Real Public Private PartnershipsReal Public Private PartnershipsDeveloping, Sharing & Benefiting

Rationale and Background

LIFT has now been running for around 8 yearsg y

SFT were interested in learning some of the lessons from LIFT to see how they can improve HUBy p

Fulcrum Experience based primarily on Renova Developments in the NW and London

1

Organisation Chart for LIFT

2

PPPs – Public and Private Sector

Trust Much greater trust exists between Public and Private Sectors through increased openness

Both parties aligned and working together for shared goals

Transparency

Value For Money VFM secured for the PPP not on just Private Sector terms

All commercial details are available to all parties – costs, returns and surpluses

Shared Surpluses Commercial returns for the PPP for both - Public Sector share can be re-invested in improved services. Long term pension fund equity partners recycle. Private share back to the public

Engagement

Better Solutions Clearer understanding of client challenges leads to better

Public sector leadership means partnership can meet the client’s project delivery requirements

Better Solutions g ginnovation and problem solving

5

Engagement = Better Solutionsg g

Differing interests best resolved around a table rather than contractual arguments – LIFT experience has shown that mutual understanding of Public Sector and Private Sector issues leads to faster win/win problem solving

Local Public Sector Directors on SPV Company Boards connects theLocal Public Sector Directors on SPV Company Boards connects the project directly with client needs and problems and the enhanced understanding enables more creative solutions to problems

Central Government Director crucial in connecting a programme or project to national policy but also act as a ‘critical friend’ for the local Public Sector team

This facilitative role stretches the aspirations of the PPP company allowing the Public Sector to extract the maximum benefit from the Partnership as a wholewhole

7

LIFTCo Case Studies

Fulcrum run 4 LIFTCos – Renova Developments in the North West of England and three LIFTCos in London

The following slides show how, since their formation, these two groups of companies have:

Improved customer satisfaction across a range of measures

Driven down construction costs (per m2)Driven down construction costs (per m2)

Driven down Lease Plus costs (the rental cost plus services element – such as facilities management and lifecycle) (per m2)

10

Renova Case Study 2004-2011

IntroductionIntroductionRenova is one of the most effective LIFTCos in the UK and has won Lift Area of the Year 2009 (Lift Awards) and Best LIFTCo 2007 and 2008 (PPP awards). It is an excellent blueprint as to how to set up and run PPP’s in the right way and the following Case Study p p g y g ysets out some of its achievements in continuous improvement. It also has probably the best delivery record with 17 schemes now financially closed. The Continuous Improvement was achieved by a special programme involving an integrated team of 30 people (from the NHS, LIFTCo, Designers and Supply Chain) working together in a series of teams and workshops using World Class techniques developed from the Manufacturing Industry.

Renova Developments is the NHS LIFT Company for Halton, St Helens, Knowlsey & Warrington,

Fulcrum is owned by Meridiam Infrastructure Managers – a European PensionFulcrum is owned by Meridiam Infrastructure Managers – a European Pension Fund-backed long term Investment Company

11

Renova’s JourneyLIFTCo Case StudiesLIFTCo Case Studies

V ll t f th t t b th P bli S tVery well set up from the start by the Public Sector

Commitment, Projects, The right people who were dedicated resourceresource

They demanded high quality set up for LIFTCo including excellent Chair Appointment of external CEOChair, Appointment of external CEO

Realised after 1st Project that it was no better than standard

Embarked collectively on a programme of Continuous Improvement

Probably the most successful Lift project, the charts speak for themselves

10

Continuous Improvement over 5 Tranches of Projects

10.0

Renova Customer Satisfaction Score (out of 10)

8.0

9.0

10

5 0

6.0

7.0

Scor

e ou

t of

3 0

4.0

5.0

Value for Money Timeliness Product Quality

(Zero Defects)Customer

Satisfaction Design Quality Quality of Service Environmental Communication Health and

Safety

Innovation & Continuous

ImprovementT5 - 2009 9.0 9.0 8.5 10.0 10.0 9.1 9.3 8.8 7.2 8.7T4 - 2007 7.9 7.6 7.9 8.2 8.4 8.0 7.8 7.6 9.4 8.0T3 - 2006 7.0 7.0 7.6 7.9 8.1 7.8 7.7 7.6 9.3 7.3

3.0

T2 - 2005 6.0 7.1 7.0 7.1 7.7 7.5 7.4 6.8 9.0 6.6T1 - 2004 5.0 5.7 5.5 6.2 6.8 6.0 5.4 5.5 7.0 6.1

12

Driving Down Construction Costs

4,000 

Renova Construction Cost m24 000

Renova Construction Cost m2

3,500 

,

3,500 

4,000 

3,000 

Construction  Cost m2

3,000  Construction Cost m2

2 000

2,500 Linear (Construction  Cost m2)

