north territory - scottish futures trust · 2017-06-16 · north territory . contents . ... chapter...

Scottish Futures Trust hub Project Manager’s Handbook

North Territory

Contents

Chapter 1 – Introduction .................................................................................................................................. 1

Chapter 2 - Hub Overview ................................................................................................................................ 1

Chapter 3 – Choosing the Procurement Route ................................................................................................. 9

Chapter 4 - OJEU Notice ................................................................................................................................. 14

Chapter 5 – Key Roles and Responsibilities .................................................................................................... 15

Chapter 6 – New Project Development Process ............................................................................................. 18

Chapter 7 - New Project Request ................................................................................................................... 19

Chapter 8 - Stage 1 ......................................................................................................................................... 21

Chapter 9 - Stage 2 ......................................................................................................................................... 23

Chapter 10 - Financial Close ........................................................................................................................... 24

Chapter 11 -Template Project Agreements .................................................................................................... 25

Chapter 12 - Key Stage Review Process .......................................................................................................... 40

Chapter 13 - Construction Delivery ................................................................................................................ 42

Chapter 14 - Commissioning Process ............................................................................................................. 43

Chapter 15 - Monitoring Performance ........................................................................................................... 44

Chapter 16 - Operations (DBFM) .................................................................................................................... 45

Appendix 1 - Hub Guidance Notes SFT Web Site Links ................................................................................... 46

Users of this manual may find useful the SFT Publication Terminology Glossary published on SFT’s

website. A link to this document is contained in Appendix 1

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Chapter 1 – Introduction

This handbook is intended to act as a basic guide to the hub process. As such to get a fuller understanding of the details behind the hub process it is necessary to refer to the Territory Partnering Agreement and associated documents. There are a number of links to these documents contained within the guide to help the user get a fuller understanding.

Chapter 2 - Hub Overview

There are five hub territories South East, East Central, North, West and South West shown on the

map below. Each has a population of approximately 1m.

For each hub territory a jointly owned public private company (“hubco”) has been set up.

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Private Sector Development Partner (60%)

Public Sector Participants

(30%)

Scottish Futures Trust (10%)

hubcoPublic Sector Participants

(TPB)

Shareholders Agreement

Territory

Partnering

Agreement

Supply chain(designers & builders etc)

hub Structure Post Contract Close

As the private sector is the majority shareholder hubco is not a public contracting authority.

Hub Initiative Aim The Territory Partnering Agreement sets out that the purpose of the hub initiative is to establish a long-term partnering relationship between hubco and the Participants and for the hubco to provide or procure, across the Territory as a whole, the provision of appropriate accommodation and related services to the Participants and others involved in providing Community Services with the aim of:

a) improving the efficiency of delivery of community-based facilities; b) delivering economies of scale through shared facilities; c) making the best use of public resources; and d) providing continuous improvement in both cost and quality in public procurement

Parties to the hub relationship are overleaf:

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Participants

South East North East Central West South West

East Lothian Council NHS Grampian Fife Council Renfrewshire Council NHS Ayrshire & Arran

NHS Lothian Highland Council Clackmannanshire Council NHS Greater Glasgow and Clyde Police Scotland

Police Scotland Aberdeen City Council NHS Tayside Glasgow Housing Association Dumfries & Galloway Council

Scotland Fire & Rescue Service Aberdeenshire Council Perth & Kinross Council Scottish Fire and Rescue Service Irvine bay Regeneration Company

City of Edinburgh Council Argyll & Bute Council NHS Forth Valley Glasgow City Council NHS Lanarkshire

NHS Borders Comhairle nan Eileen Siar Dundee City Council Clydebank Re-Built Scottish Courts Service

Midlothian Council Scotland Fire & Rescue Service Falkirk Council Clyde Gateway South Lanarkshire Council

Scottish Borders Council Police Scotland NHS Fife Elderpark Housing Association South Ayrshire Council

West Lothian Council Moray Council Police Scotland Glasgow School of Art NHS Dumfries & Galloway

Scottish Ambulance Service Highland Council Scottish Fire and Rescue Service East Renfrewshire Council Scottish Fire and Rescue

NHS Grampian Scottish Ambulance Service East Ayrshire Council

NHS Highland West Dunbartonshire Council North Lanarkshire Council

NHS Orkney City of Glasgow Colleges Scottish Ambulance Service

NHS Shetland East Dunbartonshire Council State Hospitals Board for Scotland

NHS Western Isles Inverclyde Council North Ayrshire Council

Orkney Islands Council Scottish Police Authority

Scottish Ambulance Service

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Private Sector Development Partners

South East Consortium Name SPACE (Scottish Partnership and Community Enterprise)

Galliford Try Investments – 83% Aecom – 16.5% Fulcrum Investment Corporate Holdings – 0.5%

North Consortium Name Alba Community Partnerships Equitix/Cyril Sweett Investments Joint Venture Company – 50%

Galliford Try Investments – 50% East Central Consortium Name Amber Blue Robertson – 42%

Amber Infrastructure – 42% FES – 16%

West Consortium Name WellSpring Partnership Limited Morgan Sindall – 80%

Apollo Capital Projects – 10% Community Solutions Investment Partners – 10%

South West Consortium Name Alliance Equitix – 70%

Kier – 10% Galliford Try – 10% Graham Construction- 10%

Hub Initiative Principles The following principles underpin the delivery of the parties' obligations under the Territory Partnering Agreement:

to develop close working relationships between hubCo and the Participants at all levels;

to focus on achieving the best value for money operational performance within agreed timescales;

to set in place business and cultural processes to enable the Participants and hubCo to establish and agree challenging time and performance objectives, and to meet or better them;

to recognise each other's needs, constraints, limitations, capabilities, roles and responsibilities to achieve mutually beneficial outcomes;

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to identify, by regular monitoring, weaknesses and strengths in the relationship between and amongst the Participants and hubCo and to work together to overcome the weaknesses and to build on the strengths;

to commit to the early recognition and resolution of differences, conflicts and disputes between and amongst the Participants and hubCo in a 'no surprises' environment;

to appoint within each of the Participants and hubCo, co-ordinators at senior level who will support, defend and promote the long-term strategic partnering between them and its principles of operation;

to develop openness and trust in a transparent information and data sharing environment; and

in accordance with the Equality Requirements to positively promote equal opportunities by combating discrimination on the grounds of race, ethnicity, religion, nationality, gender, disability, age or sexuality and promoting good relations between all sections of the community in 'everything we do' including:

delivering high quality Community Services for end users; and

working with the local community, Community Health Partnerships, Community Planning Partnerships and partners in the public, private or voluntary sectors.

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Hub Initiative Objectives The hub Initiative Objectives as approved by the hub National Programme Board are as follows:

The sustained and efficient design and delivery of facilities, executed with service user

requirements taken fully into account, which achieves procurement value for money and

results in efficient use of assets

an increasing number of services provided locally in communities through collaborative

working from single sites (wherever possible and appropriate) leading to better outcomes

for service users;

Reinforces joint strategic planning, investment, asset management and service delivery;

Delivers demonstrably better value for money on a stable, long‐term basis than alternative

Procurement arrangements Incorporates consideration of joint asset management strategies

to ensure best use of available infrastructure

Incorporates consideration of joint asset management strategies to ensure best use of

available infrastructure

Is flexible in its ability to respond to evolving service strategies, and in being able to support

delivery thus able to generate sufficient project size, volume and deal flow to attract private

finance into the delivery and long term management of service infrastructure where

enhanced value for money can be achieved through that form of arrangement through

different contractual/funding routes

Is able to generate sufficient project size, volume and deal flow to attract private finance into

the delivery and long term management of service infrastructure where enhanced value for

money can be achieved through that form of arrangement

Engenders joint learning and continuous improvement in both public sector client

procurement teams and their private sector partners and enables the sharing of innovation

and best practice and the generation of economies of scale across Scotland

Increases opportunities for local employment & training

Incorporates full consideration of service delivery requirements, enabling joint service

working leading to better outcomes for service users and providing a focus for community

engagement

Supports the delivery of national and local sustainability targets; and

Increases opportunities for the delivery of community benefits, including the provision of

opportunities for SMEs and local companies and the employment of local people

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The services provided by hubco to the public sector participants are detailed in Schedule Part 3 of the Territory Partnering Agreement (can be viewed by clicking here ) and how they will be delivered by hubco are detailed in the Ongoing Partnering Services, Project Development Partnering Services and Strategic Support Services method statements. In summary the services are as follows

Ongoing Partnering Services

Develop Territory Delivery Plan with Participants

Supply Chain Management

Support the Territory Partnering Board

Project Development Partnering Services

New Project Development/Delivery

Supply Chain Selection

Funding A summary of the hub New Project Development Process is contained in the hub flowchart published on SFT’s website A link to this document is contained in Appendix 1

Strategic Support Partnering Services

Strategic Estate Planning - if requested

Service Planning – if requested

Strategic Support Services may be appropriate when there is a requirement for master planning, option appraisals or for support in developing a project brief prior to the issue of a New Project Request. A link to a guidance note on the use of Strategic Support Services is contained in Appendix 1

http://www.scottishfuturestrust.org.uk/files/publications/North_TPA_-_Schedule_Part_3.pdf

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Hubco can deliver both capital and revenue funded projects as illustrated in the figure below:-

Territory Partnering Agreement

Contains process for hubco to develop proposals for New Projects at request of a Public Sector

Participant.

