ISSUE 28
Driving the UK towards renewable energy target
Also in this issue: Europe’s PPP catalyses growth Brazil on the threshold of change Singapore joins World Green Building Council
CONTEnTS 4
Brazil on the Threshold of Change Faithful+Gould joined UK ministerial visit to world's eighth largest economy
6 Middle East Distressed Assets Formulating a recovery strategy
The Green Deal 8 Financial innovation for UK’s low-carbon vision
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Academies Education landscape continues to change
Offshore Wind Power 12 Driving the UK towards renewable energy target
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Intermodal Transport Solutions Transport infrastructure projects continue to perform well
Workspace Solutions 16 Transforming government office space
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Singapore’s Green Market Evolves Singapore joins World Green Building Council
PPP in Europe 20 A catalyst for growth as European economies strive towards recovery
22 Facilities Management Outsourcing Bringing efficiency benefits
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I’d like to warmly welcome you to Solutions, where we highlight some of Faithful+Gould’s latest initiatives. I hope you’ll find something within these pages which captures your interest. Though the economic recovery has been slower than predicted, I remain positive about the industry’s future and Faithful+Gould’s ability to make a valuable contribution. We are fortunate to have a diverse global business, both geographically and in terms of sector spread, and, together with a loyal client base, this has certainly helped us to weather the storms of the last two years. New opportunities have arisen even in these leaner times, and our innovative construction management skills have played their part in meeting the challenges of a competitive and constrained market. As the dust settles following the government’s Comprehensive Spending Review, UK public services inevitably face tough times ahead. The Department of Energy and Climate Change was one of the few departments to see its budget grow, a confirmation of commitment to the low-carbon agenda. On page 8 we take a look at the implications for the Green Investment Bank and the Green Deal. Sustainability is now a key driver for every sector and every client we work with, and our expertise and reputation in this area has continued to grow since our emergence as the first cost management consultancy to have both BREEAM assessors in the UK and LEED assessors in the US.
The global energy sector has long been one of our specialisms and, with the major players increasingly investigating alternative sources, we are now transferring our technical and commercial expertise from the oil and gas, offshore and subsea sectors into the renewables market. On page 12 we outline the specific challenges facing the offshore wind sector. Additionally, our global sustainability and carbon management skills are active in all our business locations, and page 18 highlights our involvement with Singapore’s growing commitment to the sustainable built environment. The transport sector continues to be a strong performer and our article on page 14 highlights the growing importance of intermodal hubs in promoting a major shift from private car use to alternative forms of transport. I very much appreciate your interest in Faithful+Gould. If you are new to our business, I hope you’ll want to know more – my team and I would certainly be delighted to hear from you. If you’re already in touch with us, I hope we continue doing great work together in the future.
Richard Hall CEO Worldwide Operations
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ON THE THRESHOLD OF CHANGE In August 2010 UK Secretary of State for Business Vince Cable led the delegation of 25 world-class UK companies to Brazil in the first ministerial visit between the countries since the May 2010 UK elections. Faithful+Gould was part of the delegation. Dr Cable engaged with business leaders and government representatives over four days in Sao Paulo, Brasilia and Rio de Janeiro. Co-chairing the annual Joint Economic and Trade Committee (JETCO) with his Brazilian counterpart Miguel Jorge, Dr Cable’s agenda was to build closer ties between the countries. Already tipped to become the world’s fourth largest economy by 2050, Brazil is one of the most promising and exciting developing markets. Rich in natural resources, an economic giant and one of the world’s biggest democracies, the challenge now for South America’s most influential country is to internationalise. The strength of its emerging economy is an incentive to build trade and investment links to capitalise on financial prospects, Vince Cable said during his visit.
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Speaking at the Economist Emerging Markets 2010 Summit, the business secretary noted that, by 2014, Brazil’s economy will be larger than any European country. He said: “The bigger emerging countries – China, India and Brazil – have achieved very substantial growth and reductions in poverty levels based largely on an expansion of their domestic market and domestic savings.” With many major nations now recognising Brazil’s status as a global player, the UK is keen to encourage industrial cooperation in sectors such as defence and security, energy and advanced engineering. Foreign investment in the country is also being boosted by the 2014 World Cup and the 2016 Olympics. Earlier this year, the Brazilian government announced that it would spend US$890 billion on
Dr Vince Cable, UK Secretary of State for Business
“The strength of this emerging economy is an incentive to build trade and investment links”
upgrading the country’s infrastructure prior to hosting these major sporting challenges. This will be much needed as Brazil has suffered a lack of consistent infrastructure investment and update for decades.
resource will help convince multinationals that this is an investment-friendly climate. The built environment is proving comparatively robust in recession, with Brazil as a whole well positioned to recover from the economic downturn.
