Skanska UK divides PPP operation into two distinct teams

Skanska UK’s PPP operations have been split into two distinct teams as a result of the £27m hit that has been taken on three of Skanska’s health sector PPP projects.

David Fison, chief executive, said: “It has made us focus more as we recognise now that schools PPP schemes involve a lot of smaller projects whereas a hospital PPP is a huge undertaking.

“So we’ve split. The team doing the big schemes is what we call PPP construction public and it works in the health, custodial and Ministry of Defence sectors. The second PPP team does the framework and regional types.”:

• Martin Nunns heads up the first team
• David Tydeman is acting head of the second team, pending a new full-time appointment to this post

Fison has not lost his long-term enthusiasm for PPP work. “What has happened to us confirms that PPP does truly transfer risk,” he said.

“The whole purpose of PPP is that in exchange for that you seek to make higher rewards than on other forms of contract.

“If you look at Skanska’s portfolio of PPP projects over the years, then even allowing for this latest setback, our construction profits are still more than industry average. It is painful but we retain our appetite.”

Skanska’s two PPP biggest hospital projects currently in the pipeline are:

• Enniskillen – a Northern Ireland scheme with a short-list of three
• Bristol South Mead – just two contenders, Skanska and Carillion

The three hospitals that have caused the financial hiccup have not been named, though Skanska has said that its flagship Bart’s hospital project is not one of the three.

Are there any general reasons? “Yes,” replied Fison. “We learnt from this that design development is crucial. We have not properly reflected all the consequences into our design forecast.”