King Sturge is set to become the first UK chartered surveying firm to run a PFI hospital project. The firm’s financial arm King & Co and joint venture partners Kaeverner Construction, Select Facilities Management and the Royal Bank of Scotland are close to signing a deal for a £16m community hospital in Chepstow, Wales.
Surveyors and developers have been reluctant to bid for PFI hospital and local authority projects because of concern over the security of contracts and because of a legal obstacle preventing hospital trusts entering into PFI contracts.
But a Bill currently going through the House of Lords will enable hospital trusts to sign PFI projects and another one going through the Commons provides safeguards for contractors and financiers entering into PFI type contracts with local authorities. It provides for adequate compensation should an audit or judicial review declare the contract beyond the local authority’s trusts statutory powers.
The Chepstow consortium will be paid a lump sum by the local NHS trust broken down into £8m to build the 5,574 sq m (60,000 sq ft) hospital; £750,000 for facilities management and the remaining £7.25m for the land. It will also get a monthly, performance-related payment for 25 years.
“It is just a matter of turning the deal into a live transaction,” said King & Co’s Gary Yardley. The way is being paved a bill currently going through the House of Lords which will make it legally possible for hospital trusts to enter into PFI projects.
EGi News 17/07/97