Contains approvals process for New Project proposals developed by hubCo.

Contains Template D&B Development Agreement and Template DBFM Agreement to be

entered into once hubco’s proposals for a New Project have been approved

D&B Development Agreement

Design and Build contract entered into between the relevant Public Sector Participants (i.e. those

procuring the facilities in question) and hubco on New Projects that are capitally funded.

DBFM Agreement

Design, Build, Finance and Maintain contract entered into between the relevant Public Sector

Participants (i.e. those procuring the facilities in question) and sub hubco on New Projects that are

revenue funded. The expectation is that special purpose vehicles will be established by hubco (and

wholly owned by hubco) for delivering DBFM projects.

.

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Chapter 3 – Choosing the Procurement Route

Exclusivity Hubco has for 10 years from the commencement Date exclusivity to deliver Qualifying Projects. NHS has granted Qualifying Project Status and therefore has granted exclusivity to hubco for procurement. All other participants have the option of using hub or other procurement routes for their projects. In helping Participants to decide what route of procurement is best for any particular project, the following table providing information on the differences between different procurement routes. Only if a participant chooses to use the hub route and if Qualifying Project status is granted by the Territory Partnering Board does exclusivity occur. Follows options appraisal of hub versus other forms of procurement

PARAMETER OBJECTIVES Standalone Traditional

Standalone Design & Build hubco

Participant Frameworks Constraints

TIMING REDUCED PROCUREMENT TIMESCALES

OJEU process would need to start from beginning.

OJEU process would need to start from beginning.

OJEU process complete. hubco set up for 20 years and projects can be procured quickly.

OJEU process complete. Framework set up for 4 years and projects can be procured quickly.

Consultation requirements. Committee Approval. Site Acquisition. Statutory Requirements. Utilities. Capital Plan cash flow forecast.

COST COMPETITIVE TENDERING AND ELIMINATION OF PROFIT LAYERS

Limited input from Contractors therefore opportunity missed to achieve better value solution.

Early supply chain involvement provides cost benefits in relation to design/

hubco charges a management fee in addition to contractor on-costs, but these are competitively tendered below pricing caps. Capped design fees very competitive. Due to large

Less transparent management fees. Early supply chain involvement from RIBA stages C/D provides cost benefits in relation to design/buildability. Supply chain involvement will

Limited capital to develop projects. SFT funding requirements influence

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Market conditions. Pricing of traditionally tendered projects extremely competitive.

buildability. Higher bid costs when compared with traditional procurement.

pipeline of work at least 80% of elemental work packages transparently tendered on open book basis. Contractor risk capped.

include advice from three main contractors which will be combined into a final solution. Projects tendered in a mini-competition.

procurement route.

QUALITY HIGH DESIGN STANDARDS

Limited input from Contractors therefore opportunity missed to achieve better quality solution.

Design and build route can result in a compromised product (PPP). Early supply chain involvement does provide cost benefits in relation to design.

Supply chain has a selection of best practice consultants. Collaborative design approach protects quality. Early supply chain involvement does provide cost benefits in relation to design.

Projects are designed using a mix of framework best practice consultants and in house teams. Designs are constantly peer reviewed. Design team heavily influence quality. Supply chain involvement will include advice from three main contractors which will be combined into a final solution.

Whole life cost to be appropriately considered. Building maintenance team to be included within design process.

VARIATIONS AVOID PROHIBITIVE COST OF CHANGE

On site design changes can be easily understood from a programme, quality and cost perspective. Pricing transparency.

Difficult to ascertain impact of change efficiently and effectively with D&B route when on site.

Only Client led variations, which are responded to through a transparent process. On site design changes can be easily understood from a programme, quality and cost perspective. Pricing transparency. All design/development risk resides with hubco

On site design changes can be easily understood from a programme, quality and cost perspective. Pricing transparency.

Likely that some elements will change during construction e.g. IT infrastructure difficult to understand fully at pre-contract stage.

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COMPLEXITY TECHNICALLY ADVANCED

Will deliver technically advanced design. Changes during construction easily evaluated during to transparency of pricing.

Will deliver technically advanced design although if changes implemented during construction may be difficult to obtain best value.

Will deliver technically advanced design changes during construction. Easily evaluated due to transparency of pricing.

Will deliver technically advanced design. Changes during construction easily evaluated due to transparency of pricing.

Ever changing technology requirements such as IT.

RESPONSIBILITY SINGLE CONTRACTUAL LINK

Single contractual link between Council and Contractor.

Single contractual link between Council and Contractor.

Contractual link between hubco and Council and not Contractor. Single point of responsibility for both design and construction. Collateral Warranties provided by Contractor.

Single contractual link between Council and Contractor. Single contractual link between Council and Designers. Disputes can arise over responsibility for defects.

Clear lines of responsibility required.

DESIGN TEAM DUTY OF CARE

NEED FOR DESIGN TEAM TO REPORT TO SPONSOR

Easily identifiable reporting structure/regime.

Reporting regime unclear. Will need to employ separate Employer Representative consultant. Checking and verifying designs etc.

Collaborative approach, with Client, hubco, design team and contractor involved from an early stage of the project. Shared mutual objectives during design. Only during construction is the possibility of conflict of interest, but D&B contract administered by Authority Representative.

Easily identifiable reporting structure/regime.

Sponsor ideally needs direct contact with the design team.

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RISK MANAGEMENT

DESIRE TO TRANSFER RISK

No risk transfer. 100% risk transfer. 100% risk transfer at Financial Close.

Partial risk transfer with 30% of packages contractor's designed portions. Also split responsibility for design and construction.

Maximum risk transfer desired.

BUILDABILITY CONTRACTOR INPUT TO DESIGN PROCESS

Limited input from Contractors therefore opportunity missed to achieve better buildability solution.

Early supply chain involvement provides cost benefits in relation to design/buildability. Separate Contractors will bring members of their supply chain into the process. Design will benefit but improvements could be obtained by having all tenderers inputting into one design. High abortive costs.

Early supply chain involvement provides cost benefits in relation to design/ buildability. Specialist sub-contractor (Tier 3) involvement easily arranged during RIBA Stage D&E.

Early supply chain involvement from RIBA stages C/D provides cost benefits in relation to design/buildability.

Maximise input from Contractors and Contractors supply chain.

BUILDABILITY CONTRACTOR INPUT TO DESIGN PROCESS

Limited input from Contractors therefore opportunity missed to achieve better buildability solution.

Early supply chain involvement provides cost benefits in relation to design/buildability. Separate

Early supply chain involvement provides cost benefits in relation to design/buildability. Specialist sub-contractor (Tier 3) involvement easily arranged during RIBA Stage D&E.

Early supply chain involvement from RIBA stages C/D provides cost benefits in relation to design/Buildability.

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Contractors will bring members of their supply chain into the process. Design will benefit but improvements could be obtained by having all tenderers inputting into one design. High abortive costs.

VALUE FOR MONEY

ADDED VALUE OPPORTUNITIES

No specific process to encourage

Contractors to go beyond minimum requirements for

Community benefits etc.

No specific process to encourage

Contractors to go beyond minimum requirements for

Community benefits etc.

VfM process from hubco provides opportunities for

Participant to build in added value requirements to Supply

Chain tenders.

No specific process to encourage Contractors to go

beyond minimum requirements for Community

benefits etc.

COLLABORATION PARTNERSHIP WORKING

N/A N/A Long term relationship with hubco enables early engagement

at no cost and access to competitive consultancy services. Incentive to ensure Supply Chain

performs.

Limit to long term incentives.