Most reports acknowledge that there will be considerable pressure on all sectors if the shortfall in transport, leisure and hospitality facilities is to be overcome in time for 2014. Rio de Janeiro, the World Cup host city, will need around US$17 billion in public and private funds to stage it successfully. Forty per cent of that sum is expected to be invested in transport, to improve Rio’s roads and rail network, and to boost the bus fleet and metro system.
Faithful+Gould is supporting several multinational clients, including the biopharma, oil and gas, retail, leisure and manufacturing sectors, with their inward investment initiatives in Brazil. Our goal is to strengthen technical expertise, ensuring that proven best practice is instilled into our clients’ projects in Brazil.
Tim Horner represented Faithful+Gould on the August 2010 trade delegation to Brazil.
Aside from infrastructure problems, Brazil offers a sound proposition for many global investors, and 400 of the world’s 500 biggest companies are already operating here. With its mature engineering and technology pedigree, the availability of good
For further information contact Tim Horner (US) on +1 832 476 3300 tim.horner@fgould.com
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Middle East Distressed Assets Recovery Strategy As the fallout from Dubai’s real estate crash continues to impact the market, banks and developers alike are seeking clarity on distressed assets.
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The effect of the global financial crisis on Dubai’s property sector has been widely reported. Progress in debt restructuring at troubled state-owned investment company Dubai World, together with infrastructure projects now taking centre stage, point towards a reshaping of the local construction industry as economic recovery begins. Dubai is forecast to emerge from recession this year with growth of 0.5 per cent, thanks to recovery in the trade and tourism sectors, the International Monetary Fund has said. However with some 400 projects slowing dramatically or grinding to a halt at the height of Dubai’s real estate crash, the emirate will continue to feel the impact for some time. Future economic policy may emulate neighbouring Abu Dhabi, who helped rescue the smaller emirate from financial distress. Abu Dhabi has traditionally taken a more measured approach to development of its own built environment. If Dubai follows Abu Dhabi’s lead, we can expect less investment in mega-projects and more focus on areas such as infrastructure and shipping. Dubai’s stalled projects are now seeing some gradual movement and confidence has been boosted by a major developer’s plans to return to market. But in the light of financial restructuring, the new construction approach is cautious, phased and scaled down. More attention is focused on robust preliminary feasibility studies before investment decisions are made. Infrastructure remains a relatively strong performer, with both transport and utilities continuing, albeit at a slower pace. Dubai Metro is the forerunner to the rail expansion in the Middle East, with passenger and freight projects planned across the region. Investor confidence remains low and lenders are currently very cautious. Banks and other financial institutions are grappling with their high levels of
exposure to Dubai’s distressed projects. The UAE insolvency regime is for the most part untested and a multitude of different rules and procedures, with varying levels of enforcement, result in a complicated picture. Creditors face complex issues around land ownership, transfer of property ownership and absent investors. Banks and developers alike are therefore evaluating incomplete projects and seeking clarity on the best way forward. In general, the more construction stages already completed, the better the outlook. Projects and individual building plans are typically being reconfigured, often resulting in fewer storeys or smaller developments in order to complete and achieve some return on investment. Faithful+Gould offers guidance and support with the key technical, commercial and contractual issues surrounding distressed assets. Our Middle East operation offers project evaluation audit services and project rescue recovery strategies. These services are provided within the context of our global due diligence experience and insolvency expertise gleaned in other jurisdictions. Where the recovery strategy leads to viable construction completion, we also offer cost management, project management and consultancy services for the continuation of developments. Distressed assets are also an opportunity for investment and our services can benefit clients who wish to explore this potential. Our global portfolio includes financial institutions, funders, distressed debt investors and developers.
For further information contact David Stapleton (UAE) on +971 (0)4 405 9100 david.stapleton@fgould.com
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THE
Financial innovation for UK’s low-carbon vision
The Department of Energy and Climate Change (DECC) will see an increase in its spending over the next four years as a result of the October 2010 Comprehensive Spending Review. Commitments include the planned Green Investment Bank, Green Deal energy efficiency scheme and promised support for renewables (through the Feed-in Tariff and Renewable Heat Incentive), wind energy and carbon capture and storage (CCS) projects.
Figure 1 Zero Carbon and Carbon Compliance
Zero Carbon
Allowable Solutions
On-site LZC tech. or connected heat Energy Efficiency
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70% Carbon Compliance Fabric Energy Efficiency Standard
DECC was one of the few departments to see its budget grow, a confirmation of the Coalition government's commitment to the low-carbon agenda. Chancellor George Osborne promised £1 billion upfront for the proposed Green Investment Bank, while asset sales in the future will be expected to add to proceeds, potentially leveraging private capital to invest in low-carbon projects. The bank is intended to help tackle investment barriers, reducing the risks to investors and cutting the cost of transition to lowcarbon technology. However the funding has been delayed until 2013/14. Tim Yeo, chair of the Energy and Climate Change Select Committee, commented: “The government’s idea for a Green Investment Bank holds considerable promise, but it must be properly funded and given the power to borrow on money markets. Although £1 billion sounds a lot, it may not be enough to leverage the billions of pounds of extra private sector cash needed to kick-start the low-carbon revolution.” The chancellor’s upfront use of the word ‘bank’, and not ‘fund’ or ‘trust’, raised confidence that it will have the means to be an effective independent institution with lending power. Faithful+Gould has recommended that the Green Investment Bank could be a vehicle for managing an ‘Allowable solutions’ fund (see fig 1). If this were created, it would allow developers to pay into the fund to offset the last 30 per cent of zero carbon compliance.
