Highway Maintenance PFI Project Presentation to Client and Partnership Panel 10 th Sept 2008 Cllr Barbara Reid Executive Member for Environment Suresh Kamath Director, SMPP Delivering a Step Change in the Whole Street Environment 1
Presentation � What is the Private Finance Initiative? � Background to project � Key points � Evidence of need � Project Objectives and our Approach � Project Governance � Staff Issues � Consultation and Communication � What happens next? Delivering a Step Change in the Whole Street Environment 2
What is the Private Finance Initiative (PFI)? � Long term service contract � Provision of capital assets and associated services � The integration of Design Build Fund Operate � Single “unitary” payment which covers investment and services � Performance related “payment mechanism” � Allocation of risk � Output specification � “Off balance sheet” treatment � Central government support through “PFI Credits” Delivering a Step Change in the Whole Street Environment 3
Background to Project � Committed to Environmental Sustainability � Highways Improvements essential for our community � Innovative culture for service delivery � Cross-Party support for PFI � Additional funding committed � £2.5m every year for the PFI Delivering a Step Change in the Whole Street Environment 4
Background to Project � Typical urban network; no longer fit for purpose � Huge maintenance backlog (£78m) � Justified by comprehensive, up to date data � Trends getting worse against National/London benchmarks � Gateway to London - bordering Heathrow and Motorway network � Community demands better street environment Delivering a Step Change in the Whole Street Environment 5
Key Points � Network: Borough Roads, all classes (excludes TfL Road Network) � Length: 432 km road carriageway and 762 km footway � Duration of contract: 25 years, including 5 year Core Investment Period (CIP) � Value: Capital investment during CIP of £78m � PFI Credit: £198.0m � Contract Price: Approx £27m p.a.( £15m revenue support grant, £9.5m existing expenditure plus £2.5m) Delivering a Step Change in the Whole Street Environment 6
The Evidence of need � 100% Inventory Survey 2007 � Updated Condition Surveys 2007 � All road classes � Carriageways and footways Delivering a Step Change in the Whole Street Environment 7
The Evidence of need Figure 1: Trends in Road Condition 40% Hounslow 2005/06 BVPI Percentage of Network Requiring Investigation Hounslow 2006/07 BVPI 35% London 06/07Average 30% All England 06/07 Average 25% 20% 15% 10% 5% 0% BV 187 Footways BV 223 Borough BV 224a Classified BV 224b Unclassified Principal Roads Roads Roads Delivering a Step Change in the Whole Street Environment 8
The Evidence of need � Aspects of Environment most in need of improvement in the borough (Resident’s Panel – November 2007) 1. Reduce noise and air pollution 2. Resurface Footways 3. Resurface Road 4. Improve Lighting 5. Put in more trees shrubs and bulbs Delivering a Step Change in the Whole Street Environment 9
Project Objectives � To provide a significant Step Change � To address the Whole Street Environment � Linked to Asset Management Best Practice � HAMP V2 adopted in early 2008 � Asset Valuation in 2007 - £525m � Identified Best Value Option – PFI � Leads to demonstrable efficiency savings � Builds on our experience (WSE Schemes etc.) � Long term, sustainable approach (25 years) Delivering a Step Change in the Whole Street Environment 10
Our Approach � Performance Standards � Based on accepted practice (NCI ‘plus’) � Add a new PS for compliance with WSE objectives � Sustainability � Committed to achieving Beacon status � Already recycle materials � Reduce Energy � Will work with contractor and DfT � WSE encourages walking and cycling Delivering a Step Change in the Whole Street Environment 11
Our Approach � New Approach to Appraisal (NATA) Refresh � Benefit to Cost Ratio (BCR) > 2 � Will work with DfT to develop this further � Risk � Risk register developed - addresses Project/Procurement Risks � During OBC will further analyse construction and Operational Risks Delivering a Step Change in the Whole Street Environment 12
Our Approach � Whole Street Environment (WSE) Approach includes all fence to fence services � Based on Manual for Streets and LBH Street Design Guide � Reduced maintenance � Good Practice not “gold plating” � Whole Street Environment delivers � Big perceivable benefit, small extra cost � Paid for by Council contribution � Spread around Wards, throughout 25 years � Minimises disruption Delivering a Step Change in the Whole Street Environment 13
What’s included? � Whole street “fence to fence” approach � Roads and footways � Highway drainage � Bridges and structures � Street lighting illuminated signs � Street furniture � Trees and verges � Street cleansing Delivering a Step Change in the Whole Street Environment 14
Before / After Delivering a Step Change in the Whole Street Environment 15
Before / After (cont’d) Delivering a Step Change in the Whole Street Environment 16
Project Governance � Strong project structure designed to deliver (based on Prince2 principles and 4ps guidance) � Project Board includes Political and DfT representation � Builds on Hounslow’s experience � Project Team with extensive experience including PFI � Clear responsibilities � Wide range of skills and support � Balance of internal and external expertise Delivering a Step Change in the Whole Street Environment 17
Project Governance � Identified Gaps – recruiting Project Director and Project Manager � External Advisers to be appointed - post OBC Stage � £2.0m provision set aside for Procurement Costs � Ambitious but deliverable timetable Delivering a Step Change in the Whole Street Environment 18
Project Governance LBH approval LBH scrutiny Delivery processes arrangements Team Project Owner Director SM&PP – Suresh Kamath (Chair of Board) Suresh Kamath Lead Member of Environment - Cllr. Barbara Reid Director of Finance – Stephen Fitzgerald Borough Solicitor – Terry Welsh Project Director (tba) Project Director Department for Transport Rep – Jens Reinke (to be appointed) Project Transactor Transport Manager (Atkins) for London (to be appointed) Lead Internal External Internal External Internal External Internal & Technical Financial Financial Technical Technical Legal Legal External Manager Adviser Adviser Adviser Adviser Adviser Adviser ad hoc Krishnan Mel Deloitte Satbir Chris Britton Chuhr (to be Specialist Rahakrishnan Smith & Touche * Gill Consultancy * Nijjar appointed) Advisers Project Team Project Team Support Corporate Risk Management Human Public Audit Procurement & Insurance Resources Relations (* Appointed until OBC only; then subject to competitive tendering under EU and UK legislation) Delivering a Step Change in the Whole Street Environment 19
Staff Issues � Real opportunity to participate in transformation of the borough � Small client side � Transfer most highway, lighting and street cleansing staff to contractor- approx 160 staff � T.U.P.E. � Regular information to staff and Trades Union Delivering a Step Change in the Whole Street Environment 20
Consultation and Communication � Strategy being developed � Residents and businesses - Residents panel survey - Focus groups – first one in November - Road Shows � Members - Scrutiny - Area Committees – first round in November � Staff - those directly involved and others � Media Delivering a Step Change in the Whole Street Environment 21
What happens next? � Outline Business Case – Jan 2009 � Appoint external advisers � Approval by Project Review Group – May 2009 � Stimulating the Market � Develop specification � Procurement process – competitive dialogue � Start new service in 2011/12 Delivering a Step Change in the Whole Street Environment 22
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