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Chapter 4 - OJEU Notice

The use of hubco to deliver Project Development Partnering Services has been the subject of an EU

compliant procurement process. The types of projects which hubco may deliver are detailed in the

OJEU Notice. A copy of the North Territory OJEU Notice can be found by clicking here and a copy of

the North Territory Information Memorandum can be found by clicking here. The type of facilities for

which partnering services may be provided is governed by the following extract from the OJEU notice:

…a mixture of new build and refurbished facilities (including administrative facilities and serviced

facilities) ("Relevant Facilities") used by one or more of the Participants relative to the provision of

Community Services (within the sphere of primary health, wellbeing, library services, education

(including nursery, pre-school, primary and/or secondary), children's services, residential and social

care, social housing and other community based services (including those provided by the police, fire

and rescue and ambulance services)) to the public within the Territory and/or facilities management

services in relation to such Relevant Facilities or other facilities used by one or more of the Participants

relative to the provision of such Community Services to the public within the Territory, all across the

respective Participants' whole estates. It is anticipated that Relevant Facilities may be delivered

through a design, build, finance and maintain agreement or a design and build development

agreement.

The Partnering Services to be provided by hubco may also include but will not be limited to: Partnering

and collaborative working; Demonstration of Continuous Improvement in value for money; New

Project Development and Delivery Services; Supply Chain Management; Funding; Service Planning and

Strategic Estate Planning.

It is essential that the OJEU Notice and Information Memorandum are checked to ensure that any

project which it is proposed that hubco will deliver is within the scope of the OJEU Notice and

Information Memorandum and in the case of any doubt that legal advice is sought.

http://www.scottishfuturestrust.org.uk/files/publications/North_OJEU_Notice.pdf

http://www.scottishfuturestrust.org.uk/files/publications/North_Information_Memorandum.pdf

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Chapter 5 – Key Roles and Responsibilities

The roles and responsibilities of the Participant, hubco, the Territory Programme Director, the Scottish

Futures Trust (“SFT “)hub Support Director, Scottish Government, SFT’s Schools team and Participant’s

advisers for delivering and supporting the delivery of each task in a hub Project are detailed in the Key

Roles and Responsibilities Matrix overleaf:

Role and Responsibility Matrix C - Person/role creates/owns the deliverable.

Project Development Process I - Person/role provides input /contributes.

Version - Issued Version 1.0 R - Person/role reviews the deliverable.

S - Person/role provides support/advisory function

A - Person/role approves the deliverable.

Relevant Project Development Stage Activity

1 - Pre NPR Request - Project Prep. 1.01 Identify the strategic context for the Project.

1.02 Identify investment, existing arrangements and business needs.

1.03 Identify benefits, risks, constraints and dependencies.

1.04 Undertake an option appraisal review.

1.05 Identify commercial, financial and management case.

1.06 Identify critical success factors for the investment.

1.07 Develop commercial, financial and management case.

1.08 Indentify project budget.

1.09 Identify and communicate participant sub-debt requirements.

1.10 Asses impact of previous development work.

1.11 Identify project definition and brief.

1.12 Identify project roles and responsibilities including for advisers.

1.13 Initiate draft project Organogram (Governance/Project Mgt. Structure).

1.14 Identify and initiate project specific project development approach.

1.15 Identify and initiate participant/stakeholder engagement.

1.16 Initiate draft risk register.

2 - New Project Request - Preparation 2.01 Initiate NPR development process.

2.02 Produce project brief.

2.03 Participant approval process.

2.04 Identify and describe Specific Requirements.

2.05 Derive intelligent benchmarking & affordability cap.

2.06 Determine construction costs (incl. Prelims, OaP, design fees, cont.).

2.07 Determine project development fee.

2.08 Determine construction management fee.

2.09 Determine hubco portion.

2.10 Determine financial close costs.

2.11 Determine construction phase SPV costs.

2.12 Determine hard facilities management and lifecycle costs.

2.13 Determine operations phase SPV costs.

2.14 Carry out Pre-NPR Key Stage Review.

2.15 Issue approved NPR.

3 - NPR Issued - hubco to commence/action 3.01 Formal appointment of Project Development Team.

3.02 Develop Project Execution Plan.

3.03 Determine and Produce Risk Strategy & Management Plan.

3.04 Develop and issue project programme.

3.05 Establish a Progress Monitoring & Reporting.

3.06 Agree relevant adjustments to Approval Process & Pricing Report.

3.07 Agree hubco deliverables for Participants’ for inclusion into OBC .

3.08 Agree Milestone Gateway Checklists.

3.09 Agree change/fee adjustments for partially completed developments.

3.10 Develop and agree Communication Plan & Consultation Strategy.

3.11 hubco accepts New Project Requests.

4 - Stage 1 - Preparation to inform Stage 1 4.01 SSFP - Workshop No 1 - Initial Programme Goals.

4.02 Develop the project Design Brief.

4.03 Develop and agree response to any Specific Requirements.

4.04 Compile list of Required Services and Service Outputs.

4.05 Agree project essential relationships and adjacencies.

4.06 Establish required impact, functionality and operational policy.

4.07 Agree build quality standards.

4.08 Initiate design review (Schools)/DQI Process (Health).

4.09 Determine and agree relevant Criteria for VFM.

4.10 Determine and agree relevant Life cycle strategy/affordability.

4.11 Identify project Optimisation/innovation.

4.12 Identify opportunities for Future services/reconfiguration.

4.13 Develop initial designs.

4.14 Input from design guides.

4.15 Determine site specific risk assessment.

4.16 Review title, Boundaries, GI, planning requirements.

4.17 Agree VFM assessment.

4.18 Review/Consult users/community.

5 - Stage 1 Development 5.01 Produce elemental cost plan.

5.02 Determine and produce Pricing Report - Benchmarking etc.

5.03 Demonstration VFM & Affordability outcomes.

5.04 Where Vfm or Affordability Cap not met - action plan.

a - Value management of the design.

b - Partial Market Testing.

c - Whole Market Testing.

5.05 Review of Affordability Cap with the Participant.

5.06 Indicative financial model(DBFM) - Health Only.

5.07 Issue Stage 1 submission.

6 - Stage 1 Submission Review 6.01 Review Outline Business Case objectives.

6.02 Review VFM assessment.

6.03 Review Technical Solution.

6.04 Review Title and Land Matters.

6.05 Review Commercial & Legal Matters.

6.06 Stage 1 Approval Process - Procuring Authority.

6.07 Carry out Stage 1 Key Stage Review.

6.08 Issue Stage 1 Approval.

7 - Stage 2 Development 7.01 Update Stage 1 information/criteria.

7.02 SSFP - Workshop No 2 - Achieving the Programme Goals Workshop.

7.03 Develop design.

7.04 Pre-planning Consultation.

7.05 Detailed Planning Consent.

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7.06 Procure Contractor.

7.07 Confirm VFM.

7.08 Procure Facilities Management Contractor.

7.09 Develop project finance approach.

8 - Re-confirm the following post Stage 1 8.01 Reconfirm Project Objectives, VFM, Risk and Programme.

8.02 Agree relevant approval criteria.

8.03 Agree any pricing cap adjustments.

9 - Stage 2 - Specific requirements 9.01 Develop designs to RIBA Stage E.

9.02 Carry any required Pre-planning Community Consultation.

9.03 Prepare Planning Application submissions.

9.04 Carry out Pre Planning Application Gateway Checklist Process.

9.05 Submit formal Planning Application.

9.06 Liaise/Secure Planning Approval.

9.07 Select and Procure Construction Contractor.

9.08 Prepare Stage 2 Pricing Report including: -

a –Benchmarking.

b –Comparison with pricing caps.

c –Stage 2 Risk appraisal.

d –Demonstration that that Vim & Affordability Caps are met.

e - Carry out Partial Market Testing if required.

f - Carry out Whole Market Testing if required.

g - Carry out Review of Affordability Cap with the Participant.

9.09 Produce Indicative financial model.

9.10 Source and Carry out Funding Competition.

9.11 Appointment Due Diligence Advisors.

9.12 Determine Base case nominal Blended Equity IRR.

9.13 Develop Financial close programme.

9.14 Issue Stage 2 submission .

10 - Stage 2 Submission Review 10.01 Review Final Business Case objectives.

10.02 Review Economic Case.

10.03 Review Value for money assessment.

10.04 Review Technical Solution.

10.05 Review Title and Land Matters.

10.06 Review Commercial & Legal Matters.

10.07 Review Key Project Milestones.

10.08 Stage 2 Approval Process - Procuring Authority.

10.09 Carry out Stage 2 Key Stage Review.

10.10 Issue Stage 2 Approval.

11 - Financial Close 11.01 Managing financial close process.