The bank could prove to be a major vehicle for injecting private sector finance into the Green Deal for energy efficient homes and buildings. The Green Deal is a proposed mechanism for funding energy efficiency upgrades on both domestic (initially) and commercial property. Sums in excess of £90 billion are expected to be spent in this area, starting in late 2012, provided the forthcoming Energy Security and Green Economy Bill stays on programme. The Bill is intended to create more efficient energy usage in existing stock, without the need for upfront finance from the customer.
like a straight carbon tax. The potentially reputationally damaging league table remains. The second is the Feed-in Tariff subsidy which pays small generators to export energy to the grid from renewables (although payments in future years will reduce) and this typically halves payback periods. A number of our clients are already making good use of this product and earning returns close to nine per cent, as well as enjoying the reputational benefits of having PV on their roofs. The third, the Renewable Heat Incentive, will be phased in around 2011-12 and will reward those generating heat from renewable sources.
Green Deal finance will create a new legal mechanism shifting repayments for the costs of energy efficiency measures onto the property (the electricity meter), rather than to an individual property owner. The cost of the initial upgrade is paid back through the energy savings with the repayments managed by the energy company. An electricity bill, for example, will have the usual information containing units used etc, but in addition there will be a ‘Green Deal’ sum payable over a long period. If the property is sold, the Green Deal debt transfers to the new owners, with repayments collected through energy bills. There will also be an option to settle the debt as part of the exchange if the vendor wishes.
These changes fundamentally alter the business case for low-carbon solutions in the UK and Faithful+Gould can help clarify the options. Our UK sustainability and carbon management service is an integral part of our global sustainability division. We have a diverse range of multi-disciplinary professionals including lowcarbon consultants, licensed BREEAM, LEED and Code for Sustainable Homes Assessors, accredited Energy and Carbon Assessors and renewables advisors. See also page 12 for a discussion of offshore wind power and page 18 for an outline of Singapore’s sustainable built environment measures.
Three existing fiscal instruments remain a key part of the Coalition’s policy. The first is the CRC, whose threshold remains at 6000 MWh, but the revenue recycling element has been removed, making it more
For further information contact Sean Lockie on +44 (0)20 7121 2121 sean.lockie@fgould.com
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Education landscape continues to change The Comprehensive Spending Review on 20 October 2010 emerged as less painful for education than for other public services, but the anticipated reduction in capital funding has been confirmed. The schools budget will rise from £35 billion to £39 billion for the next four years and, overall, the Department for Education (DfE) will be required to find resource savings of just one per cent a year. Capital expenditure takes a hit however. Following the decision to halt the Building Schools for the Future (BSF) programme, which saw 700 rebuilding or improvement projects scrapped, capital spending will be reduced by 60 per cent in real terms over the Spending Review period. The DfE has stated that demographic pressures and maintenance needs will be catered for, with £15.8 billion set aside for this, but the priority will be frontline services. Immediately following the Spending Review, the Department highlighted a series of next steps in the decisions around the education spending settlement and the continuing reform of the school system and children's services. These include a Schools’ White
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Paper, a Special Educational Needs and Disability Green Paper, further announcements about allocating voluntary sector grants, and confirmation of Local Authority allocations for schools and early years provision. The DfE had already commissioned a review, headed by Sebastian James of DSGi, to look at how school building should be carried out in the future. Due to report in December 2010, early indications suggest a focus on standardisation. Exemplar whole school designs could be used, as well as standard designs for classrooms and toilet blocks. The review may also recommend rationalisation of the design guidance documents issued by the DfE to schools. Prioritising schools projects based on current building condition is also likely to be explored. The new wave of Academies – independent state schools not under local authority control – will continue, but Academy status does not automatically mean capital investment. Legislation introduced in July 2010 paved the way for primary, secondary and special schools rated 'Outstanding' overall in their most recent Ofsted inspection to convert to Academy status, through the first phase of this new process in September 2010.
The original Academies programme grew under Labour and was directed mainly at improving the most challenging schools. The Coalition government seeks to make Academies a mainstream model, together with the Free Schools programme (which enables groups of parents and charities to set up their own state-funded schools), moving towards decentralisation and less bureaucracy. Other schools now have the opportunity to apply for the January 2011 wave, and Michael Gove, Secretary of State for Education, has said he anticipates that Academies will become the norm. The schools will receive direct funding and are entirely responsible for all their capital requirements. There is no obligation for them to have an external sponsor, unlike the traditional Academies programme. For most Academies, refurbishment, as opposed to new build, will form the first thrust of investment. Many will also have a considerable backlog of maintenance to be addressed. Most new Academies will lack experience in managing their own estates strategy including construction/ refurbishment plans. They are likely to face significant challenges around procuring professional advisors and contractors, building design, cost control, project management and quality management.
