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PFI progress in the North West |
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Colin Schofield outlines how the Private Finance Initiative is being used to reinvigorate fire and rescue services in the North West of England
THE NORTH WEST FIRE AND rescue services of Lancashire, Cumbria and Merseyside are collaborating in an ambitious and innovative project to provide 17 new community fire stations and an Operational Resource Centre (ORC) across the three areas. This project is on a scale not previously seen in the British Fire Service, covering three services and a geographic area of some 10,500 square kilometres. The project is to be funded using the government’s Private Finance Initiative (PFI). This is a scheme whereby a private contractor is engaged, via a competitive process, to design, build, finance and operate the fire station buildings. Each of the fire and rescue services obtains the necessary land and outline planning permission for a fire station on that site, and then asks potential contractors to provide detailed plans and designs for each building for approval by the project team. Once built, each service pays the contractor to maintain those buildings for an agreed term, normally 25 years, at the end of which the buildings are returned to the service in an ‘as new’ condition. The major advantage to each of the three services in using the PFI route is that the scheme attracts a substantial grant from the government, making it a cost-effective and value for money way of providing modern facilities for firefighters and other staff. The buildings are also properly maintained to agreed standards during the life of the contract. Lancashire already has two fire stations built under PFI (Hyndburn and Morecambe).
Deep Roots
This project has its roots in the Fire and Rescue Service modernisation agenda, articulated in the National Framework, and the North West region is at the forefront of this agenda for improvement. The services involved are pioneers in their recognition of community integration as a key to making communities safer. This project builds upon work already done in the North West. It illustrates the three services’ ability to collaborate at the most strategic level and the commitment to the modernisation of the fire and rescue services for the benefit of the communities they serve. The project has the support of the North West Fire and Rescue Service Regional Management Board. Integrated Risk Management Plans have been developed and approved by each authority, emergency cover reviews carried out and all sites in each area have been risk modelled using Fire Service Emergency Cover (FSEC) and other appropriate software to determine the most suitable locations for future fire stations.
Each of the three services has also developed their Property Asset Management plans. Analysis of building condition surveys reveals that in many cases the current building assets fall short of what is required for each of the authorities to achieve their strategic objectives.
Following consideration of all the above items, each service determined that a number of existing fire stations and facilities required urgent replacement. The factors determining the need for replacement are wide and vary according to each site, but typically include the following issues:
• Premises remote from current fire risk, and the communities which they serve
• Existing buildings in very poor condition with a history of under-investment
• No, or very limited, community facilities in the existing premises
• Premises are subject to adverse environmental impacts
• Premises designed for significantly larger firefighting capability than is now required, leading to inflated running costs in keeping surplus space, with consequent opportunities to embrace greater energy efficiencies.
Appropriate Funding
A Fire and Rescue Service circular issued in March 2005 invited all fire and rescue services to bid for notional credit approvals under the 5th round of Private Finance Initiatives. It was considered that this form of funding was appropriate for a substantial element of each service’s requirements. Lancashire and Merseyside fire and rescue services agreed to submit a collaborative bid and Cumbria Fire and Rescue Service also submitted a bid in the same round. Following discussions with the Office of the Deputy Prime Minister (ODPM), it was agreed to combine the two bids in a joint North West Project, involving the three services. In December 2005, the Parliamentary Under- Secretary of State at the ODPM wrote to the three chief fire officers and invited them to take this joint project forward to the next stage. Since this time the original bid has evolved in a number of areas and the current scope of the project will provide new stations at:
• Blackburn, Burnley, Chorley and South Preston in Lancashire
• Carlisle (2 sites), Patterdale, Penrith, Whitehaven and Workington in Cumbria
• Belle Vale, Birkenhead, Bootle, Formby, Kirkdale (including the ORC where all Merseyside’s special appliances are to be housed), Newton-le-Willows and Southport in Merseyside. The project has an estimated overall capital value of £38.3 million (2006 prices) and is hoping to attract PFI Credits of some £66 million.
The objectives of the North West Fire and Rescue Services PFI Project are to:
• Position appropriate and resilient operational resources in the appropriate locations to reduce the social, commercial and economic consequences of emergency incidents
• Provide accessible, functional locations where community safety practitioners and the public can interact to improve the wellbeing of communities
• Increase partnership delivery of community safety initiatives and support community cohesion, particularly to high risk areas
• Deliver local initiatives to significantly reduce arson together with false and malicious calls and attacks on firefighters
• Develop facilities to meet the demands of a modern Fire and Rescue Service
• Provide a safe and healthy working environment to enable employees and visitors to maximise their contribution towards achieving the objectives of the fire and rescue services and those of their partners
• Provide cost-effective, sustainable buildings that maximise the use of green resources and have minimal impact on the environment.
