Infrastructure & projects solicitors
Our business ethos is one of high efficiency and giving the best value for our fees, which we can bring to bear in this competitive area to ensure our clients are able to deliver as much as they can for the funds that are available.
Overview
Building Scotland’s future
Infrastructure projects are a crucial part of the UK economy. Whether schools or hospitals, roads or affordable homes, the need to deliver developments which bring investment and long-term benefits to communities around the land and assist with the drive to achieve net zero – and all for a reduced public purse – is fundamental to society.
Our infrastructure & projects team is at the forefront of this sector and is a market leader in projects procured through the hub initiative. The team is also fully integrated with our award-winning public sector team in relation to complex, high-value and high-profile public sector procurements of works and services.
THE TEAM
The team draws together highly experienced lawyers across all relevant practice areas to deliver a multi-disciplinary full-service offering to all our clients.
Services
The Hub Initiative
Overview
The Scottish Government’s hub initiative
Our Infrastructure & Projects team has been active in the Scottish Government’s hub initiative from the outset and continuously, since 2009. We are one of the few firms to have advised on projects procured in all five hub territories in Scotland. The involvement of our team in every territory has meant that we played a significant part in establishing the “ground rules” for hub projects.
Our unrivalled hub deals experience
Between 2012 & 2021 our team advised on hub infrastructure projects with a combined construction value of £797.5 million.
Euan Pirie, our Head of Infrastructure & Projects, has acted as ‘lead legal adviser’ on 43 separate hub projects – 12 DBFMs and 31 DBDAs – involving 14 different public sector bodies.
What is the hub?
This initiative reflects a national approach to the delivery of new community infrastructure, bringing together community planning partners – including health boards, local authorities, police, fire and rescue services and several other public bodies – with a private sector development partner. The resultant five hubCos – South East, North, East Central, West and South West – increase joint working and deliver the best value in delivery new community facilities.
Hubco’s are structured on a framework basis having an exclusive right to develop primary care projects (above a threshold value) for a period of 10 years. The intention though is that they will operate for longer than that (up to 25 years). Participants in each Territory are, however, offered significant flexibility. Projects in other sectors can be (and have been) developed by the hubco. The hubco is also able to progress projects on either a revenue funded basis (hub DBFM) or capital basis (hub DBDA or design and build contract). Value for money is secured by the hubco having to commit to caps on costs recovery and to tender works and services at Tier 1 level in the hubco supply chain.
Hub and Harper Macleod
Our team advised the Alba Community Partnerships consortium (a 50:50 joint venture between Miller Corporate Holdings Limited and Sweett Group plc) on their bids to be appointed as private sector development partner in relation to the two original hub pathfinder territories in 2010/2011.
Alba’s bid in relation to the North hub Territory was successful and our team subsequently advised on setting up ACP: North hub Limited and the conclusion of all agreements relevant to the establishment of Hub North Scotland Limited. We have subsequently been retained as legal adviser on all of hNS, comprising:
- 10 hub DBFM (revenue funded) projects (including both the first and second DBFM projects achieving financial close status in Scotland); and
- 22 hub DBDA (design and build)
with an underlying construction value of £631.4million. This has involved our infrastructure & projects team drafting, negotiating and agreeing (up to the end of 2021):
- 54 design and build contracts;
- 94 design team/technical services consultant professional appointments;
- 35 main contractor construction direct agreements;
- 25+ contractor parent company guarantees and performance bonds; and
- 300+ collateral warranty agreements.
Involvement in this number of projects has allowed us to develop an extensive precedents bank and sophisticated service management tools through which we have consistently provided very high quality services while working within a fixed fee environment and often to very demanding programmes.
Roads & other civil engineering projects
Overview
We have extensive involvement in roads and other civil engineering projects, with significant recent examples including advising:
- the successful contractor on the £590m+ A465 Mutual Investment Model road project in Wales;
- the successful contractor appointed to design and build the £300m+ Aberdeen Harbour Expansion Project;
- advising contractors on bids for the £500M+ M8 M73 M74 Motorways Improvements Project and the £745m+ AWPR Project;
- a major Scottish local authority on a 4 year framework agreement covering citywide road repairs;
- a Scottish local authority on a £25m+ decontamination, site stabilisation and revetment (sea wall) project;
- a Scottish local authority on a £25m+ roads project to be funded using UK Government levelling up funding; and
- a Scottish local authority on a £16m+ pedestrian bridge project.
We have developed significant expertise in the drafting, negotiation and management of the nec based contracts typically used for these complex and high value roads and other civils projects.
Energy, thermal efficiency and other “modern methods of construction” projects
Overview
We have an established track record and in-depth knowledge of contracts for the design and construction of affordable homes and other buildings to PassivHaus and other energy and thermal efficiency standards. This includes understanding the processes and certification procedures involved, integrating these effectively with practical completion arrangements and the challenges presented through the requirements of an extended post practical completion period during which performance of the facilities will require to be measured for compliance. We also have extensive experience of works delivered by MMC, including modular construction and have assisted clients in developing innovative solutions to address the significant risks presented under Scots relating to payment for “off-site” goods and materials entailed in those projects.
Notable recent examples of our project experience in this sector are advising:
- a Scottish local authority on contracts for design and build of a £60m+ Community Education Campus (one of the largest PassivHaus projects to date in Scotland);
- a housing association on contracts for design and build of the largest residential PassivHaus development in Scotland;
- a housing association on contracts for design and build of the largest affordable homes development in Scotland to be delivered using solely modular construction technologies; and
- a major Scottish local authority on a design and build contract for the replacement of all streetlighting citywide with energy efficient luminaires.