Well defined expectations which reflect budgetary constraints Clear programme and procurement method Knowledge of the right supply chain/contractors Good teamwork between the design team and Academy sponsors where applicable Comprehensive monitoring processes.
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Underpinning these, an agreed plan for capital funding, planned maintenance and lifecycle costing will ensure that educational needs are properly interpreted within the school’s built environment. This will enable buildings to be maintained to an appropriate standard, avoiding the increased costs of neglected maintenance.
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As technical and design advisors to the DfE Academies Group, we have acted as key client contact on cost issues and currently provide strategic advice on service delivery. We have been involved on over 70 schemes procured through the traditional Academies programme, with construction values of between £5 million and £50 million (see also our profile of Chelsea Academy on the back cover). Our extensive national education sector experience includes higher and further education, BSF and Local Authority commissions.
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Faithful+Gould’s experience suggests that clients in the education sector achieve best results when the following are in place: A clearly defined educational vision A design brief that matches and supports the vision Clearly defined roles and responsibilities
Main image, 1 and 2: Thomas Deacon Academy, Peterborough 3: Langley Academy, Slough
For further information contact Andrew Stowell on +44 (0)1372 753121 andrew.stowell@fgould.com
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Offshore Driving the UK towards a more sustainable future
Offshore wind is becoming a significant part of the energy mix as we move to low-carbon, sustainable energy supplies. With a wealth of natural resource and coastlines, the UK is the world’s largest producer of offshore wind energy and there are extensive plans for further development. The UK is under pressure to increase use of renewable energy to help tackle climate change and secure future energy supplies, with an EU target to source 15 per cent of our energy (electricity, heat and transport) from renewable sources by 2020. Depending on the performance of transport and heat, this could require 40 per cent1 of consumed electricity to come from renewables by 2020 – an eight-fold increase in just over ten years. The UK has the largest potential wind energy resource in Europe – onshore and offshore – and it has become one of the most developed and cost-effective renewable energy technologies. Currently most European wind power is generated in onshore wind farms, but offshore is a major growth opportunity for the renewables market. Offshore advantages include greater acceptance among the population, and stronger and more constant winds in coastal areas and at sea. However the industry faces significant obstacles in terms of technology, materials, infrastructure, logistics and long build times. For these reasons, driving down the costs will be a major challenge.
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The Crown Estate owns UK territorial waters and has issued leases in three consecutive rounds, for offshore wind developments around the UK coast. From Round 1, eleven projects are already generating and construction of the first of the fourteen Round 2 sites is now underway. In January 2010, The Crown Estate awarded licences to develop offshore wind in nine Round 3 zones in seas around the UK, from the Moray Firth to the Irish Sea. Once complete, the total generating capacity ºof offshore wind in UK waters will be approximately 47GW; in contrast, the existing fleet of UK nuclear power stations has a combined generating capacity of 9GW. The world’s largest operational offshore wind farm opened in Thanet, Kent, in September 2010. Thanet’s 300MW of capacity will boost UK offshore wind capacity by 30 per cent and will produce on average enough electricity to supply more than 200,000 homes. In the government’s October Spending Review, subsidies for wind power remained untouched, unlike many other sustainability initiatives. The chancellor pledged a further £200 million for low-carbon technologies including offshore wind technology. A further £60 million will help finance the development of manufacturing bases and infrastructure at port sites, to support the manufacture and installation of turbines for the Round 3 offshore wind programme. This demonstrates support for the development of a UK based supply chain for offshore wind, but the sum is small and thinly spread, and substantial private sector investment will also be required to make Round 3 more commercially viable.
1 Carbon Trust, 2008, Offshore Wind Power, Big Challenge, Big Opportunity:
maximising the environmental, economic and security benefits.
The Spending Review proved to be generally positive for the renewable energy sector and has signalled a clear commitment to a low-carbon future. The range of current incentive mechanisms have mostly been retained and indeed reinforced by other measures, such as the creation of the Green Investment Bank (see page 8). The combination of the Climate Change Levy (CCL), Carbon Reduction Commitment (CRC), and Renewable Obligation Certificates (ROC) are set to encourage the generation of as much as 20 per cent of UK energy from renewable sources by 2020. The challenge facing the renewables sector is to reduce the cost per unit generation. Engineering for an offshore environment is especially complex and costs are therefore higher. Logistical challenges are greater, with the complexities of building in increasingly difficult locations, in deeper water and further from shore. Effective supply chain management, programming support and cost management are therefore critical to achieving best value and successful delivery. Faithful+Gould has many years’ experience of supporting clients in the constantly changing energy sector and we have forged strong relationships with major electricity providers. We are now successfully transferring our technical and commercial expertise from the oil and gas, offshore and subsea sectors into the renewables market. We offer project and cost management, alongside best practice risk and value management, to financiers, utility companies and developers, working on complex global programmes. Current commissions include the Carbon Trust and RWE npower renewables.
