the Role of the

FM Provider in PPPsFM Provider in PPPs

presentation to RMIT Students as part of

“Advanced Construction Management”

σ Introduction to Sodexo

σ PPP consortium structures

FM in PPPs

Presentation OverviewPresentation OverviewPresentation OverviewPresentation Overview

σ FM in PPPs

σ Risk

σ FM as part of the design process

σ Whole of Life and Lifecycle Management

σ Global company HQ’d in Paris

σ 20th largest organisation in the world

385,000 employees

About SodexoAbout SodexoAbout SodexoAbout Sodexo

σ 385,000 employees

σ Integrated facility solutions provider

σ Remote sites, healthcare, education, defence

σ End to end PPP project principle

σ More than 30 live PPP/PFI projects globally

Project CoProject Co

(SPV)(SPV)

Equity & Equity &

DebtDebt

Equity & Equity &

DebtDebt

Finance Finance

PrincipalPrincipal

Government

Agency

Typical PPP StructureTypical PPP StructureTypical PPP StructureTypical PPP Structure

DebtDebtDebtDebtPrincipalPrincipal

Engineers & Engineers &

ConsultantsConsultants

Engineers & Engineers &

ConsultantsConsultants

ArchitectsArchitects FM ProviderFM ProviderBuilderBuilder

Design

Team

PPP Agreements & ContractsPPP Agreements & ContractsPPP Agreements & ContractsPPP Agreements & Contracts

Government Agency

PROJECT

AGREEMENT

Construction

Deed LeaseFinanciersFinanciersFinanciersFinanciers

Financier Direct

Agreement

Finance &

Project CoProject Co

(SPV)(SPV)

BuilderBuilder FM ProviderFM Provider

SPV MOU

FMC

Construction

Contract

Service Provider

Deed

Equity Equity

ProvidersProviders

Equity Equity

ProvidersProvidersShareholder

Agreement

Finance &

Security

Documents

FM Role in PPPsFM Role in PPPsFM Role in PPPsFM Role in PPPs

σ Responsible for:

σ Operational management

σ Maintenance

σ Lifecycle management and refreshment

σ Integration of services

σ Management of subcontractors

σ Assessed against KPIs

σ Controlled through financial abatement

FM ServicesFM ServicesFM ServicesFM Services

Asset & Facilities Management

σ Client coordination

σ Asset management

σ Project management

Soft Services

σ Cleaning

σ Concierge

σ Pest controlσ Project management

σ Lifecycle management

σ Subcontractor management

σ Energy & utility benchmarking

σ Call centre services

σ Pest control

σ Grounds and landscaping

σ Waste management

σ Laundry services

Hard Services

σ Building fabric maintenance

σ Equipment maintenance

FM FM FM FM –––– Accepted RiskAccepted RiskAccepted RiskAccepted Risk

σ FM provider accepts risk arising from:

σ Service delivery

σ Facility performance – operationally only

σ Maintenance standards

σ Shortened lifecycle refreshment periods

σ Additional lifecycle refreshment requirements

σ Subcontractor performance

σ Industry benchmarking

FM Issues for Rating AgenciesFM Issues for Rating AgenciesFM Issues for Rating AgenciesFM Issues for Rating Agencies

σ FM Component: longest risk exposure period

σ Comfort derived from:

σ Market testing soft servicesMarket testing soft services

σ Comprehensive documentation of FM CMP

σ Create a transparent delivery model that can be

transferred with minimum disruption

σ Financial backing:

σ balance sheet strength

σ parent guarantee

Services in the Design ProcessServices in the Design ProcessServices in the Design ProcessServices in the Design Process

σ Traditional D&C model (Principal’s perspective):

σ Design for ease of construction

σ Meet scopeσ Meet scope

σ Look good

σ Cheapest construction options utilised

Services & FM in PPPsServices & FM in PPPsServices & FM in PPPsServices & FM in PPPs

σ PPP model:

σ FM provider part of design team

σ Robust fabric, materials and FFE utilisedσ Robust fabric, materials and FFE utilised

σ Maintenance considered in design layout

σ LCC a core element of design

σ NPV of cap-ex and op-ex costs used for procurement

decisions

FM role through the ProjectFM role through the ProjectFM role through the ProjectFM role through the Project

EOI Phase

RFT/Design

Phase

Construction

Phase

Handover

Phase

Operational

Phase

Architects

Engineers

BuildersBuilders

SPV

Equity Provider

FM Team

ACTIVE

PASSIVE

Lifecycle ManagementLifecycle ManagementLifecycle ManagementLifecycle Management

σ FM provider manages capital works program

σ Lifecycle profile is managed with design team

σ Lifecycle model and costs are bid in RFPσ Lifecycle model and costs are bid in RFP

σ Lifecycle model addresses fitness for purpose:

σ Operational performance

σ Aesthetic requirements

σ Lifecycle includes run-out period (5-10 years)

Whole of Life (Whole of Life (Whole of Life (Whole of Life (WoLWoLWoLWoL))))

σ FM provider is required to approach the entire

project from a Whole of Life position

σ Bring client perspective into design

Consider day-to-day operationsσ Consider day-to-day operations

σ Design: ease of access for maintenance tasks

σ Procurement : balance robustness, capex & opex

σ Maintenance : cost, profile, operational impact

σ Lifecycle : refreshment rates, obsolescence

HandbackHandbackHandbackHandback

σ FM provider required to ensure LCC position

σ Cost and management of run-out included in PPP

Never been tested, is likely to be subject to:σ Never been tested, is likely to be subject to:

σ Sinking fund position

σ Option to absorb risk transfer for self-management

σ Change in use negates last refreshment cycles

σ Questionsσ Questions