How To Attract Bidders

Presented BySandy Bremner24th March 2005

Bremner Management Services Limited

TODAY’S PRESENTATION

Sandy Bremner’s background and experience

The PPP market

The private sector’s perception

Who are the bidders and what do they want?

How to attract bidders

COMPETING MARKETS IN THE UK

England, Northern Ireland and Wales– Courts– Defence– Education– Health

• PFI• LIFT

– Housing– Prisons– Roads– Waste

Scotland– Education– Health– Prisons– Roads– Waste

Signed Projects (586) - £40,161 million Signed Projects (85) - £2,441 million

SCOTTISH SCHOOLS PORTFOLIO

School PPP Projects By Value

24%

54%

8%

14%

Done Deals Being Negotiated Advertised Potential

Capital Value - £2,872 million

The Market

SCOTTISH SCHOOLS’ MARKET• Comhairle nan Eilean Siar Schools• Falkirk Schools PPP2• Scottish Borders Schools• Inverclyde Schools• Moray Schools (A)• Aberdeen City Schools (A)• East Dunbartonshire Schools (A)• West Dunbartonshire Schools

• £48 m• £70 m• £50 m• £80 m• £50 m• £80 m• £100 m• £100 m

• £578 m

PRIVATE SECTOR’S PERCEPTION

• Confusion• Disappointment • False promises• Lack of urgency• Lack of confidence• Poor and inaccurate communication• Poor business practice

PROCUREMENT TIMINGS

WEEKS SAMPLE SIZE

AVERAGE MAXIMUM MINIMUM

OJEC to ITN 12 25 39 14ITN to Preferred Bidder

12 34 65 13

Preferred Bidder to Financial Close

12 39 61 21

OJEC to Financial Close

12 97 122 70

ITN to Financial Close

12 73 102 52

PPP MARKET PARTICIPANTS

• Project Sponsors– Construction companies– Facilities managers– Advisory consortia

• Equity Funds• Funders• Advisors

THE PRIVATE SECTOR DRIVERS

• Budgets bettered.• Certainty.• Planned financial returns achieved or

bettered.• Quality repeat business.• Reputation enhanced.• Risks mitigated and managed.

RISK MANAGEMENT

HighImpact

LowImpact

LowLikelihood

HighLikelihood

Moderate RiskMinor Risk

Major RiskModerate Risk

ELIMINATE or

AVOID

ACCEPT

TRANSFER

REDUCE

HOW TO ATTRACT BIDDERS

• Commitment• Command• Communication• Confidence• Content• Culture

PROJECT STRUCTURE

• Quality Components– Confidence– Location– Political Support– Right Mix– Focused Business Plan– Affordable– Process Driven

PROJECT SCOPE• Realistic

– Do-able– Deliverable– Uncomplicated– Few issues

• Don’t be excessive• Be prepared

• Affordable– Know the benchmark

economics• Funding• Capital cost• Facilities Management• Life Cycle• Management and

administration– Know the interrelationships– Budget from top down– Demographics to be satisfied

THE MIX

• New build• 75 : 25 - New build / refurbish• 50 : 50 - New build / refurbish• 25 : 75 - New build / refurbish• Refurbish

Attractive

Unattractive

AUTHORITY’S PROJECT TEAM

• Dedicated team– Well led– Delegated authority– Commercialism– PFI experts– Experience

• Experienced external advisers– Procurement– Operational

• Project knowledge– Know what you want– Be realistic– Stretching to create

“Best Value”– Continually analyse the

market

PROCUREMENT CONUNDRUM• Clearly describe the procurement process and its various

stages.• Keep it simple.• Stick to the rules.• Use published guidance.• Categorically state the evaluation methodology.• Demonstrate that you know and can manage the process

from all angles:– European– UK Government– Scottish Executive– Partnerships UK– Local Authority

OPTIMAL PROCUREMENT PERIODS

WEEKS SAMPLE SIZE

AVERAGE MAXIMUM MINIMUM

OJEC to ITN 12 25 39 14ITN to Preferred Bidder

12 34 65 13

Preferred Bidder to Financial Close

12 39 61 21

OJEC to Financial Close

12 97 122 70

ITN to Financial Close

12 73 102 52

THE SOLUTION

Don’t do this

Do this

Communicate

A VERITABLE TALE

“Never in all history have we harnessed such formidable technology. Every scientific advancement known to man has been incorporated into its design. The operational controls are sound and foolproof.”

…………….E.J. Smith (Captain of the Titanic)

Bremner Management Services Limited

Contact Details

Sandy Bremner

T – 01383 861504M – 07906 856035E – sandy.bremner@bremner.uk.net

Financial Partnerships Unit

Local Authority Training Seminar