Topic: Finance & funding

By Myrna Rickards
September 17th 2024

Moving on from PFI – Innovative ways to Fund and Finance Major Infrastructure Full Report

Unlocking private finance has long been a quest since PFI fell out of favour after the 2015 infrastructure cost review.

It is hard to look forward without looking back at the challenges of PFI, but looking forward is what we will be focusing on. The United Kingdom has significant infrastructure challenges, and it also has a new Government. The Chancellor, Rachel Reeves MP, has already pledged “a new partnership with the private sector” and investors with about $4 trillion of “dry powder” to invest are clearly interested in being part of the solution, more than ever before.

With a new Government there appears to be the appetite to get things moving: The King’s Speech included some 39 bills for the next parliamentary session, of which the Major Projects Association highlights 14 that relate to major projects.  In particular there is a new organisation called Great British Energy, a publicly-owned energy production company set up to own, manage and operate clean power projects and an Infrastructure & Planning Bill to help accelerate projects and improve investor confidence.  Aligned to this is the new National Wealth Fund – which will provide £7.3bn of capital and look to “crowd in” three times as much from private investors to support the Government’s growth, industrial strategy and clean energy missions. It will do so initially via the existing national banks – the UK Infrastructure Bank and the British Business Bank – before being established as a statutory body in its own right.  The aim is to simplify the support and routes for businesses and investors. It will align to the Industrial Strategy and the Green Prosperity Plan.  Add to this the £100bn of capital projects that Water UK states is in the business plans of the water companies for the next five years, any approach that can “simplify the support and routes” will be very welcome.

This seminar looks to investigate the future of private finance and other innovate ways to fund and finance major projects, taking on board the learning from projects prior to make more informed decisions. The speakers and panellists will look at the issue through a variety of lenses:

  • The private investor lens – what are those who provide the capital looking for in an investment
  • The developer lens – what can project owners and developers do to put their project at the forefront
  • The government lens – what can government and associated organisations do to support these projects
By Sascha Flint
September 17th 2024

Moving on from PFI – Innovative ways to Fund and Finance Major Infrastructure Highlight Report

Unlocking private finance has long been a quest since PFI fell out of favour after the 2015 infrastructure cost review.

It is hard to look forward without looking back at the challenges of PFI, but looking forward is what we will be focusing on. The United Kingdom has significant infrastructure challenges, and it also has a new Government. The Chancellor, Rachel Reeves MP, has already pledged “a new partnership with the private sector” and investors with about $4 trillion of “dry powder” to invest are clearly interested in being part of the solution, more than ever before.

With a new Government there appears to be the appetite to get things moving: The King’s Speech included some 39 bills for the next parliamentary session, of which the Major Projects Association highlights 14 that relate to major projects.  In particular there is a new organisation called Great British Energy, a publicly-owned energy production company set up to own, manage and operate clean power projects and an Infrastructure & Planning Bill to help accelerate projects and improve investor confidence.  Aligned to this is the new National Wealth Fund – which will provide £7.3bn of capital and look to “crowd in” three times as much from private investors to support the Government’s growth, industrial strategy and clean energy missions. It will do so initially via the existing national banks – the UK Infrastructure Bank and the British Business Bank – before being established as a statutory body in its own right.  The aim is to simplify the support and routes for businesses and investors. It will align to the Industrial Strategy and the Green Prosperity Plan.  Add to this the £100bn of capital projects that Water UK states is in the business plans of the water companies for the next five years, any approach that can “simplify the support and routes” will be very welcome.

This seminar looks to investigate the future of private finance and other innovate ways to fund and finance major projects, taking on board the learning from projects prior to make more informed decisions. The speakers and panellists will look at the issue through a variety of lenses:

  • The private investor lens – what are those who provide the capital looking for in an investment
  • The developer lens – what can project owners and developers do to put their project at the forefront
  • The government lens – what can government and associated organisations do to support these projects
By Myrna Rickards
September 19th 2023

The Unresolved Issue of Estimating and Forecasting Highlight Report

To be deemed a success, projects are generally judged on how well they delivered against their quadruple objectives of time, cost, scope and benefits when the project completes. To gain and maintain confidence through the journey to completion, projects will also be judged on how well they have delivered on milestones and the accuracy, or perhaps the believability, of their forecasts for the subsequent milestones through to the end of the project.

Therefore, get the estimates wrong and what could otherwise be a successful project could be viewed as a failure. Overestimating may prevent a project from getting started in the first place or it will tie up investment and resources which could be invested in other projects. Underestimating may result in a project becoming unaffordable if additional investment cannot be secured or unviable of the reduction in scope or later delivery erodes the promised benefits.

