AMEC QUIT the Department of Social Security's £4bn PRIME estates management project at the 11th hour because fellow shareholders insisted it compete for construction contracts, it emerged this week.
The contractor was part of consortium PPM, which has now signed a concession to refurbish and manage almost all of the DSS's property. PPM chief executive Manish Chande said Amec would have had to tender for all of the £41M a year annual maintenance contracts, plus refurbishment work, even if it had invested money in the consortium. 'Amec would not have been guaranteed construction contracts,' he said.
Most contractors only invest in private finance projects so they can pick up construction work when concessions are awarded. But this week Amec claimed the project failed to offer the type of workload it had originally sought.
'We decided that the business opportunities that would be generated through PRIME did not justify the level of equity involved,'' said a spokesman.
'Originally we had anticipated that there would have been a larger number of development opportunities within the project. However, the bulk of the activity planned involves small packages of refurbishment and renovation work.'
Amec withdrew from Goldman Sachs-led PPM at the end of last year just before the final concession agreement was signed on Christmas Eve (NCE 15 January). Under the concession PPM is paying the DSS £250M for 1.6M.m2 of buildings - the whole estate apart from a £160M privately financed office project on Tyne & Wear. In return the DSS will pay PPM an availability charge for 65% of the space over the next 20 years. Payments can be cut if offices are unfit for use.
PPM plans to finance PRIME through a mix of 75% bank loans and 25% equity from shareholders including Symonds Group, facilities manager Compass Management & Leasing, management company Vines Management and property consultant Richard Ellis.
Ironically, Amec won the concession for the £160M Tyne & Wear project last week in joint venture with Building & Property Group last week. Unlike PRIME this project involves a major design and construction element (News last week).