PPPs and COVID-19: “transparency is key”

The PPP bulletin recently sketched out the consequences of the COVID-19 crisis on the contracting landscape in the UK, with stakeholders of the PPP industry severely affected as well.

The dramatic heading “a new Carillion” refers to the difficulty for public authorities to step in in the event of their service provider going into liquidation, with dire consequences on the infrastructure, the contract, the cost-effectiveness of the project....and ultimately the service provided to the users.

This echoes the recent guidance provided by the Infrastructure and Projects Authorities (IPA) for operational PPPs and to bring supplier relief to facility managers.

The guidance includes a delineation of recommended options such as maintaining unitary charge payments or adapting the performance indicator matrix and scoring systems in place, or even bringing flexibility in the assessment of cases of “force majeure” to take into account the “best efforts” provided by project companies in charge of the facility management and related services.

The bulletin quotes leading PPP economist Max Curzon-Hope on some of the major risks faced by health-PPPs, typically hospitals pre financed, built and operated by private sector partners of public health authorities:

Contracting authorities and providers will both be affected by lower staffing levels - possibly the chief risk (...) Those contractors with maintenance and construction obligations may face severe disruption from their suppliers who are unable to obtain parts that are required to keep building assets operational.

A thorough analysis of the consequences of the COVID-19 crisis by Amanda Nicholls, this article helps contextualise the challenge for public authorities in health facility stewardship at a time of disruption and while the clock is still ticking to deliver on all health-related SDGs targets, with filling the health infrastructure gap accounting for the second cost-driver!

The analysis of experts with hands-on exprience of health PPPs drills down pragmatically to the growing constraints weighing on private sector providers:

Those responsible for soft FM are also likely to face the added pressure from contracting authorities to do even more than usual such as more extensive cleaning. Having to do more with less staffing and a scarcity of consumables like sanitiser and personal protective equipment will be very difficult.

To read the full article: Click here.