For further information contact Iain Stewart on +44 (0)1392 813 100 iain.stewart@fgould.com
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Intermodal Solutions Transport infrastructure projects continue to be strong performers in the UK, Europe, the Middle East and the US. As the financial squeeze continues, these projects are still seen as attractive due to their long-term regenerative benefits. With all countries exploring sustainability issues, transport projects are in a unique position as they are generally seen as efficient users of energy, producing little or no pollution at the point of use. One of the key challenges is to achieve a major modal shift in transport preferences by making intermodal journeys more attractive. Part of the solution lies in providing transportation hubs which allow effective interchange between different transport modes. By default, some modes of transport have become intermodal over time. The classic development of this is the airport. The concepts surrounding the ideas of
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the initial hub and spoke systems, pioneered in the US in the 1950s, have come a long way and most airports now have extensive facilities for car parking and good public transport connections. This has now permeated extensively around the world, with transport hubs offering combinations of connections between bus, mass rapid transit, air, car (park & ride) and rail (both high speed and classic). However it is easy to get it wrong and there are numerous cases where, despite close proximity, intermodal transfers can be difficult. The key factors influencing the effectiveness of transport interchanges are: The ability to change between the different modes Logistical and operational factors: how well synchronised are services between different transport modes? Physiological factors, notably the fear of crime The functional quality of the physical design and layout, such as way finding and crowding management The physical location of the interchange The ease of access to/from the interchange and the availability of parking Economic and social factors such as cost of travel
Appropriate amenities and journey experience for different passenger demographics, eg. business lounges The commercial services at the interchange.
The provision of effective transport and urban design solutions is a central element of sustainable development. In the Middle East a significant number of mega-projects are being implemented, which promote a modal shift from private car use to alternative modes. In the past these developments would have supported and encouraged private car use, resulting in worsening traffic congestion and environmental damage. At the core of such developments are transport interchanges which: Increase and maintain accessibility to a variety of integrated travel modes Optimise traffic and transport efficiency Reduce congestion and associated environmental impacts
Are seen as an integral element of urban design and public realm concepts, sometimes acting as the brand for the scheme Are cost-effective and financially viable in their construction and operation Facilitate commercial development of the site and its surrounding area.
Faithful+Gould has unprecedented knowledge and expertise within the transportation sector, reinforced by strong links with our parent company Atkins. Our global transport hub experience includes St Pancras International Station, Heathrow Terminal 5, Birmingham Airport International Interchange, Madrid Barajas Airport, Dubai Metro, South Africa’s Gautrain and the regeneration of Belfast’s Great Victoria Street bus/rail terminal. In the US our portfolio includes the Anaheim Regional Transportation Intermodal Center, the Sacramento Airport and Intermodal Center, the San Francisco Airport and Multi-modal Center, JFK, Newark and Atlanta Airports.
For further information contact Graeme Bampton on +44 (0)141 220 2200 graeme.bampton@fgould.com or Warwick Lowe on +44 (0)1372 75 6895 warwick.lowe@atkinsglobal.com
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WORKSPACE Transforming government office space In the last few years the Office of Government Commerce (OGC) has set out to transform government procurement, driving up standards and procurement capability across central government. The aim is to capitalise on the government’s collective buying power to achieve value for money, and to improve the management and use of the government estate. This brings significant challenges. Government building stock is huge, varied, fragmented and increasingly under scrutiny, internally and externally, to evaluate its utilisation and suitability. Additionally, public sector workspace has the dual pressure of efficiently fulfilling its purpose and at the same time justifying the public purse’s expenditure. Collaborative procurement via professional buying organisations (PBOs) is seen as the way forward.
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Like the private sector, and indeed often influenced by the private sector, government organisations are exploring innovative ways of organising their workspace. The key drivers are density and transformational change.
Density describes the requirement to include additional staff within an existing building, as a result of growth or following estate rationalisation. This is often a relatively straightforward space planning exercise. However corporate and public sector organisations are increasingly using this opportunity to effect a transformational change in the way in which they deliver their businesses. This more complex process requires a much greater understanding of the organisation’s current functioning and, more importantly, how it would like to function in the future. Intangible factors such as business culture, the extent
“Work has migrated beyond the conventional boundaries of time and space into a wider environment and those who manage the government estate need to be prepared.” Gus O’Donnell, UK Cabinet Secretary 1.
of collaboration and co-operation across departments, the attitude to sustainability and the business vision will need to be properly considered, in addition to the more usual space/functional utilisation studies. The life cycle of a typical transformational change programme involves four phases:
sector and geographical differences in standard expectations for office size and environment, but, as space costs escalate and technologically enabled work/ lifestyle patterns become the norm, this is changing. Even law firms, for instance, traditionally favouring a visibly hierarchical layout, are beginning to see the cost and culture benefits of more innovative open space.
