Balfour Beatty quits £350m hospital PFI

The £350m Whipps Cross Hospital PFI scheme is facing severe delays following Balfour Beatty’s decision to pull out of the two-horse race, citing a lack of bidding resources.

The move has prompted contractors to question the future delivery of the government’s ambitious PFI hospital building programme and to call for measures to speed up the bidding process.

The Balfour Beatty-led consortium Consort Healthcare was neck-and-neck with Bouygues when it decided to pull out last month. Both teams had spent just four months working up their bids.

Balfour appears to be a victim of its own success at bidding for PFI contracts. A Balfour Beatty spokesman told CJ: “We had a bumper year last year in terms of getting to preferred bidder on five schemes.

“That left our construction bidding teams very busy going from the preferred bidder stage to financial close and these things tend to slip, so that people were still tied up bringing the deals to fruition.

“With our resources stretched we had to make a decision and, as Whipps Cross was the most recent scheme, we felt we couldn’t field a team for that at this time.”

A trust statement said it is in discussions with the Department of Health to “take the project forward. This development presents the trust with a good opportunity to ensure the existing plans reflect government policy.

“However, this does not represent a material change to the scheme.

“Once these discussions have been concluded, a further announcement will be made,” the trust said.

A trust spokeswoman said it was unlikely that the trust would carry on with a single bidder and confirmed that it planned to add a mental health facility to the scheme. The scheme is expected to be re-advertised in a year’s time.

The Balfour spokesman said the group may bid for the scheme again. “It depends on what the trust does with it, we will wait to see how it repackages it and when it brings it out again. Then we will decide what to do.”

Construction Confederation chief executive Stephen Ratcliffe called for a number of measures to speed up the PFI bidding process.

“One solution would be for the Treasury to require all local PFI teams to take – on secondment – a bid/commercial director who has a record of negotiating deals from the public sector side and would manage the bidding process,” he said.

“Another solution would be to give more power to central government departments – notably health and education – to deal with the negotiations with the preferred contractor after they had been selected at local level.

“The central departmental team would sort out the details and potential problems and recommend a contract that would be technically fit to be signed by the trust or authority.”