The three fire and rescue authorities have recognised the importance of streamlining the management of the procurement process. To that end, each has signed up to a Joint Working Agreement which sets out the respective responsibilities of each of the authorities. The agreement sets out key milestones in the project including key stages when specific approvals from each of the authorities are required, together with providing explicit delegated powers to the Executive Board, Project Executive and Project Manager to move the Project forward. The Executive Board is made up of Chris Kenny, Director of Service Support, Lancashire (who is the nominated Project Executive); Dominic Harrison, Chief Fire Officer, Cumbria and Kieran Timmins, Executive Director of Resources, Merseyside. Merseyside has been appointed to act as the lead authority in the period leading up to financial close to manage the external advisors and take on other management functions. Colin Schofield is Project Manager. Advisors have been appointed, following a competitive tendering process, to support the Project Manager. They are:
• Mouchel Parkman – Technical and lead
• PricewaterhouseCoopers – Financial
• Dickinson Dees – Legal
Pre-contract costs of the project are shared between the three services in accordance with the relative capital value of each service’s element of the overall project. Such costs include the salaries and expenses of the Project Manager and Co-ordinator, together with advisors’ fees. Other site-specific costs such as land purchase, planning applications, site investigations etc are paid for directly by each service.
Establishing the Need
The current (early July 2007) position of the project is that the Project Manager is finalising the Outline Business Case (OBC).
The OBC is required to establish the business need to proceed with the proposals, support the case for investment and the rationale behind using the PFI procurement route, appraise the various options considered, define in output terms the service delivery being sought and confirm value for money by comparing the proposed PFI Project with a reference project which provides a full costing of a possible solution to the output requirement using traditional funding methods.
The OBC was submitted to each of the authorities for formal approval during June 2007. Each of the authorities supported and approved the OBC, providing the necessary undertaking to meet the funding gap for the next 25 years. The funding gap is the amount of extra money that will need to be found to meet the difference between the bill submitted by the appointed contractor and the grant received from government.
The next stage is to submit the OBC to Communities and Local Government (CLG) as sponsoring government department, and then seek funding approval from the Treasury’s Project Review Group (PRG). It is hoped to receive all necessary government approvals by the end of October after which a notice will be published in the Official Journal of the European Union (OJEU) seeking expressions of interest from potential contractors. This is a very exciting project and is the biggest (of four) in Round 5 of the Fire and Rescue Services PFI. The Project Manager has been liaising closely with colleagues in other fire and rescue services who are currently, or have recently, been involved in PFI projects to get the benefits of their experiences and share documentation. Particularly close working relationships have been established with Tyne and Wear, Staffordshire and Gloucestershire. The Project Manager has also been liaising closely with CLG and the Public Private Partnerships Programme Ltd (4Ps) to promote this project to, and engage with, the private sector as, if there is no interest in the project, it cannot proceed.
A number of proven and established providers of construction services and facilities management (FM) in the PFI sector were invited to respond to a market sounding letter which sought views on a number of issues including:
• Aspects of the project which are of particular interest
• Scope of services
• Programme timetable
• Geographical disparity of sites.
The feedback received shows that there is genuine interest in the project and that its regional nature is not seen as a deterrent. The other notable characteristics which have been highlighted as attractive include:
• Financial value of the scheme
• Participating authorities’ reputations
• Geographical location
• Nature of new build over refurbishment.
The project rates positively against each of these criteria and the Project Manager is confident that sufficient interest exists to ensure that a competitive procurement process can be achieved. The project follows themes which have proved attractive to the market in other fire and rescue services across the United Kingdom. The Project Manager continues to meet with a range of potential private sector providers and a ‘bidders day’ will be held in late October or early November 2007, to further promote the project, once PRG approval has been achieved and the OJEU notice published. The longerterm project timetable anticipates a build programme of some two and a half years across the three areas starting in early 2010.
If anyone requires any further information about any aspect of the project, please contact Colin Schofield on 0151 296 4203 or at
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or write to him at Merseyside Fire and Rescue Authority, Fire Service HQ, Bridle Road, Bootle L30 4YD.
About the Author:
Colin Schofield is the Project Manager for the North West fire and rescue services’ PFI Project. He has worked for Merseyside Fire and Rescue Service for 19 years, gaining extensive experience at a senior level in a wide range of areas. Before being asked to lead the project in 2006, he worked principally in finance and administration, but also spent some time working on the original IRMP. Prior to this he spent 14 years with Merseyside County Engineers department, and Merseyside Waste Disposal Authority.
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