2 000

2,500 Linear (Construction Cost m2)

1,500 

2,000 

Oct‐04 Mar‐05 Aug‐05 Jan‐06 Jun‐06 Nov‐06 Apr‐07 Sep‐07 Feb‐08 Jul‐08 Dec‐08 May‐09 Oct‐09 Mar‐10 Aug‐10 Jan‐11 Jun‐11

2,000 

17 projects in 7 yearsg p p y g

13

Driving Down Lease Plus Costs

500 

Renova LPA Cost m2Renova LPA Cost m2

450 

350 

400 

LPA m2LPA m2

250 

300 

Linear (LPA m2)Linear (LPA m2)

200 

17 projects in 7 years

14

Fulcrum London Case Study

IntroductionFulcrum now manages 3 LIFTCos in the south and west of London. This case study shows what continuous improvement has been achieved since Meridiam changed the management of the Company in 2009 and it started to operate aschanged the management of the Company in 2009 and it started to operate as a proper PPP. It illustrates therefore that setting up these organisations with the ‘right’ private sector partner is fundamental to success.

Fulcrum is the Private Sector Partner in 3 NHS LIFT Projects in London

South West London Health PartnershipsSouth West London Health PartnershipsBuilding Better Health (BBH) West London

BBH Lambeth, Southwark, LewishamFulcrum is owned by Meridiam Infrastructure Managers – a European Pension Fund-Fulcrum is owned by Meridiam Infrastructure Managers a European Pension Fund

backed Investment Company

16

Improvement in Fulcrum Buildings’ Customer Satisfaction Dec 2010 – March 2012Satisfaction Dec 2010 March 2012

100

70

80

90

40

50

60

D 10

0

10

20

30 Dec‐10

Mar‐12

0

17

Driving Down Construction Costs

4,000 4,000 

3,000 

3,500 

3,000 

3,500 

2,000 

2,500 

Series5

Li (S i 5)

Construction Cost m22,000 

2,500 

1,000 

1,500 Linear (Series5)Linear 

(Construction Cost m2)

1,500 

1,000 

‐

500 

Apr‐09 Jul‐09 Nov‐10 Mar‐11 Aug‐11 Mar‐12 Apr‐12

500 

Grand UnionBaldry Gardens Grand Union Village Akerman Road Whitton Surbiton White City Norwood HallBaldry Gardens Grand Union

Village Akerman Road Whitton Surbiton White City Norwood Hall

18

Driving Down Lease Plus Costs

400 

450 

300 

350 

200 

250 

Series1

Linear (Series1)

LPA m2

100 

150 

Linear (Series1)

Linear (LPA m2)

‐

50 

Apr‐09 Jul‐09 Nov‐10 Mar‐11 Aug‐11 Mar‐12 Apr‐12

Baldry GrandUnion Akerman Road Whitton Surbiton White City Norwood HallBaldry Grand Union Akerman Whitton Surbiton Whit Cit Norwood HallBaldry Gardens

Grand Union Village

Akerman Road Whitton Surbiton White City Norwood HallBaldry Gardens

Grand UnionVillage

Akerman Road

Whitton Surbiton White City Norwood Hall

19

So what’s been learned?Set up right from the start:

CEO Strong leadershipCEO

Staff at the

g pand support

Directors

LIFTColevel Understanding of

VFM issuesDirectors

Pipeline of schemes

creative, innovative Partner who adds valuetechnical skills Partner who adds value

So what’s been learned?Small Supply Chains

Ensure users are properly consulted

Continuity of advisory teams

Resolution fResolution of property issues

Design work mustPace of Design work must wait for user

requirements

Pace of project

The continuous improvement Journey

The first project is likely Continuous

improvement t k tito be no different takes time

Public sector

Private sector A programme is required to facilitate the

improvement

Value For Moneyymany longer term benefits are lost if

Public sector need to decide their procurement strategy in a benefits are lost if

projects are market tested every time

gyrecession

Some clients cannot distinguish

LA’s used to buying here

Public sector mustPublic sector must compare like for like

The Construction partner

All parties need

must buy in to reducing construction costs

to buy in to VFM

LIFTCo IdentityyRole of Local Public Sector

Joint training and development

Director and Chair

FulcrumSeparate from

Fulcrum

Tr st

the contractor

market

Trust