The Major Projects Association has looked at estimating and forecasting on three prior occasions. In 1984 through the lens of scenario planning, in 2013 through the lens of project controls and lessons from the 2012 Games, and in 2021 through the lens of benchmarking. Scanning the reports from these previous seminars highlights that while we have sought to improve our ability to estimate and forecast over the past four decades that the challenges we face have increased in parallel and frankly, it remains an unresolved issue. In many ways it could be argued that the level of market volatility we are currently facing means the gap between estimating performance and capability has never been greater. A project estimating 4% CPI for inflation on materials two years ago could be facing with a ten fold error as some materials have increased by more than 40% since. How can we estimate when there is such volatility? Do we need to place more emphasis on forecasting and mechanisms to adapt projects as assumptions upon which they are based veer to extreme alternatives?

Join us for this seminar where we will explore the unresolved issue of estimating and forecasting. We will gain insights from and an update on best practice guidance from the Association of Cost Engineers (ACOSTE), the Royal Institution of Chartered Surveyors (RICS), the Infrastructure and Projects Authority (IPA) and from Oxford Global Projects on Reference Class Forecasting (RCF). We will then explore the practitioner’s view from both a client perspective before looking at how estimating and forecasting might evolve or even transform. Join us to give your best prediction and help us resolve the unresolved issue of estimating and forecasting.

This event is followed by an evening Data and Digital Showcase on how projects are embracing data analytics, AI benchmarking services and date trusts to improve project controls. – you will need to register separately for this if you would like to attend both parts.

By Jonathan Norman
October 25th 2022

Making Projects Investable Full Report

The publication of the National Infrastructure Pipeline last year provided a strategic overview of the level of public and private infrastructure investment planned to 2024/25 and beyond. It revealed a portfolio of projects requiring over £650bn of investment over the next 10 years. This figure is for infrastructure only and does not cover non-infras developments such as industrial facilities, real estate or transformations. So the true figure of the 10-year investment planned for major projects in the UK could easily top £1trn.

The outlook is one of an abundance of projects seeking investment, whether that is from the exchequer or the private sector. However, with economic uncertainties due to the pandemic, Brexit, the war in Ukraine and inflation, it is clear direct investment for public projects from the exchequer may be increasingly challenging to secure. Analysts seem to agree that there is plenty of private money available to finance new capital projects, but whether they are banks, pension funds, or insurance companies, there will be a range of factors influencing their choice of lending or equity investment. Aligning project proposals to those factors will be key, not just to securing finance, but to reducing the overall cost of capital for the project.

This seminar will explore how major projects can be set up and developed to make them more investable. We will consider:

  • Does scale matter (too big or too small)?
  • What’s more important – the funding model for the asset or the financing model for the project?
  • How do investors assess risk for major projects and what can be done to reduce their risk rating and its impact?
  • What’s the role of the Government financial guarantees, the National Infrastructure Bank or other Government financial institutions? Help or hindrance?
  • Do major projects need to work on delivery reputation to attract new investors?
  • How do contractual models affect investor appetite?
  • What’s the role of the UK’s local government pension pools in investing in local or regional projects?
  • How should project sponsors/developers seek and secure investment?

The seminar will explore such questions through a mix of presentations (e.g. current strategies/trends, market analysis and case studies), discussions/debate and workshops.

By Jonathan Norman
October 25th 2022

Making Projects Investable Highlight Report

The publication of the National Infrastructure Pipeline last year provided a strategic overview of the level of public and private infrastructure investment planned to 2024/25 and beyond. It revealed a portfolio of projects requiring over £650bn of investment over the next 10 years. This figure is for infrastructure only and does not cover non-infras developments such as industrial facilities, real estate or transformations. So the true figure of the 10-year investment planned for major projects in the UK could easily top £1trn.

The outlook is one of an abundance of projects seeking investment, whether that is from the exchequer or the private sector. However, with economic uncertainties due to the pandemic, Brexit, the war in Ukraine and inflation, it is clear direct investment for public projects from the exchequer may be increasingly challenging to secure. Analysts seem to agree that there is plenty of private money available to finance new capital projects, but whether they are banks, pension funds, or insurance companies, there will be a range of factors influencing their choice of lending or equity investment. Aligning project proposals to those factors will be key, not just to securing finance, but to reducing the overall cost of capital for the project.

This seminar will explore how major projects can be set up and developed to make them more investable. We will consider:

  • Does scale matter (too big or too small)?
  • What’s more important – the funding model for the asset or the financing model for the project?
  • How do investors assess risk for major projects and what can be done to reduce their risk rating and its impact?
  • What’s the role of the Government financial guarantees, the National Infrastructure Bank or other Government financial institutions? Help or hindrance?
  • Do major projects need to work on delivery reputation to attract new investors?
  • How do contractual models affect investor appetite?
  • What’s the role of the UK’s local government pension pools in investing in local or regional projects?
  • How should project sponsors/developers seek and secure investment?

The seminar will explore such questions through a mix of presentations (e.g. current strategies/trends, market analysis and case studies), discussions/debate and workshops.

