3rd October 2001

Facilities Management from a Funder’s Perspective

Richard Hoile

22/05/02

Facilities Management in a PFI/PPP context

What do bankers look for in a traditional structure?

What will a credit committee expect to have demonstrated to it?

How can FM companies manage their banks?

… a funder’s perspective

22/05/02

Track record and experience

Resources required to complete the transaction

Resilience to cope with difficulties

Does the FM company know what it is getting into?

… a funder’s perspective

22/05/02

Turnover, Profit before Tax,

Tangible Net Worth, Market Capitalisation.

Credit Rating

Is the FM company financially resilient?

… a funder’s perspective

22/05/02

Can the FM company do the job?

What is the nature of the work to be undertaken?

Have sufficient resources been allocated?

Is the price sufficient?

Has the Payment Mechanism been modelled with realistic deduction and termination scenarios?

How robust is it?

… a funder’s perspective

22/05/02

Bank Sensitivity Testing

Increase in Operating Costs by 10-15%

Completion Delay

Low and high inflation

Low and high interest rates

… a funder’s perspective

22/05/02

… a funder’s perspective

Contractual safeguards required by banks

Appropriate “second line of defence” controls

Termination triggers

SPV to manage contract

Ability to introduce alternative providers

Flexible contract (bundling of services)

Price

Benchmarking/market testing

22/05/02

… a funder’s perspective

FM Company Protections

Incentivised to make contract work but not “bet the company”

Benchmarking and Market Testing

Caps - Penalties for Service Deductions

Termination Liabilities

22/05/02

… a funder’s perspective

How can FM companies and Banks work together better ?

Open and clean lines of communication with the Bank’s Technical Adviser

Partnership approach to problem solving

TA should add value

Spot problems

Anticipate and identify risks etc

Address issues and problems as they arise with appropriate resources

22/05/02

Delivering PPP and PFI Projects

•Arranging•Investing•Advisory

Richard Hoile

020 7470 7348