11.02 Finalise/agree project agreement and ancillary documents.

11.03 Carry out Due Diligence on Sub Contracts.

11.04 Agree and finalise Sub Contracts.

11.05 Negotiate and agree equity and funding documents.

11.06 Carry out due diligence on equity and funding documents.

11.07 Agree and finalise equity and funding documents.

11.08 Finalise/agree Conditions Precedents

11.09 Carry out financial model dry runs.

11.10 SSFP - Grant Award.

11.11 Review insurance Due Diligence.

11.12 Review final Technical Adviser report.

11.13 Carry out final review of funding competition.

11.14 Carry out final model audit.

11.15 Credit committee approval.

11.16 Finalise Authority's Construction Requirements.

11.17 Finalise Authority's Services Requirements.

11.18 Agree Authority's Requirements.

11.19 Finalise hubco's services proposals.

12.19 Agree hubco's services proposals.

13.19 Achieve Financial Close.

14.19 Issue SG/HD Support Letters.

12 - Construction Delivery: 12.01 Act as Employer for D&B Contract.

12.02 Engage Independent Certifier.

12.03 Monitor construction to practical completion.

12.04 Manage change control process.

12.05 Monitor production of collateral warranties, PI insurance, H&S .

12.06 Attend monthly project meetings.

12.07 hubco to report on progress .

12.08 Employ FM Services contractor.

13 - Commissioning Process 13.01 Agree Commissioning Programmes.

13.02 Attend Commissioning meetings.

14 - Operations 14.01 Manage defects process, logs and arranges the rectification of defects.

14.02 Supervises the progress of the final account and final statement.

14.03 Monitor the activities of Sub-hubco.

14.04 Collaborate in final inspection & formal handover to Participants.

14.05 Arranges post occupancy review.

14.06 Operational financial, cost control, Help Desk and maint procedures.

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Chapter 6 – New Project Development Process

The New Project Development Process is a complicated process and as such careful consideration of the Territory Partnering Agreement and Project Development Services Method Statements as described in the following section is necessary. A summary of the steps in the development process is shown in the following chart overleaf:

EDIN 2756030 v 1 1

Territory Delivery Plan outlines a programme of service needs and projects derived from local hub Delivery plans.

Projects

included in TDP

Territory Delivery Plan

STAGE 1 Focus is on strategic background to investment business case

New Project

Request

New Project Request

Written request by Relevant Participant for hubco to produce a Stage 1 Submission supported by information appropriate to amount of prior development.

hubco Review

hubco seeks clarification as necessary to enable meaningful response, then confirms in writing within 20 Business Days of receipt of a New Project Request whether or not it will submit a Stage 1 Submission to the Relevant Participant(s).

hubco Reviews New Project

Request

Pricing Report showing

predicted max cost

Procured outside terms

of TPA

hubco Submits Stage 1

Submission

Stage 1 Submission

A Stage 1 Submission is produced within 3 months (or longer period agreed between hubco and the Relevant Participant). It includes option appraisal, outline design solution to RIBA Stage C (or such lesser work stage as the Relevant Participant may require), providing a Project Development Fee and costs and programme for completing Stage 2.

Stage 1 Approval

Process

Stage 1 Approval

Relevant Participant(s) have 2 months from the date of receipt in which to notify hubco of approval or rejection of Stage 1 Submission. If following the date of the New Project Request, hubco has failed the Track Record Test then the Relevant Participants are entitled to reject the Stage 1 Submission. hubco meets its own development costs except where the TPA provides otherwise.


of TPA

Rejection for specific

reasons outlined in

TPA

Approved Stage 1 Project Development Fee payable at this stage for Stage 1 Approved Projects

hubco Submits Stage 2

Submission

Stage 2 Submission

Stage 1 Approved Project developed by hubco to RIBA Stage E within the maximum time period for submission indicated in the Stage 1 Submission. The Stage 2 Submission includes the design, plans and drawings, a draft Project Agreement, financial model, commitment letters and a programme from Stage 2 Approval to Financial Close.

STAGE 2 Focus is on detail of the scheme

Stage 2 Approval Stage 2 Approval

Process


of TPA

1st Rejection

Pricing Report showing

predicted cost

Relevant Participant(s) approve or reject on specific grounds within 60 Business Days. Approval is determined by achievement of Approval Criteria although the Relevant Participant(s) can reject on other specified grounds. A submission failing one or more Approval Criteria may be resubmitted within 30 days of rejection.

Conclude Project Agreement

Following Stage 2 approval hubco and the Relevant Participant(s) work together to conclude the project contract. Stage 2 Project Management Fee for an approved D&B will be paid on signing of the project agreement and for an approved DBFM will be paid in the service charge.

Approved

2nd rejection for specific reasons

outlined in TPA or failure to resubmit

Conclude Project

Agreement

hubco confirms it will not submit a

Stage 1 Submission

Stage 1 Pricing Report

As part of its Stage 1 Submission, hubco produces a pricing report analysing its predicted maximum cost of the New Project. hubco and the Relevant Participant(s) agree which elements or components (as may be adjusted) of the Pricing Data projects can be used as Comparators. These act as price caps but hubco must (including where there are no Comparators) still price on an open book basis and compare against these and other benchmarking information. The Relevant Participants can also require competitive tendering and/or market testing. Drafts of the report are to be provided and updated to reflect outcome of further work prior to inclusion in Stage 1 Submission.

Stage 2 Pricing Report

Stage 1 Pricing Report process is repeated (but on the basis of more developed information) to produce an analysis of hubco's predicted cost of the New Project.

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Chapter 7 - New Project Request

Procurement of a new project commences with the issue of a written request by a Participant for hubco to produce a stage 1 submission (“New Project Request”). The New Project Request includes the scope for the project and an affordability cap. This is not generally the participants’ project budget. It is that part of the budget which is available to meet the cost of that part of the project which is to be delivered by hubco. In addition to the elements of the budget included in the NPR affordability cap, Participants should allow in their budget for all costs that require to be incurred directly by the Participants. In addition consideration should be given to including a contingency to cover any potential scope change and inflation over and above forecast indices (forecast inflation should be allowed for in the NPR affordability cap). Hubco will then have 20 business days to decide whether it wishes to accept the New Project Request. If hubco accepts the New Project Request the affordability cap in the New Project Request requires to be accepted by hubco as a capped price for the project. A Participant would typically expect this price to be bettered as hubco works it through the Stage 1 and Stage 2 development processes and as result of tendering through their open Supply Chain.

Guidance on value for money assessment: capital programmes and projects, setting affordability caps in new hub projects, project brief and Authority’s construction requirements, reference health care designs, schools development handbook and amended payment arrangements for consultants are published on SFT’s website. Links to these documents are contained in Appendix 1.

If the project is to be revenue funded (a Design Build Finance “DBFM” project) guidance on grouping

of projects, value for money supplementary guidance for revenue funded projects, timing of capital

injections and NHS balance sheet treatment are published on SFT’s website. Links to these documents

are contained in Appendix 1.

A template for New Project Request and be found by clicking here

Reference should be made to Schedule Part 5 of the Territory Partnering Agreement which sets out

the approval process for new projects (can be found by clicking here) and the Project Development

Services Method Statement. Paragraph 3 of Schedule Part 5 sets out the requirements for a New

Project Request.

http://www.scottishfuturestrust.org.uk/files/publications/Template_New_Project_Request.pdf


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Chapter 8 - Stage 1

The requirements for Stage 1 are set out in clause 4 of Schedule Part 5 of the Territory Partnering

Agreement (please click here to view). Reference should also be made to Schedule Part 6 of the

Territory Partnering Agreement which sets out the requirements for a new project pricing report

(please click here to view) and the Project Development Services Method Statement.

Stage 1 reports should be delivered within 3 months of acceptance of the New Project Request. The

stage 1 report should include among a long list of requirements:

An option appraisal

A Value for Money Assessment

Development and outline design (to RIBA Stage C)

Survey Results

Stage 1/2 pricing reports include the following data:

Comparison with prices bid for comparator projects during the original procurement;

Actual cost/prices of previously approved schemes;

Other relevant projects;

General market level of pricing, charges, costs, fees for all elements and components of similar

projects;

- In the Territory (outside of hub);

- Nationally in community services sector; and

- General market levels of prices etc – other hub areas, benchmarking data and

indices provided by SFT or Govt.