Investigation and understanding Staff interviews are held, to understand current working practices and their effectiveness. Surveys assess the building’s characteristics and space utilisation. Space utilisation studies enable real estate directors and heads of departments to evaluate organisational needs and clarify density potential. Under-utilised space is identified and quantified, and usage opportunities and constraints explored.
Currently we are seeing increased attention paid to whole life costs, as opposed to capital costs only, together with a growing recognition that best value should be balanced with investment in employee productivity. Flexibility is also an important driver, with organisations more aware of their future work modes and their need to support changing technological needs. Space which can be easily reconfigured may be more cost-effective in the long run.
Development of workspace proposition This investigative phase forms the basis for a workplace strategy proposition, which in turn becomes the blueprint of the design, planning, procurement, programming and cost management phases.
Faithful+Gould is appointed on a range of public sector frameworks including Buying Solutions, the largest PBO, and our procurement services have been utilised on a wide variety of projects. In addition to our specialist workplace strategy advice, we also have extensive experience of supporting both public and private sector clients on the project management, programme management and cost management of their office interiors. In many instances this process has included IT planning and migration management.
Implementation and change management This key aspect of the project lifecycle will, when conducted successfully, lead to staff working effectively in their new setting from the first day of occupation. Post-occupancy review This assesses the extent to which objectives have been met and can also include subsequent periodic reviews to ensure that the space is used as designed. A move towards open spaces is also frequently part of an organisation’s plan to embrace more egalitarian principles of working. Challenging the downsides of rigid hierarchies and promoting inter-generational knowledge transfer may be a priority. There are still some distinct
1 www.ogc.gov.uk/documents/workingbeyondwalls.pdf
Recent commissions include the introduction of collaborative layouts and intelligent working in the offices of a major financial institution, together with management of the change process with over 3500 staff. We have also worked extensively with the public sector. Recent projects include the implementation of a transformational change programme for a local authority, resulting in a 25 per cent space saving, and a Fire and Rescue Service in the northeast where sustainability measures have been introduced with minimal payback periods.
For further information contact Richard Morris on +44 (0)118 951 6100 richard.morris@fgould.com
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GREEN MARKET EVOLVES Global green building leaders met in Singapore for the World GBC International Congress in September 2010, hosted by the Singapore Green Building Council. Although not a newcomer to the sustainable built environment, Singapore has reinforced its efforts this year, with the Singapore Green Building Council (SGBC) achieving Established Member status with the World Green Building Council. Building and Construction Authority (BCA) Green Mark New Build Version 4 launches in December 2010, further refining the country’s sustainable construction requirements. Globally, the first green building rating tools, BREEAM and LEED, are gradually being replaced, where appropriate, by locally developed systems that are better aligned with local building codes and conditions. As well as Singapore’s Green Mark, examples include Green Star in Australia, Germany’s DGNB, LEED India, LEED Brazil, and the Estidama Pearl Rating System in Abu Dhabi. This trend towards local and regional rating tools looks set to continue, but these will increasingly use common core metrics for measuring carbon, waste and water, enabling meaningful performance comparisons. Driven by the tropical climate, Singapore’s built environment faces different challenges to those found
2nd Green Building Masterplan
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Public Sector Taking the Lead
in the UK or US. Air conditioning is a major contributor towards Singapore buildings’ consumption of nearly half of the country’s total end-use electricity.
is impractical due to humidity and resultant mould growth, and thermal mass is impractical due to very low diurnal variations.
The BCA Green Mark Scheme, launched in 2005, focuses heavily on energy efficiency as a result. The scheme has made considerable strides since 2008’s requirement for all new developments or major retrofitting works with a gross floor area greater than 2,000m2 to reach Green Mark (GM) Certified level.
The market is working within these constraints however. We are currently seeing a much stronger focus on the use of ventilation simulation analysis to maximise the use of available wind velocity, wind direction and temperature differentials, capitalising on natural ventilation.
