GSU’s
Unless shared with Bidders, contentious
Key to VFM pricing and an affordable project
Avoiding Re-scoping May address affordability but could compromise VFM? Clarity / Deliverability / Correctness of initial scope fundamental to
project success- Constraints in market- Refurbishments- Correct use of BaFO
Planning / site issues addressed early on- Funders / SE won’t accept these risks : NOR should Council’s
Council Management / Dialogue KeyMarket Failure / Market Abuse monitored in future
Questions and Answers Or…. peace & quiet / tea & coffee!