By Jonathan Norman
May 18th 2017

Global trends in the private finance of major projects Highlight Report

Public spending on major projects to improve infrastructure, support public services, upgrade communications and transform organisations is struggling to keep pace with investment need, not just in the UK but worldwide. The World Economic Forum estimates that for infrastructure alone the investment gap between what is being spent and what is needed to support global economic growth is an incredible $1trillion per annum. By 2030 it forecasts a $14trillion shortfall.

At the same time the world has experienced some game changing political developments, market turbulence and persistent low oil prices leading to uncertainty affecting investor sentiment. Despite this, and in some cases because of this, investors are seeking new opportunities for putting their capital to work.

The need for this private finance to make its way into major projects is on an upward trajectory, accelerated by population growth, urbanisation, the need for improved connectivity and of course the impact of climate change. It is therefore timely that the Major Projects Association brings together government leaders, investment funds, legal experts, project directors and consultants to examine, debate and inform on global trends within private financing of major projects.

Members may wish to examine previous MPA event highlights or research reports, for example:
Making Major Projects Bankable, 17th – 18th September 2014 at 5:30 pm, 32nd Annual Conference
And
World Economic Forum, How can we bridge the $1 trillion infrastructure gap?

There is no charge for this event for individuals from member organisations.

By Jonathan Norman
May 18th 2017

Global trends in the private finance of major projects Full Report

Public spending on major projects to improve infrastructure, support public services, upgrade communications and transform organisations is struggling to keep pace with investment need, not just in the UK but worldwide. The World Economic Forum estimates that for infrastructure alone the investment gap between what is being spent and what is needed to support global economic growth is an incredible $1trillion per annum. By 2030 it forecasts a $14trillion shortfall.

At the same time the world has experienced some game changing political developments, market turbulence and persistent low oil prices leading to uncertainty affecting investor sentiment. Despite this, and in some cases because of this, investors are seeking new opportunities for putting their capital to work.

The need for this private finance to make its way into major projects is on an upward trajectory, accelerated by population growth, urbanisation, the need for improved connectivity and of course the impact of climate change. It is therefore timely that the Major Projects Association brings together government leaders, investment funds, legal experts, project directors and consultants to examine, debate and inform on global trends within private financing of major projects.

Members may wish to examine previous MPA event highlights or research reports, for example:
Making Major Projects Bankable, 17th – 18th September 2014 at 5:30 pm, 32nd Annual Conference
And
World Economic Forum, How can we bridge the $1 trillion infrastructure gap?

There is no charge for this event for individuals from member organisations.

By Jonathan Norman
December 8th 2016

Portfolio management – can it really make a difference to improving effectiveness of capital investment? Highlight Report

Building on our 2015 seminar The Shape and Nature of PMOs this discussion dinner will explore the opportunities and challenges faced by organisations when delivering a complex portfolio of capital investment programmes and projects. The focus of the evening will be to discuss how adopting a portfolio management approach has the potential to improve outcomes and certainty. A panel, chaired by Roy Hill, will examine this subject from the perspectives of Highways England, Transport for London, the Environment Agency and NATS, covering issues such as:

• Where do projects most often experience unexpected problems and how does organisational maturity and using different delivery models help to mitigate these issues?

• How do organisations balance and prioritise a portfolio of competing projects in a cost constrained and sometimes political environment? Where does portfolio management create value in balancing these challenges?

• Integrated project controls and comprehensive reporting is the panacea to successful portfolio management – what works well to stimulate value creation across multiple projects and programmes?

By Jonathan Norman
October 18th 2016

Lifecycle risk management for major projects Full Report

Major Projects are often characterised by large levels of complexity over extended timelines. The risk profile of a major project is therefore not static; it can be quite dynamic demanding continual review and assessment.

The risk profile will change as we move through different stages in the major project lifecycle and there are different groups of key stakeholders which have an interest at each of these stages. Having a better understanding of how these stakeholders perceive major project risk and what their typical concerns are, should mean that we are better able to address these concerns as early as possible in each lifecycle stage, thereby helping to support initiation and delivery.

This seminar will look to explore the attitudes to risk and associated ‘risk appetite’ of different stakeholder groups at different stages in the major project lifecycle, and share experiences from a small number of high profile and current major projects as well as infrastructure operators.

By Jonathan Norman
October 18th 2016

Lifecycle risk management for major projects Highlight Report

Major Projects are often characterised by large levels of complexity over extended timelines. The risk profile of a major project is therefore not static; it can be quite dynamic demanding continual review and assessment.

The risk profile will change as we move through different stages in the major project lifecycle and there are different groups of key stakeholders which have an interest at each of these stages. Having a better understanding of how these stakeholders perceive major project risk and what their typical concerns are, should mean that we are better able to address these concerns as early as possible in each lifecycle stage, thereby helping to support initiation and delivery.

This seminar will look to explore the attitudes to risk and associated ‘risk appetite’ of different stakeholder groups at different stages in the major project lifecycle, and share experiences from a small number of high profile and current major projects as well as infrastructure operators.