The Issue

The City Council had 2 PFI Facilities Management FM contracts servicing 22 schools: 

• PPP2 – Transform Schools (Balfour Beatty) - contract was signed in March 2006 with 16 years remaining of the operational phase
• BSF – Birmingham Lend Lease Partnership (BLLP) - contracts were signed between 2009 and 2011 with 19/21 years remaining, this included 7 non PFI D&B schools with FM contracts

Both PFI projects were due to have the Soft FM Service elements benchmarked to ensure best value for money.

Our Brief

The previous benchmarking exercise had led to a significant increase in costs to the Council, and this time, FM providers were yet again recommending a seven-figure increase in costs across both schemes. We were therefore engaged to provide expert advice, to challenge the SPV’s/FM Provider's benchmarking proposals and to lead the negotiations from the Council’s perspective.

Our Solution

Instead of relying on the FM provider’s cost modelling, we developed our own ‘bottom-up’ costing model. Our ‘bottom-up’ model uses actual costs of the various services, including local labour costs taken from the current FM Provider's own job adverts. Applying this model systematically, we were able to discredit the two SPV appointed PFI Benchmark Consultants’ reports. After 9 months of negotiations, the FM Provider had no option other than to accept our findings and challenges. 

Our Achievements

We successfully negotiated a reversal of the proposed increase, and in addition we were able to save the Council further costs by negotiating a substantial reduction on the existing FM price across both BSF and PPP2.