Skanska, in consortium with Innisfree and Equion (part of John Laing plc) has today reached financial close for the redevelopment of Britain’s biggest hospital scheme under the UK Government’s Private Finance Initiative (PFI) – Barts and The London.
This major milestone ensures that the long awaited main redevelopment work at St Bartholomew’s Hospital in the City of London and The Royal London Hospital, Whitechapel can begin and facilities to deliver healthcare provision for the people of the City of London, east London and beyond can be transformed.
The Royal London will be the largest new hospital in the UK. St Bartholomew’s will be transformed into a Cancer and Cardiac Centre of Excellence. The combined facilities will provide a total of up to 1,248 patient beds.
Barts and The London NHS Trust have awarded the project to the consortium. The Trust will continue to make all decisions on clinical management and development, with patient care provided free at the point of delivery just as it is now.
The 42-year contract includes a construction programme, worth around £1 billion, to be undertaken by Skanska, which will be included in the second quarter order bookings and is Skanska’s largest ever construction project.
Skanska is co-owner of the special purpose company named Capital Hospitals holding a 37.5 per cent share and is investing £ 48 M (including £ 7.5M in mezzanine finance). Innisfree also holds a 37.5 per cent share of the company with the remaining 25 per cent held by Equion.
Skanska and its investment partners who are responsible for the financing, design, construction and operation of the project for the term of the contract, will draw on key partnerships during the redevelopment and operation of the hospitals:
Skanska UK will undertake the design and construction project on the two sites, which covers a built area of 270,000 square metres. This comprises new construction and refurbishment of some of the existing facilities. Skanska UK will also carry out hard FM and waste services. This will result in a contract worth around £7.5 million, per annum over the 42-year contract period commencing July 2006.
Preliminary work has begun and the first phase, the Cancer Centre at Barts, is scheduled to be completed in 2010. All construction is scheduled for completion in 2016. The hospitals will remain in operation during the entire construction period.
Health Care Projects are responsible for management services on the project. Sovereign Hospital Services (Carillion Plc) will be responsible for soft FM services with Siemens Medical Solutions carrying out managed technology services for medical equipment and Synergy Healthcare providing sterile services. Architect for the scheme is HOK.
Simon Hipperson, Business Unit President, Skanska Infrastructure Development on behalf of the project company said: “We are delighted to be moving forward to the full redevelopment of these hospitals. We are very proud to be part of the team that includes the Trust, ourselves, all of our partners in the consortium and the many stakeholders that these hospitals touch to provide these long awaited new healthcare facilities for the communities they serve. ”
David Fison, Chief Executive, Skanska UK said: “Our involvement on this scheme so far has spanned over four years. I am immensely proud of the 350 people, Skanska staff, trade contractors, designers and operatives who have been working on this project during that time. Projects like Barts & The London have enabled Skanska to build up its capability. Not just construction capability, but complex programme management and stakeholder issues that these projects demand. With jobs like these, we are moving construction from bricks and mortar to a true service industry.”
Paul White, Chief Executive, Barts and The London NHS Trust said: “The redevelopment of Barts Hospital and The Royal London Hospital will deliver world-class medical facilities for the people of East London and beyond. We have worked closely with the project team from Skanska Innisfree over the past four years and we are delighted to have now achieved financial close which will enable building work to begin. This is an important milestone in the history of our historic hospitals.”
James Stewart, Chief Executive of Partnerships UK, advisors to the Trust on its new hospitals programme, said: "Partnerships UK has provided close and active support to the Trust throughout the process of letting this very complex contract. This is the largest hospital project completed under PFI. I am delighted that the deal is now successfully closed and that St Bartholomew's and the Royal London hospitals, which serve some of the most deprived areas in England, will be transformed."