Other levers to demonstrate Value for Money include:-

Open Market Testing can be required by participant at any stage:

Component, element or project level;

Participant request;

Supply Chain selection:

Mini competition;

Participant Involvement;

SFT Key Stage Review Process:

VfM assessments on Govt funded projects;

Continuous Improvement targets:

Reduction in construction and hard FM costs;

Improvement in design outcomes;



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hubco must always price on an open book basis

Illustration of the requirements for a new project pricing report

New Project Pricing Report

Benchmark Projects

Pricing Data

Comparator

• Compliance with TPA/Pricing Caps

• Basis of Hub Procurement Model

• Method to demonstrate VFM

• Method to improve VFM• Monitor and add value

Overview of Pricing Projects

The participant then has 1 month to decide whether to approve the Stage 1 submission. Approval includes commitment to costs incurred during the Stage 1 process and allows the Stage 2 development to commence.

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Chapter 9 - Stage 2

The requirements for Stage 1 are set out in clause 5 of Schedule Part 5 of the Territory Partnering

Agreement (please click here to view) Reference should also be made to Schedule Part 6 of the

Territory Partnering Agreement (please click here to view) and the Project Development Services

Method Statement.

Guidance on Stage 2 submissions demonstrating value for money is published on SFT’s website. A Link to this document is contained in Appendix 1.

If the project is to be revenue funded (a Design Build Finance “DBFM” project) there is an SFT payment

mechanism model, guidance on the model and appendices are published on SFT’s website. Links to

these documents are contained in Appendix 1.



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Chapter 10 - Financial Close

hubco will

Manage the financial close process

Finalise/agree project agreement and ancillary documents

Carry out due diligence on sub contracts

Agree and finalise sub contracts including resolving any residual risks

Negotiate and agree equity and funding documents

Carry out due diligence on equity and funding documents

Agree and finalise equity and funding documents

Finalise/agree conditions precedent

Carry out financial model dry runs

Review insurance due diligence

Review final Technical Adviser report

Carry out final review of funding competition

Carry out final model audit

Ensure funder’s credit committee approval is obtained

Finalise hubco's services proposals

Agree hubco's services proposals

Achieve Financial Close timeously

The Authority requires to:

Finalise authority's construction requirements

Finalise authority's services requirements

Agree authority's requirements

Ensure SSFP - Grant Award (if applicable)

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Chapter 11 -Template Project Agreements

Under the terms of the Territory Partnering Agreement the parties are obliged to use the template

Project Agreements set out in Schedule Part 7 of the Territory Partnering Agreement as updated from

time to time by SFT. There are 2 forms of template Project Agreement:-

Design Build Finance and Maintain (“DBFM) Project Agreement for revenue funded projects

Design and Build (“D&B”) Project Agreement for projects funded by capital

Any changes to the template Project Agreements, other than project specific issues which are

referenced in the templates, require the prior approval of SFT.

The most up to date template Project Agreements are published on SFT’s website. Links to these

templates and a User guide and other guidance are contained in Appendix 1. The User guide provides

a clause by clause commentary.

If it is a DBFM project there is also a standard service level specification and guidance on an energy

strategy and the completion of Schedule Part 10 are published on SFT’s website. Links to these

documents are contained in Appendix 1.

DBFM Project Agreement

A typical Structure for DBFM projects is illustrated below

Typical DBFM Procurement Model

CONTRACTOR

(SPV)

SPV MMEEMMBBEERRSS AUTHORITY

SHAREHOLDERS

AGREEMENT PROJECT

AGREEMENT

LOANS

DIRECT

AGREEMENT

FUNDERS

SERVICE PROVIDER

CONSTRUCTION

CONTRACTOR

SUB-CONTRACTORS

DESIGNER(S)

SPV MEMBERS

SHARES

FUNDING

AGREEMNT

OPERATION AND

MAINTENANCE

AGREEMENT

CONSTRUCTION

AGREEMENT

PROFESSIONAL

APPOINTMENT(S)

Contractual Link

Design and/or

Construction Risk

or Operating Risk

Design and

Construction Risk

Commissioning

Operating

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Overview of DBFM Agreement

General including obligations and responsibilities of sub-hubco and respective

representatives

Land and Title issues

Design and Construction

Services

Delay and Relief Events

Changes in Law and Changes

Financial

Termination

Handback

Indemnities, Warranties and Insurance

Miscellaneous

Land and Title Issues

hubco required to comply with disclosed title conditions only;

Otherwise title risk sits with the Participant;

On a project by project basis, each Participant will require title examination to produce the

“Title Conditions” and “Reserved Rights”;

Ground conditions are generally a sub-hubco risk - exceptions to this are any unforeseen

ground conditions and/or contamination which hubco was unable to investigate

The risk of any asbestos on a Site is to be dealt with on a project by project basis

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Key Points to Note

A narrowly defined scope of hard FM service (Services Specification);

The payment mechanism has been developed using concepts from both the NHS and schools

sectors;

Equity return sharing and capping for hub DBFM projects ; and

Clauses have been dropped on the basis that they have been found to be of little or no

practical benefit in operational projects; and clauses taken from other market

precedents/standard forms.

Authority takes unforeseen capex change in law risk during operational period

Malicious Damage will be a public sector risk although the service provider will provide the

reactive maintenance to rectify damage due to vandalism, subject to reimbursement of

costs. The Authority will be best placed to manage this risk given that it will be retaining

responsibility for security and janitorial services.

Variations are regulated by a version of the Change Protocol developed for the BSF

programme in England. The Change Protocol includes an option that allows the Authority

to carry our certain very minor classes of changes for itself

Insurance premium risk sharing in relation to market-related changes has been dropped so

that insurance premiums become mainly a pass-through cost, but measures have been added

to ensure that the project insurances are procured on terms that represent best value for

money for the Authority e.g. competitive quote.

Internal decoration, window cleaning (and floor coverings optional) and Authority equipment

are excluded from the maintenance service. The Authority will have minimum periodic

maintenance obligations for these items. The service also excludes PAT testing of the

Authority’s electrical equipment.

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Schedules to DBFM Project Agreement

Schedules - Technical Inputs

Schedule Part 12

Service Requirements

Main Body of project Agreement

Schedule 14

Payment Mechanism

Schedule Part 15

Insurance Requirements

Schedule Part 6

Construction Documents

SCHEDULE PART 6 – CONSTRUCTION MATTERS (8 Sections)

Section 1 (Planning/Consents) are project specific and should be prepared by each Authority on a

project by project basis. This should include a list of the Planning Permissions/Consents and any

additional/supplemental Planning Permission/Consents required to be obtained by Sub-hubco or the

Authority (as the case may be) for the duration of the Project Term.

Section 2 (Safety during Construction) and whenever used elsewhere in this Agreement: CDM co-

ordination and responsibilities.

Section 3 (Authority’s Construction Requirements) will include

Contents Page

Sub-Section A – Introduction

Sub-Section B – Definitions & Abbreviations

Sub-Section C – General Requirements

Sub-Section D – Operational Specific Requirements Sub-Section E – Soft FM Specific Requirements

Section 4 (Sub-hubco Proposals) will usually include the following:

Introduction

Architectural proposals

Civil/Structural engineering proposals

Mechanical and Electrical engineering proposals

Construction Methodology

Drawings (full design to be developed at least to 1:2000 level, with a sample drawing of each

key area of the Facility developed to 1:50 level)

Management proposals.

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Section 5 (Reviewable Design Data) should include the design that is to be developed in accordance

with principles set out in the Review Procedure e.g. 1:200 drawings of site plans, 1:50 drawings of

room layouts, etc.

Section 6 (Room Data Sheets) should include a room by room design and contents schedule.

Section 7 (Thermal and Energy Efficiency Testing Procedure) should contain the monitoring

procedure referred to in Clause 12.4

Section 8 (Quality Plans (Design and Construction) should contain sub-hubco’s Design and

Construction Quality Plans.

SCHEDULE PART 7 THE PROGRAMME

(The contents of this Schedule Part 7 (The Programme) are project specific and need to be prepared

by Sub-hubco and agreed with the Authority – essential includes detailed construction programmes,

handover dates, commissioning etc.

SCHEDULE PART 11 – EQUIPMENT

Schedule Part 11 (Equipment) is project specific and should be prepared by each Authority on a

project by project basis. This should include a list of the equipment that Sub-hubco is required to

procure and install and any other items that are relevant to equipment on a project specific basis.

SCHEDULE PART 12 – SERVICE LEVEL SPECIFICATION

Schedule Part 12 comprises of three sections, the Authority's Service Level Specifications sets out its

service requirements, the contractors proposals, which is the SPV’s statement of the methods it will

use to satisfy those requirements and the Services Quality Plan.