In 2009 the Inter-Ministerial Committee on Sustainable Development announced its target to achieve 80 per cent green buildings in Singapore by 2030 as part of the second Green Building Masterplan. This included some significant public sector initiatives, such as new public projects with an air conditioned area greater than 5000m2 being required to achieve GM Platinum, and existing public buildings with air conditioned area greater than 10,000m2 required to meet GM GoldPlus by 2020. Various government incentive schemes have been launched including the GM GFA scheme, which allows developers a greater floor area over than generally allowed if certain GM criteria are achieved. GM Existing Building is a S$100 million scheme offering co-funding to incentivise works in existing buildings, and the S$20 million GMIS New Buildings does the same for new building works. Green Mark New Build Version 4, for release in December 2010, places much greater emphasis on passive design through natural ventilation and day lighting. This is complex in Singapore with its heat, strong solar radiation and torrential rainfall. Many of the usual alternatives to air conditioning are unsuitable: high humidity and low wind speeds make evaporative cooling ineffective; ground temperatures of 20-30°C 30m below ground make earth cooling ineffective; night ventilation
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Spurring the Private Sector
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Furthering the Development of Green Building Technology
For further information contact Hannah Feddon (Singapore) on +65 6227 6144 hannah.feddon@fgould.com or Chris Nunn (UK) on +44 (0)20 7121 2121 chris.nunn@fgould.com
Faithful+Gould is providing professional services on a number of Green Mark projects in Singapore, some of which are ambitiously targeting dual ratings. This can bring considerable challenges. A current commercial fit-out project is targeting to achieve both Green Mark Platinum and LEED Platinum. Achieving LEED in this case is particularly complex, because of the disparity in regulation standards between the US and Singapore. These difficulties make it imperative for clients to define their sustainable objectives and choose a green building rating tool very early on in the project. This allows maximum time to clarify any disparities with the relevant certifying authorities. The development of the green market in Singapore is also encouraging the supply chain to make more green products available locally. The Singapore Environment Council, a member of the Global Ecolabelling Network, has run the Singapore Green Labelling Scheme since 1992. This scheme covers a wide range of building and non-building related products. The SGBC launched the Singapore Green Building Product Certification initiative in September 2010. This scheme relates to building materials and supports the supply chain in achieving and certifying safe, healthier, efficient and sustainable building products. Faithful+Gould’s global sustainability expertise includes a dedicated team working in Singapore, which also serves the surrounding Asia Pacific region.
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Building Industry Capabilities Through Training
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Profiling Singapore and Raising Awareness
6 Imposing Minimum Standards
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A catalyst for growth as European economies strive towards recovery The quality of a country’s infrastructure can have a profound impact on its prospects for sustained economic growth. The recent effects of the 2008-09 banking crisis have left most advanced western economies facing substantial reductions in public sector capital spend. Many are struggling to restrain excessive borrowing resulting from falling tax revenues as a consequence of negative growth. One of the many challenges facing governments today is how to balance competing demands to reduce spending whilst continuing to invest in improving the quality of infrastructure.
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The Public Private Partnerships (PPP) model of procurement which evolved from the Private Finance Initiative (PFI) developed in the early 1990s in the UK, has increasingly found favour with European governments facing the challenges outlined above. In the first half of 2010, the volume of infrastructure investment financed through PPP in Europe rose 19 per cent to €25.7 billion on the same period in 2009. Western Europe remains the dominant region for PPP, accounting for over 50 projects with a combined value of €14.9 billion. One of the largest projects to reach financial close was the Karolinska Hospital in Sweden. At a capital cost of €1.4 billion, the project represents the world’s largest PPP healthcare project. Faithful+Gould acted as Technical Advisor to a syndicate of twelve banks comprising commercial lenders and two multilateral institutions, the European Investment Bank and the Nordic Investment Bank.
In addition to Scandinavia, the Benelux region is enthusiastically embracing PPP. The Flemish provincial government in Belgium recently structured an ambitious project to redevelop over 200 schools during the next six years, in an arrangement which includes shared equity participation from both the public and private sectors. Meanwhile, work continues on transactions which have already reached financial close, including a scheme to develop new transport facilities in the form of bus hubs in the cities of Brugge, Zomergem and Overrijse, where Faithful+Gould is acting as Technical Advisor to the lending banks. The Netherlands, too, is a keen exponent of the process, using PPP across a wide range of sectors and most recently to develop new custodial facilities in a €100 million project outside Amsterdam.
1
In Eastern Europe, the volume of projects financed under PPP rose to a record €2.8 billion in the first half of 2010. Roads projects in particular are benefiting from the use of private capital, with the Moscow-St Petersburg highway at €1.7 billion as the largest PPP project globally to reach financial close in the period. The former Soviet states of Latvia and Lithuania are also exploring the use of PPP procurement, having identified a number of ‘pathfinder’ projects in the education sector. Sovereign credit risk remains a potential issue in some of the emerging Eastern European markets and this may be holding back further growth, but the ambition and appetite for PPP procurement in those regions is becoming increasingly apparent.
Copyright World Economic Forum/Photo by Youssef Meftah
As the PPP model becomes more widely used not only in Europe but globally, the UK is in a position to export a vast bank of knowledge and expertise acquired during the development of the domestic PPP market in the last decade. Faithful+Gould, as one of the leading Technical Advisors in PPP, is actively engaged with a variety of international banks, sponsors and governments, assisting them in the development of these new projects. As public sector fiscal constraints become more demanding, finding capital to secure the necessary investment in upgrading and replacing worn-out infrastructure will remain an enormous challenge. The goal of sustained economic growth resulting from such improvements however makes a worthy prize in meeting that challenge.
