Simon Castle on FM

the Role of the FM Provider in PPPs

presentation to RMIT Students as part of

“Advanced Construction Management”

Presentation Overview σ

Introduction to Sodexo

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PPP consortium structures

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FM in PPPs

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Risk

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FM as part of the design process

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Whole of Life and Lifecycle Management

About Sodexo σ

Global company HQ’d in Paris

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20th largest organisation in the world

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385,000 employees

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Integrated facility solutions provider

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Remote sites, healthcare, education, defence

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End to end PPP project principle

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More than 30 live PPP/PFI projects globally

Typical PPP Structure Government Agency

Project Co (SPV)

Finance Principal

Architects Design Team

Engineers & Consultants

Builder

Equity & Debt

FM Provider

PPP Agreements & Contracts Government Agency Construction Deed

PROJECT AGREEMENT

Lease

Project Co (SPV) Construction Contract

FMC

FM Provider

Builder

SPV MOU

Financier Direct Agreement

Finance & Security Documents

Shareholder Agreement Service Provider Deed

Financiers

Equity Providers

FM Role in PPPs σ

Responsible for: σ

Operational management

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Maintenance

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Lifecycle management and refreshment

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Integration of services

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Management of subcontractors

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Assessed against KPIs

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Controlled through financial abatement

FM Services Asset & Facilities Management

Soft Services

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Client coordination

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Cleaning

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Asset management

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Concierge

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Project management

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Pest control

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Lifecycle management

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Grounds and landscaping

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Subcontractor management

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Waste management

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Energy & utility benchmarking

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Laundry services

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Call centre services

Hard Services σ

Building fabric maintenance

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Equipment maintenance

FM – Accepted Risk σ

FM provider accepts risk arising from: σ

Service delivery

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Facility performance – operationally only

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Maintenance standards

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Shortened lifecycle refreshment periods

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Additional lifecycle refreshment requirements

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Subcontractor performance

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Industry benchmarking

FM Issues for Rating Agencies σ

FM Component: longest risk exposure period

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Comfort derived from: σ

Market testing soft services

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Comprehensive documentation of FM CMP

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Create a transparent delivery model that can be transferred with minimum disruption

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Financial backing: σ

balance sheet strength

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parent guarantee

Services in the Design Process σ

Traditional D&C model (Principal’s perspective): σ

Design for ease of construction

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Meet scope

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Look good

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Cheapest construction options utilised

Services & FM in PPPs σ

PPP model: σ

FM provider part of design team

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Robust fabric, materials and FFE utilised

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Maintenance considered in design layout

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LCC a core element of design

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NPV of cap-ex and op-ex costs used for procurement decisions

FM role through the Project EOI Phase Architects Engineers Builders SPV Equity Provider FM Team

ACTIVE

PASSIVE

RFT/Design Phase

Construction Phase

Handover Phase

Operational Phase

Lifecycle Management σ

FM provider manages capital works program

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Lifecycle profile is managed with design team

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Lifecycle model and costs are bid in RFP

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Lifecycle model addresses fitness for purpose:

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Operational performance

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Aesthetic requirements

Lifecycle includes run-out period (5-10 years)

Whole of Life (WoL (WoL) WoL) σ

FM provider is required to approach the entire project from a Whole of Life position σ

Bring client perspective into design

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Consider day-to-day operations

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Design: ease of access for maintenance tasks

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Procurement : balance robustness, capex & opex

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Maintenance : cost, profile, operational impact

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Lifecycle : refreshment rates, obsolescence

Handback σ

FM provider required to ensure LCC position

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Cost and management of run-out included in PPP

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Never been tested, is likely to be subject to: σ

Sinking fund position

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Option to absorb risk transfer for self-management

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Change in use negates last refreshment cycles

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Questions