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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
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
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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
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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
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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
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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
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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
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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
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