Authority's' FM requirements to be set out in this Section 1 (Service Level Specifications) of

Schedule Part 12 (Service Requirements).

The SPV’s statement of the methods it will use to satisfy the Service Level specifications to be

set out in this Section 2 (Method Statements) of Schedule Part 12 (Service Requirements)

The SPV's statement of the (Services Quality Plan) of Schedule Part 12 are project specific and

should be incorporated by each Authority on a project basis.

The Authority requires that the Services are fully integrated, efficient, responsive, comprehensive

and effective, and based on sound technical and operational requirements and standards.

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The Services incorporate:

Contract management;

Health and safety;

A helpdesk facility;

Performance management and monitoring;

Maintenance of the Facilities; and

Management of Utilities within the Facilities.

The services that are provided are by sub-hubco and the Authority respectively are illustrated in the

diagram below:-

Helpdesk Service

Pest Control

Grounds and Gardens

Cleaning

Waste

Portering

Materials Management

Catering

Security

General Management

PAT Testing

Wall Washing

Estates ServiceEnergy and Utilities

Management

Refined by Procuring Body

NPD/hub Standard ApproachSPV Authority

Performance Management

and Monitoring

Contract Management

Health and Safety

Maintenance of Facilities

(Hard FM only)

Window Cleaning

Procurement of Utilities

Authority’s Maintenance Obligations

5 years from completion, make good plaster and other finishes and decoration – general

redecoration

Authority electrical appliances – PAT Testing

Options available to the procuring Authority;

Renew and replace floor coverings as required;

Resurface/restore all floor finishes that are subject to wear and tear; and

Anything provided by the Authority;

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Interface between Sub-hubco/FM Sub contactor and the Authority

Historically a single-point responsibility was a key feature of “full service” PPP`s projects. Risks that do

crystallise and for which the SPV/Sub-hubco/FM sub-contractor is ostensibly responsible, but which

can be influenced by the performance of the Authority and or their service providers, may become

fertile ground for claims and counter-claims between the Authority and their DBFM contractor.

There needs to be a common understanding between the parties as to how these interface

arrangements will work in practice. To assist the discussion of this matter please refer to the Detailed

Interface Responsibility Matrix (please click here to view) and the FM Interface Matrix (Please click

here to view)

The Authority should consider the impact this may have on the resourcing of their contract

management arrangements

SCHEDULE PART 13 – INDEPENDENT TESTER CONTRACT

Sub-hubco and the Authority jointly appoint the Independent Tester to perform obligations and

tasks which are ascribed to the Independent Tester under the Design Build Finance and Maintain

Agreement-

During the Works, attend monthly site progress meetings and provide the Authority and Sub-

hubco with a monthly report.

Undertake regular inspections during the Works, if necessary.

Report on the completion status of the Project, identifying any work that is not compliant

with the Authority’s Construction Requirements, Sub-hubco’s Proposals, the Approved

Reviewable Design Data (Approved RDD) and/or the Completion Criteria.

Determine whether any relevant Phase is finished or complete in accordance with the

Completion Criteria and advise Sub-hubco and the Authority of the need for any re-testing

which may be necessary to demonstrate whether a relevant Phase of the Project is finished

or complete.

Certify the Actual (Phase) Completion Date and issue a Certificate of (Phase) Practical

Completion in accordance with the Design Build Finance and Maintain Agreement.

http://www.scottishfuturestrust.org.uk/files/publications/Detailed_Interface_Responsibility_Matrix_4Issue.pdf

http://www.scottishfuturestrust.org.uk/files/publications/FM_INTERFACE_MATRIX.pdf

http://www.scottishfuturestrust.org.uk/files/publications/FM_INTERFACE_MATRIX.pdf

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SCHEDULE PART 14 – PAYMENT MECHANISM

Payment for a “service” not construction of a facility

What does this mean?

No payment is made until the facility is available and ready for use – no stage payments during

construction

Payment of an annual unitary charge or service payment for the life of the project (this is not

rent and it is not a lease!)

No service, no payment – deductions for non-availability of areas of the facility and sub-

standard performance apply

It is a mechanism to incentivise good service delivery

Priority areas of the facility and services are clearly defined

The general principles are:

Areas are weighted using the GSUs (the schools approach)-Categorise spaces within the

facility e.g. wards, toilets, specialist rooms, classrooms

Availability works on whole days on which there are Core Times

Rectification Periods are fixed in the specification but are extended until immediately prior to

the start of the next Core Times.

Where Rectification is not appropriate, there will be an immediate Performance Failure and a

Remedial Period then starts before the next Performance Failure occurs.

Performance Deductions are fixed monetary amounts according to the classification. (minor,

medium, major)

Availability Deductions are by GSU – Availability Deductions are based Upon Gross Service

Units Affected

Whole facilities unavailability is retained where relevant.

Repeated Failures increase the amount of the Deductions by 50%

Repeated rectification of a recurring failure is itself a Performance Failure.

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Non-reporting is a Performance Failure.

There will be Response Times in the specification and failure to respond within the response

Time will be a Performance Failure even if Rectification occurs within the Rectification

Period.

Temporary Repair and Alternative Accommodation are catered for.

Utilities and rates (if included) and insurance premiums are all dealt with as pass-through

costs

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FacilityFunctional Area 1(30)

Functional Area 5(40)

Toilets(10)



FunctionalArea 3(40)

Service Units of the Facilities (SUF) = (10+30+30+40+20+40) = 170

Example showing build-up of Service Units – Functional Areas

GSUs grouped by Functional Area set out in Appendix 2 – Functional Areas

Assume SUR of £1.7673 (Annual UC/SUF)

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Calculation of Deductions

•Service Units Affected x Service Unit Rate x Deduction Period

Availability Deduction

Performance Failure Deduction

Example 1 - 40 (e.g. Area 5) x £1.7673 x 1 = £70.69(Minimum Availability Deduction - £50.00)

D = PFD x DP

•The amount of deduction in respect of a Performance failure is calculated by the following formula: -

D = Means the actual amount of the deduction.PFD = the amount of - Minor Performance Failure [£?] indexed

- Medium Performance Failure [£?] indexed - Major Performance Failure [£?] indexed

DP = Deduction Period (number of days)

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SCHEDULE PART 15 – INSURANCE REQUIREMENTS

Policies to be taken out by sub-hubco and maintained during the design –

“Contractors”, “all risks”, insurance (car) – “all risks” of physical loss or damage to the insured

property unless otherwise excluded.

Delay in start-up insurance (dsu) – loss of anticipated revenue during at least the minimum

indemnity period

Construction third party liability insurance- to indemnify the insured in respect of all sums that they

may become legally liable to pay as damages in respect of accidental:

Death, or bodily injury, illness, death, disease contracted by any person;

Loss or damage to property

Interference to property or any easement right of air, light, water or way or the enjoyment

or use thereof by obstruction, trespass, nuisance, loss of amenities, or any like cause.

Policies to be taken OUT BY SUB-HUBCO AND MAINTAINED FROM THE ACTUAL COMPLETION

DATE

Property damage insurance – “All risks” of physical loss or damage to the Insured Property from any

cause not excluded, including machinery breakdown and computer breakdown in respect of

appropriate equipment.

Business interruption insurance – loss of anticipated revenue during at least the minimum

indemnity period arising from an interruption of interference in the operation of the project as a

result of loss or damage

Third party public and products liability insurance – to indemnify the Insured in respect of all sums

that they may become legally liable to pay as damages in respect of accidental:

Death, or bodily injury, illness, death, disease contracted by any person;

Loss or damage to property

Interference to property or any easement right of air, light, water or way or the enjoyment

or use thereof by obstruction, trespass, nuisance, loss of amenities, or any like cause.

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SCHEDULE PART 16 – VARIATION PROCEDURE

“Authority Additional Works Variation” are additional works initiated by the Authority in accordance

with Schedule Part 16 (Variation Procedure) includes how funding, how cost are dealt with and also

Small Works which has been the biggest issue in terms of legacy PPP contracts.

