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PPP Bulletin

June 2009 Issue - Article by Vikki Everett, Director at Regenter

At a time when the private sector is carefully assessing the bid cost exposure through competitive dialogue and being more selective about bidding, councils that have secured the latest round of housing PFI credits have some interesting challenges ahead. 

Competitive dialogue has exposed bidders to increased ‘at risk’ bid costs due to greater exposure to design, legal, title and funders’ due diligence costs prior to the close of dialogue and appointment of preferred bidder. It is important for authorities to be transparent as to their favoured approach to dealing with the key commercial considerations.

The move by some councils to instruct bidders of the funding terms for financial submissions is applauded. This ensures an equal playing field for financial evaluation and ensures best value funding terms are secured.

Schemes that enable the recovery of the housing market to trigger any private housing to be delivered will be more attractive to bidders in this market.

Councils that can demonstrate involvement of planners during the development of a scheme, and that can offer access for bidders, will also be favoured. The production of site and land information which the council would be willing to warrant, and which should be in their gift to produce, would assist bidders with their design development and help avoid unnecessary title due diligence costs. It’s those councils that can provide confidence to bidders  that their housing PFI scheme is commercially attractive and will be procured efficiently that will be most successful.

Key points

  • Having a well–considered proposition, efficient procurement process and an experienced project team will better gain the confidence and support of bidders.
  • Be transparent in your favoured approach to dealing with the key commercial considerations that are influencing housing PFI schemes.
  • Instruct bidders of the funding terms for financial submissions – this ensures an equal playing field for financial evaluation and ensures best value funding terms are secured.
  • Schemes that encourage private housing are a more attractive proposition to bidders in this market.