Construction of phase one of the £2bn Colchester Garrison PFI finally gets under way this week. Mark Hansford reports on a complex deal.
When the Ministry of Defence signed the deal for the redevelopment of Colchester Garrison on 10 February this year, the collective sigh of relief could probably be heard as far away as Iraq.
For while many of 16 Air Brigade's finest have been engaged in Iraq, back home in Colchester Army project managers have had their own long running issue to contend with.
RMPA, a consortium of Sir Robert McAlpine, Atkins, Sodexho and HSBC Infrastructure, submitted its pre-qualification application in 1997 and was named preferred bidder in October 1999. Construction was initially scheduled to start in 2001 but planning complexities just kept stalling the project.
'At the time it was the largest planning application in Europe and the size made it quite difficult to deal with, ' says Colonel Jim Morrison, Ministry of Defence project director pre financial close. 'Colchester Borough Council is relatively small and we just swamped it initially.
'In the end it worked with the MoD to deal with the project in bite sized pieces, ' he adds.
Just dealing with the environmental statement was a huge task. Archaeological investigations took 18 months.
'Colchester is a significant site of Roman activity so there was a huge amount - 15km - of archaeological trenching dug, ' says Morrison. 'And nothing of any significance was found.'
Even a simple footpath diversion caused problems, with one couple's objections delaying internal planning.
The size of the planning application reflects the scale of the work to be done. Colchester is an MoD core site, providing working accommodation for 3,600 troops and single living accommodation for 1,700. And it is clapped out.
'At the moment accommodation does not meet the needs of a modern soldier, ' says Morrison.
'They still live mostly in dormitories with shared ablutions, with sewers that block and central heating and hot water that regularly fails. The redevelopment underpins both the moral and physical components of fighting power.'
Consortia bidding for the project were given a free hand as to how and where the redevelopment would take place. All the MoD demanded was that the project offered value for money against the Public Sector Comparator (it will beat it by a considerable margin, says Morrison), that the new facility was compact and cohesive, and that construction work would not affect the operation of the existing garrison.
Of all the bids, RMPA's was the only one that would redevelop the existing site while consolidating all units within a 'single wire' security fence. This offered the attraction to the MoD of freeing up land for sale - a significant factor in RMPA's successful bid. And it will also give RMPA a town centre site.
This was important to RMPA as it has taken over the site on a 150 year head lease. At the end of the 35 year PFI, the Army could simply walk away, leaving RMPA with 115 years left to run on the lease.
The intention is to discourage RMPA from producing buildings that last for 35 years then fall to pieces immediately after.
'The MoD has the right to stay at the end of the contract, and can opt to extend the concession or buy out the head lease at a pre-determined cost, ' says Mark Bielecki, MoD project director post financial close. 'For RMPA the best solution is an extension of the concession and that is in everybody's best interests.'
But RMPA must nevertheless be prepared for the worst, and a town centre site has commercial attractions. Indeed, RMPA has designed the accommodation with a view to turning it into halls of residence accommodation for university students.
In the new site soldiers will be housed in approximately 135 buildings, mostly new build, with none taller than three stories. Space is set aside for future expansion. New training and recreational facilities are also part of the deal. A bridge will be built over a B road to join the north and south sectors of the site, reducing the traffic on civilian roads.
In all, construction is expected to cost £560M, with the deal worth an estimated £2bn to RMPA over 35 years of the PFI.
Sir Robert McAlpine has a 17% shareholding and is responsible for construction. Atkins and Sodexho both have 14% shareholdings and are responsible for hard and soft facilities management respectively. HSBC holds the remaining 55% of the shares.
RMPA's return could fall, however. A key risk transferred to RMPA - in addition to those arising from responsibility for layout and design, building maintenance and service delivery, and the risk of the residual value of the 150 year lease - is demand.
RMPA faces a capped deduction for daily absence and - significantly - a fixed deduction when units are deployed on exercise. 'So we needed our buildings to be as efficient as possible, ' says Tony McLean, chief executive RMPA. 'We must be able to power down individual blocks to demand minimum maintenance without deteriorating.'
The standard of accommodation on the new garrison will be that of a four-star hotel, with all rooms en-suite. But all junior rank single living accommodation rooms are completely prefabricated off site - even down to putting in the furniture.
The pods are then stacked in groups, clad and roofed.
Work will be carried out in two phases. Phase one construction began this week, and is scheduled to complete on 20 October 2006. Soldiers will move over during December, allowing work on phase two to begin on 18 December 2006, with the whole construction phase complete by 19 October 2008.