“Small Works” are of a minor nature that are requested by the Authority to be carried out having an

individual cost not exceeding £[1,000.00] (index linked), the labour element shall be calculated in

accordance with Schedule of Small Works Rates or, where such rates are not applicable, in

accordance with similar rates, failing which rates which are fair and reasonable; and the materials

element shall be charged at the cost of the materials to Sub-hubco or to the contractor carrying out

the work (net of all discounts) plus [ ?]%

D & B Project Agreement

Project specific drafting requires to be included in the following clauses

8. Name of Representatives 21. IT Strategy

9 & 17. Defect Rectification Periods 27. Project Timescales

10. Asbestos risk and other

contamination and ground conditions

11. Planning Conditions

12. Comments on hubco proposals

14. Completion Date, L.A.D.S,Programme

29. Retention – Cash or Bond

32. Long Stop Date 36,38 Indemnities, Warranties and & 39 Insurance 40. Limitation on Liability

15. Equipment Strategy Certain clarification on definitions

16 &18. Pre and Post Completion

Commissioning

16. Pre Completion Inspection

18. Period to produce O&M’s

and completion of information in

Schedules

Authority’s Representative

Under the D&B Project Agreement the Authority’s Representative exercises the functions and powers

of the Authority. He/she deals with: certifying payments to hubco from agreed drawdown schedule;

variations; assesses delay events; comments on documents for review; certifies completion. However

he/she is not the Contract Administrator or Employers’ Agent in a SBCC Construction Contract. The

Authority’s Representative can delegate to another named person and may inspect the works at all

times

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Delay, Compensation and Relief Events

EVENT TIME Delay Event Part 6 22.3

COST Compensation

Event Part 6 22.10

Relief Event (No Termination)Part 6

23.1

Breach of Authority X Direct works by Authority X Opening up of works – no defect X Force Majeure (24.1) X Refer Clause 24 Site Conditions below existing building X

Suspension for non-payment X Fire, explosion, storm, flood, riot, etc X

Failure by statutory undertaker, utilities etc

X

Accidental loss/damage to works X

Blockade or Embargo, not Force Majeure

X

Fossils, Antiquities etc X

Strike or Lockout X

Schedules to D&B Project Agreement comprise:-

Part 1 - Definitions and Interpretation

Part 11 - Development Amount Analysis

Part 2 - Completion Documents

Part 12 – Insurance Requirements

Part 3 - Key Works Personnel

Part 13 - Variation Procedure

Part 4 - Land Matters

Part 14 - Record Provisions

Part 5 – Construction Matters

Part 15 - Dispute Resolution Procedure

Part 6 – The Programme

Park 16 - Certificates

Part 7 - Review Procedure

Part 17 – Commercially Sensitive Information

Part 8 – Collateral Agreements

Part 18 - Liquidated Damages

Part -9 -Outline Commissioning Programme

Part 19 - Retention Bond

Part 10 - Equipment

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Schedule Part 13 – Variation Procedure

Procedure exists for authority to suggest variations

Grounds for Objection by hubco are limited

Very lengthy response periods if hubco wish to take maximum time permitted

On agreement, requires execution of a formal Supplementary Agreement

Avoid variations!

Note, there is no provision to incorporate provisional sums

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Chapter 12 - Key Stage Review Process

Key Stage Reviews are required for DBFM Projects. These are undertaken by SFT as a conditional

Scottish Government funding of DBFM projects. The reviews take place at 3 key stages:

Pre New Project Request

Pre Stage 1 Approval

Pre Stage 2 Approval

Key Stage Review Process - Scope of Reviews

Readiness;

- Pre NPR: Business Case & Budget approvals, Resourcing, Deliverability (e.g.

land assembly, consultations etc.).

- Pre Stage 1: Completeness of hubco proposals. Commercial readiness of the

bid.

- Pre Stage 2: Resourcing of commissioning, construction and operation.

Affordability;

Value for Money;

- Benchmarking & Evaluation

- Risk Management

Compliance with standard hub processes and documents

Copies of the Key Stage Review templates for each stage for Schools and Other Projects can be

found by clicking here.

The Key Stage Review Process and its interface with the hub and health projects approval processes

are illustrated below.

http://www.scottishfuturestrust.org.uk/files/publications/Key_Stage_Review_Templates.pdf

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Chapter 13 - Construction Delivery

hubco will:

• Act as Employer for D&B Contract

• Complete all documents

• Engage Independent Certifier.

• Monitor construction to PC

• Manage change control

• Monitor production of collateral warranties, PI insurance, H&S file

• Attend monthly project meetings

• Liaise with Relevant Participant

• Report on progress

Also on DBFMs hubco will:

• Employ FM Services contractor.

• Monitor the activities of sub-hubco

• Manage Funder and all payments

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Chapter 14 - Commissioning Process

hubco will:

• Agree Commissioning Programmes

• Attend Commissioning meetings

• Manage Authority’s installers

• Manage Snagging works

The Authority requires to:

• Co-ordinate transfer and set up arrangements to new facility

• Arrange familiarisation sessions for staff in relation to the new facilities and its security and

environmental systems

In DBFM the Authority also requires to:

• Arrange for training of staff in relation to operating the contract

• Appoint a person to fulfil the duties of the Authority Representative under the DBFM

Agreement

• Liaise with building user representatives

• Liaise with FM Provider

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Chapter 15 - Monitoring Performance

Under the Territory Partnering Agreement hubco’s performance is measured against Key

Performance Indicators summarised below:-

Key Performance Indicators

Significant Performance

Failure

Track Record Test

Continuous Improvement

Test

KPIs

Programme

Cost/VFM QualityPartnering & collaboration

Community Engagement

Community Benefit

Sustainability

Supply Chain Mgt

Overall Performance

of New Project Delivery

Health & Safety

Mgt Systems

The Schedule of Key Performance Indicators applicable in the North Territory can be viewed by

clicking here . The performance targets for several of the Key Performance Indicators are agreed on

a project by project basis

The Key Performance Indicators are categorised under Significant Performance Failure, Track Record

Test and Continuous Improvement.

If there is a Significant Performance Failure, Clause 23 of the Territory Partnering Agreement applies

(can be found by clicking here). This is a serious failure which may lead to default and if appropriate

action is not taken to termination.

If a Track Record Test is failed Clause 9 of the Territory Partnering Agreement applies (can be found

by clicking here) i.e. poor performance may lead to loss of exclusivity.

Continuous Improvement is dealt with in Schedule Part 3 of the Territory Partnering Agreement,

Section 3, Performance Management.

In addition hubco is obliged to undertake the effective measurement of the performance of its supply

chain and to implement effective processes for the removal of underperforming supply chain

members (Para 1.2.2 of Part 3 of the Territory Partnering Agreement, Section 1, Specification) (can be

founding by clicking here)

http://www.scottishfuturestrust.org.uk/files/publications/Clause_23_from_North_Territory_Partnering_Agreement.pdf

http://www.scottishfuturestrust.org.uk/files/publications/Clause_9_from_North_Territory_Partnering_Agreement.pdf

http://www.scottishfuturestrust.org.uk/files/publications/Paragraph_1.2.2_of_Part_3_of_North_Territory_Partnering_Agreement.pdf

http://www.scottishfuturestrust.org.uk/files/publications/Schedule_of_Key_Performance_Indicators_-_North.pdf

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Chapter 16 - Operations (DBFM)

In DBFM hubco will monitor sub-hubco as it:

• Logs and arranges the rectification of defects

• Supervises the progress of the final account and final statement

• Liaises with Relevant Participant

• Collaborates in the final inspection and formal handover to the Relevant Participants

• Arranges post occupancy review

• Ensures financial, cost control, Help Desk and maintenance procedures for the operational

phase.

In DBFM the Authority requires to:

• Undertake a regular review of the sub-hubco performance, its audit reports and any user

complaints and reports

• Discuss and agree remedial action in relation to any areas of poor performance

• Review Monthly Service Report and agree appropriate deductions

• Review Monthly Invoices and arrange for payment

• Manage any requests for change

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Appendix 1 - Hub Guidance Notes SFT Web Site Links

Date of Publication

Document Name SFT Web Site Link

Chapter 1 Hub Overview

13 May 2014

hub flowchart http://scottishfutures.ehclients.com/files/publications/Hub_-_flowchart.pdf