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1: Karolinska Hospital, Sweden 2: President of the European Council, Herman Van Rompuy
For further information contact Nick Gray on +44 (0)1642 675 136 nick.gray@fgould.com
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Market changes and budgetary pressures are forcing organisations to re-examine their core business activities and support operations.
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Creating and maintaining an efficient working environment represents an enormous overhead and significant ongoing investment of managerial time and resource. Many companies are exploring Facilities Management (FM) outsourcing to achieve a leaner, more efficient organisation that can concentrate on core business and reduce operating costs. Research within our current client base suggests that organisations explore outsourcing options for a variety of reasons, often beginning with cost reduction, together with the potential to convert fixed costs to variable costs. There may be insufficient management time available to devote to the existing in-house operation or its improvement, and difficulty in retaining sufficiently qualified staff. The switch to outsourcing brings advantages including cost savings of ten to twenty per cent, improved service delivery by specialist FM Service Providers, better attraction and retention of staff by the Service Providers, improved management of existing resources and transformational initiatives. The added value of consultancy expertise is another attraction, as is the potential for better procurement opportunities for an asset refresh. Successful FM outsourcing hinges on strong leadership, with decision-makers empowered to manage resources, balance the programme’s priorities and focus on the business benefits realisation. Good stakeholder management and communication are vital, together with clear service levels and governance. Benefits management should also be considered, as FM outsourcing is typically highly visible – end users notice changes to food services, environmental conditions and housekeeping immediately. It is therefore important to monitor how the initial foreseen benefits will remain intact and of value to the organisation. Thorough interrogation of the service provision market is needed, to ensure delivery
capability. Global estate holders will be affected by the significant differences in labour laws in each country, impacting on service provision. Globally, we are seeing clients focusing on bundling of contracts into a single source for delivery of hard services and likewise for soft services. Clients with a limited portfolio size are increasingly opting for total FM provision via a specialist medium sized regional provider. Sectors experiencing the greatest growth in FM outsourcing include government and manufacturing, where clients are using a cross business/ departmental model to source the optimum services from focused and efficient providers, ensuring value for money for both buyer and sellers. Faithful+Gould utilises programme management, specialist FM subject matter expertise, procurement, risk management and change management techniques to design and implement a well-planned outsourcing process. Our sector specialists strive for a full understanding of our clients’ culture and aspirations, and this is key to achieving cohesive and workable solutions. We combine strategic and operational implementation of FM outsourcing solutions, clearly translating clients’ requirements to the FM service market, and facilitating the establishment of productive and lasting relationships. For some clients, we mastermind the entire FM outsourcing transaction, from defining scope to mobilising operational changes. For others, we contribute to the FM outsourcing lifecycle at the individual organisation’s most critical stages. Our experience spans global facilities management and outsourcing projects, typically with large real estate portfolios and complex day-to-day facilities operations. Effective results have been achieved for clients in the pharmaceutical, finance, energy and government sectors, with our costs subsumed within the benefits realised.
For further information contact Martin Dancy on +44 (0)20 7121 2121 martin.dancy@fgould.com or Rod Bisset on +44 (0)131 221 5600 roderick.bisset@fgould.com
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UK and europe Aberdeen Athens Belfast Birmingham Bristol Cambridge Cardiff Colchester Dublin Edinburgh Epsom Exeter Glasgow Leeds London Newcastle upon Tyne Nottingham Oxford Reading Southampton Stockton-on-Tees Stoke-on-Trent Swansea Tunbridge Wells Warrington
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north america
The official opening of Chelsea Academy celebrates the Royal Borough of Kensington and Chelsea’s first new secondary school for 50 years. Sponsored jointly by the Borough and by the London Diocesan Board for Schools, the Academy hopes to provide inspirational education and contribute to the local community. The 1060 students will benefit from their school’s specialism in the sciences, reinforced by close links with the Borough’s museums and universities. Located near Chelsea Harbour, a constrained and contaminated inner city site has been overcome by an imaginative design by Feilden Clegg Bradley Studios. The 11,060m² gross internal floor area incorporates highly adaptable spaces to support a range of teaching and research methods and provide for future flexibility. A range of sustainable principles have been used, including optimising natural light and thermal mass. The school’s three ‘houses’ are given their own identity in three stepped blocks of up to five storeys above ground, over a site wide basement. Light and space are provided by lightwells, stairways
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and circulation areas, stretching horizontally and vertically through the building. Multi-level roof spaces with landscaping and planted areas provide external areas for play, socialising and activities, with minimal impact on the local area. Faithful+Gould is part of an Atkins team providing support to the Department for Education, the project’s prime funder. Our monitoring and auditing role ensures delivery of the agreed scope of capital works to good design practice and within budget. See page 10 for a further discussion of the challenges facing the education sector.
For further information contact Andrew Stowell on +44 (0)1372 753121 andrew.stowell@fgould.com
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