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P3 / PPP

Kykloud provides a unique solution to managing lifecycle risk on P3 and PPP projects

P3 or PPP is the leading method of procuring and delivering infrastructure projects globally across many sectors. In the UK alone there are over 750 such contracts and each contract has a unitary payment (UP) from the Government to the Private provider. The UP includes a contribution to pre-fund lifecycle investment which is typically 25-30% of the initial capital build cost.

In the UK there are £20-25bn of funds established on projects running through to the year 2050 with an average lifecycle spend of £1bn per annum.

Leading PFI Investor’s View

“Lifecycle is now our largest risk. Across the whole process of managing the lifecycle funds, our primary concerns are:

  • that we have adequate funds
  • the contractual obligations of both SPV and FM contractor are met
  • the buildings themselves are in good condition”
Leading Funder’s View

“Detailed appraisal of whole life operating & maintenance costs, and periodic capital maintenance expenditures” is the tool for “mitigating default risk….exposure to lifecycle risk and costs, or risks in meeting minimum hand back requirements, may be significant due to the long term nature of PFI/PPP contracts.”

Delivering operational efficiencies

  • Management fees paid to operators for running contracts are being used to support resource intensive, human hungry business processes
  • Operators are now looking to make cost savings for asset surveying and lifecycle planning (50%+)

Better visibility of upside

  • Returns are being held up in cash reserves with asset managers unable to accurately prove under spend or efficiencies are being made
  • Unknown benefits from capital investment made - lack of audit trail and cost-benefit and impact on IRR from investment

De-risk Life Cycle

  • Spend levels increase as portfolios are maturing. Assets are aging and degrading leading to more risk in assessing their condition
  • High value of cyclical and forward maintenance
  • Scalability - in managing portfolios of 100’s of buildings with limited visibility is leading to errors being made in the identification and communication of risks to investors
  • Short term planning horizons – unable to plan beyond next year and assess hand back risk
  • Error prone systems and unreliable technology. Security of both asset data and data integrity are at risk

Just a small selection of our p3 ppp clients success stories...

You're in good company with our global client list.