7 Feb 2014 Use of Strategic Support Services in New Project Development

Use of Strategic Support Services in New Project Development

23 Jan 2012

SFT Publication Terminology Glossary

SFT Publication Terminology Glossary

Chapter 5 New Project Request

19 Nov 2013

Setting affordability caps in new hub projects

Setting affordability caps in new hub projects

19 Nov 2013

Project Brief and Authority Construction Requirements

Project Brief and Authority Construction Requirements

2 Sep 2013 Reference Primary Healthcare Design - Gareth Hoskins Architects

Reference Primary Healthcare Design - Gareth Hoskins Architects

2 Sep 2013 Reference Primary Healthcare Design BDP

Reference Primary Healthcare Design BDP

Jan 2012 Schools Development Handbook

Schools Development Handbook

9 May 2014 hub Amended Consultant Payments - April 2014

hub Amended Consultant Payments - April 2014

http://scottishfutures.ehclients.com/files/publications/Hub_-_flowchart.pdf

http://scottishfutures.ehclients.com/files/publications/Hub_-_flowchart.pdf

http://www.scottishfuturestrust.org.uk/publications/use-of-strategic-support-services-in-new-project-development/

http://www.scottishfuturestrust.org.uk/publications/use-of-strategic-support-services-in-new-project-development/

http://www.scottishfuturestrust.org.uk/publications/sft-publication-terminology-glossary/

http://www.scottishfuturestrust.org.uk/publications/sft-publication-terminology-glossary/

http://www.scottishfuturestrust.org.uk/publications/setting-affordabilty-caps-in-new-hub-projects/

http://www.scottishfuturestrust.org.uk/publications/project-brief-and-authority-construction-requirements1/

http://www.scottishfuturestrust.org.uk/publications/project-brief-and-authority-construction-requirements1/

http://www.scottishfuturestrust.org.uk/publications/reference-primary-healthcare-design-gareth-hoskins-architects/

http://www.scottishfuturestrust.org.uk/publications/reference-primary-healthcare-design-gareth-hoskins-architects/

http://www.scottishfuturestrust.org.uk/publications/reference-primary-healthcare-design/

http://www.scottishfuturestrust.org.uk/publications/reference-primary-healthcare-design/

https://www.dropbox.com/s/c7am0h8c41ifh4b/Schools%20Development%20Handbook%20-%20JM.pdf

http://www.scottishfuturestrust.org.uk/publications/hub-pdo-guidance-note-april-2014/

http://www.scottishfuturestrust.org.uk/publications/hub-pdo-guidance-note-april-2014/

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2 Jan 2012 hub Projects - Grouping Considerations

hub Projects - Grouping Considerations

17 Oct 2011

Value for Money Assessment Guidance: Capital Programmes and Projects (October 2011)

Value for Money Assessment Guidance: Capital Programmes and Projects (October 2011)

17 Oct 2011

Value for Money Supplementary Guidance for Revenue Funded Projects

Value for Money Supplementary Guidance for Revenue Funded Projects

28 Nov 2013

hub Financing Team Timing of Capital Injections

hub Financing Team Timing of Capital Injections

12 Sep 2011

Guide to NHS Balance Sheet Treatment

Guide to NHS Balance Sheet Treatment

Chapter 7 Stage 2

21 May 2014

SFT Payment Mechanism Model - Guidance Note

SFT Payment Mechanism Model - Guidance Note

21 May 2014

SFT Payment Mechanism - Calibration Model

SFT Payment Mechanism - Calibration Model

9 Jul 2014 SFT Payment Mechanism Model - Guidance Appendices

SFT Payment Mechanism Model - Guidance Appendices

19 Nov 2013

Stage 2 submissions demonstrating value for money

Stage 2 submissions demonstrating value for money

Chapter 8 Template Project Agreements

24 Oct 2013

Template hub DBFM Agreement - version 2.1 October 2013

Template hub DBFM Agreement - version 2.1 October 2013 (word)

http://www.scottishfuturestrust.org.uk/publications/hub-projects-bundling-and-batching/

http://www.scottishfuturestrust.org.uk/publications/hub-projects-bundling-and-batching/

http://www.scottishfuturestrust.org.uk/publications/value-for-money-assessment-guidance-capital-programmes-and-projects-october/

http://www.scottishfuturestrust.org.uk/publications/value-for-money-assessment-guidance-capital-programmes-and-projects-october/

http://www.scottishfuturestrust.org.uk/publications/value-for-money-supplementary-guidance-for-revenue-funded-projects/






http://www.scottishfuturestrust.org.uk/publications/hub-financing-team-timing-of-capital-injections/

http://www.scottishfuturestrust.org.uk/publications/hub-financing-team-timing-of-capital-injections/

http://www.scottishfuturestrust.org.uk/publications/guide-to-nhs-balance-sheet-treatment/

http://www.scottishfuturestrust.org.uk/publications/guide-to-nhs-balance-sheet-treatment/

http://www.scottishfuturestrust.org.uk/publications/sft-payment-mechanism-model-guidance-note/

http://www.scottishfuturestrust.org.uk/publications/sft-payment-mechanism-model-guidance-note/

http://www.scottishfuturestrust.org.uk/publications/sft-payment-mechanism-calibration-model/

http://www.scottishfuturestrust.org.uk/publications/sft-payment-mechanism-calibration-model/

http://www.scottishfuturestrust.org.uk/publications/sft-payment-mechanism-model-guidance-appendices/

http://www.scottishfuturestrust.org.uk/publications/sft-payment-mechanism-model-guidance-appendices/

http://www.scottishfuturestrust.org.uk/publications/stage-2-submissions-demonstrating-value-for-money/

http://www.scottishfuturestrust.org.uk/publications/stage-2-submissions-demonstrating-value-for-money/

http://www.scottishfuturestrust.org.uk/publications/template-hub-dbfm-agreement-version-21-october-2013/

http://www.scottishfuturestrust.org.uk/publications/template-hub-dbfm-agreement-version-21-october-2013/

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24 Oct 2013

Template hub DBFM Agreement - version 2.1 October 2013 - comparison with version 2

Template hub DBFM Agreement - version 2.1 October 2013 - comparison with version 2

24 Oct 2013

Standard Project Agreements Users Guide - Update October 2013

Standard Project Agreements Users Guide - Update October 2013

24 Oct 2013

Standard Project Agreement Users Guide - Update October 2013 - comparison to June 2012 version

Standard Project Agreement Users Guide - Update October 2013 - comparison to June 2012 version

9 Aug 2012 Standard Form DBDA - July 2012

Standard Form DBDA - July 2012

2 Jul 2012 Standard Service Level Specification - hub - Version 2 - June 2012

Standard Service Level Specification - hub - (version 2 - June 2012)

2 Jul 2012 Standard Service Level Specification - hub - (version 2 - June 2012) - comparison with version 1

Standard Service Level Specification - hub - (version 2 - June 2012) - comparison with version 1

29 Jan 2014

Exclusion from Public Contracts of companies engaged in blacklisting

Exclusion from Public Contracts of companies which engage in blacklisting

14 Jul 2014 Energy Strategy Guidance Note for hub DBFM projects

Energy Strategy Guidance Note for hub DBFM projects

21 May 2014

Schedule Part 10 - Guidance Note

Schedule Part 10 - Guidance Note

7 Nov 2014 Guidance on the Preparation of Authority Construction Requirements

Guidance on the Preparation of Authority Construction Requirements

http://www.scottishfuturestrust.org.uk/publications/template-hub-dbfm-agreement-version-21-october-2013-comparison-with-versio/

http://www.scottishfuturestrust.org.uk/publications/template-hub-dbfm-agreement-version-21-october-2013-comparison-with-versio/

http://www.scottishfuturestrust.org.uk/publications/standard-project-agreements-users-guide-update-october-2013/

http://www.scottishfuturestrust.org.uk/publications/standard-project-agreements-users-guide-update-october-2013/

http://www.scottishfuturestrust.org.uk/publications/standard-project-agreement-users-guide-update-october-2013-comparison-to-ju/

http://www.scottishfuturestrust.org.uk/publications/standard-project-agreement-users-guide-update-october-2013-comparison-to-ju/

http://www.scottishfuturestrust.org.uk/publications/standard-form-dbda-july-2012/

http://www.scottishfuturestrust.org.uk/publications/standard-form-dbda-july-2012/

http://www.scottishfuturestrust.org.uk/publications/standard-service-level-specification-hub-version-2-june-2012/

http://www.scottishfuturestrust.org.uk/publications/standard-service-level-specification-hub-version-2-june-2012/

http://www.scottishfuturestrust.org.uk/publications/standard-service-level-specification-hub-version-2-comparison-with-version/






http://www.scottishfuturestrust.org.uk/publications/exclusion-from-public-contracts-of-companies-which-engage-in-blacklisting/

http://www.scottishfuturestrust.org.uk/publications/exclusion-from-public-contracts-of-companies-which-engage-in-blacklisting/

http://www.scottishfuturestrust.org.uk/publications/energy-strategy-guidance-note-on-hub-dbfm-projects/

http://www.scottishfuturestrust.org.uk/publications/energy-strategy-guidance-note-on-hub-dbfm-projects/

http://www.scottishfuturestrust.org.uk/publications/schedule-part-10-guidance-note/