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3rd October 2001

Facilities Management from a Funder’s Perspective Richard Hoile. 3rd October 2001. … a funder’s perspective. Facilities Management in a PFI/PPP context. What do bankers look for in a traditional structure? What will a credit committee expect to have demonstrated to it?

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3rd October 2001

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  1. Facilities Management from a Funder’s Perspective Richard Hoile 3rd October 2001

  2. … a funder’s perspective Facilities Management in a PFI/PPP context • What do bankers look for in a traditional structure? • What will a credit committee expect to have demonstrated to it? • How can FM companies manage their banks?

  3. … a funder’s perspective Does the FM company know what it is getting into? • Track record and experience • Resources required to complete the transaction • Resilience to cope with difficulties

  4. … a funder’s perspective Is the FM company financially resilient? • Turnover, Profit before Tax, • Tangible Net Worth, Market Capitalisation. • Credit Rating

  5. … a funder’s perspective Can the FM company do the job? • What is the nature of the work to be undertaken? • Have sufficient resources been allocated? • Is the price sufficient? • Has the Payment Mechanism been modelled with realistic deduction and termination scenarios? • How robust is it?

  6. … a funder’s perspective Bank Sensitivity Testing • Increase in Operating Costs by 10-15% • Completion Delay • Low and high inflation • Low and high interest rates

  7. … a funder’s perspective Contractual safeguards required by banks • Appropriate “second line of defence” controls • Termination triggers • SPV to manage contract • Ability to introduce alternative providers • Flexible contract (bundling of services) • Price • Benchmarking/market testing

  8. … a funder’s perspective FM Company Protections • Incentivised to make contract work but not “bet the company” • Benchmarking and Market Testing • Caps - Penalties for Service Deductions Termination Liabilities

  9. … a funder’s perspective How can FM companies and Banks work together better ? • Open and clean lines of communication with the Bank’s Technical Adviser • Partnership approach to problem solving • TA should add value • Spot problems • Anticipate and identify risks etc • Address issues and problems as they arise with appropriate resources

  10. Delivering PPP and PFI Projects • Arranging • Investing • Advisory Richard Hoile 020 7470 7348

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