Managing operational projects
Overview
There are more than 100 active PFI/PPP/NPD model projects operational in Scotland and more than 600 active in the United Kingdom. As the projects involve long-term contractual arrangements it is inevitable that issues will arise between the parties. The types of issues which can arise will be many and varied but include:
- addressing the developing needs of the public sector through changes to the facilities both in terms of physical changes to the building and the scope of the facilities management services provided;
- addressing the possibility of one or more of the original parties in the project becoming insolvent or otherwise needing replaced;
- disputes over whether the project is delivering the required services to the public sector and
- supporting clients in preparing for compliance with contractual “handback” requirements under PFI and PPP contracts (i.e. condition of the project facilities on expiry of the contract term).
Our team has significant experience in supporting and assisting public and private sector clients in relation to the many and varied issues which can arise in projects in which they have a role. Our role is to ensure that the process can be achieved as swiftly as possible and to achieve the best result possible.
Our recent significant experience in this sector include advising:
- a Health Board on pricing reviews relating to performance of soft services (by benchmarking) under PFI Contracts and also expiry of primary term options relating to two of Scotland’s largest acute hospitals;
- a Project Company relating to a significant variation under a PPP contract involving provision of a new elective care ward (using modular construction technologies) at another of Scotland’s major acute hospitals;
- a Health Board on a variation under a PFI Contract to re-purpose and convert an area within a major acute hospital to provide an additional operating theatre;
- advising 9 project companies under hub DBFM Projects (with an underlying project value of £290m+) in connection with changing their account bank;
- advising 6 project companies under hub DBFM Projects in relation to changes in the identity of their management services provider; and
- advising 2 project companies under hub DBFM Projects in relation to changes in the identity of their FM services provider.
Facilities management & repairs contracts
Overview
In the last 2 years we have significantly increased our involvement in advising on “standalone” procurements of facilities management and other repairs contracts. We have market leading knowledge and experience of the recently published nec 4 Facilities Management Contract (having advised on the first 2 contracts procured in Scotland using that form and when it was still in its pre-publication version).
Clients are increasingly recognising the benefit of securing long-term arrangements for the repair and maintenance of their estates. The experience we acquired over more than 20 years through advising on facilities management contracts as part of PFI and PPP projects has been invaluable in allowing us to provide clients focused commercial as well as legal advice in this fast developing sector. The contracts involve expenditure of significant sums of money and clients are committed to the contractors they select for much longer than is typically the case with construction contracts. This means particular attention has to be paid to sensibly incentivising good performance and allowing clients to terminate the arrangements without incurring significant claims where the contractor is guilty of providing poor performance over a sustained period and despite being in receipt of warning notices.
Key recent examples of our experience are:
- advising one of Scotland’s “blue light” services on a 5 year+ hard FM service contract applicable to its entire estate and with a contract value in excess if £70m; and
- advising a housing association client on a 15 year+ maintenance contract applying to all homes within the estate of one of its Scottish subsidiaries.
Secondary market
Overview
The revenue funded project model has been in place now for almost 20 years within the UK and accordingly there are a large number of mature and successful projects in the market. Inevitably these have been seen as good long investments for entities such as pension funds and other long term investors due to the regular and steady income they produce. Accordingly there has long been an active secondary market for such investors to buy projects from the original sponsors who often want to utilise their financial resources in new ventures.
Our team has long been involved in acting for clients as both sellers and purchasers of mature projects throughout the UK. The team’s wide ranging experience of projects acting for the public sector, sponsors and funders ensures that we have a full understanding of the processes and issues that arise in such transactions including:
- diligence on the active project to establish areas of risk and uncertainty;
- the often complex requirements for consents from the various parties involved and the need to address or revise corporate structures that were often established purely for the needs of the original investors or bid structure; and
- the key requirements to ensure continuity of strong delivery and effective management of projects throughout the project term.
Key recent examples of our experience are:
- advising a Health Board on the purchase of the holding company that owns the SPV that operates one of its community hospital projects;
- advising a major international contractor in relation to the sale of its investment holding company which had interests in 6 underlying PPP projects in Scotland, England, Wales and Eire; and
- advising a major infrastructure fund in relation to the portfolio sale of 12 of its projects.
Work
Overview
This circa £500m project involved the upgrading of the M8, M73 and M74 motorways and a number of tributary roads to improve the network serving the Glasgow and the surrounding Greater Glasgow conurbation. We acted for a consortium of five international and major UK construction companies, bidding to be appointed as contractor for the project works and who were also proposed investors in project co.
Our team advised throughout the competitive dialogue period, including providing advice in relation to and full input on the draft project agreement. We also advised the consortium in relation to key risks such as liability for existing structures, major traffic management, management of interfaces with utilities companies, interaction with rail networks and ground conditions. The team also gained extensive knowledge on how such projects are financed.
Overview
This £530m project was procured by Aberdeen City Council, involving the construction of approximately 58 kilometres of mainly new-build highway to form a by-pass for the City of Aberdeen. We acted for a consortium of international and major UK construction companies, bidding to be appointed as contractor for the project works and who were also proposed investors in project co.
The team advised the consortia throughout the competitive dialogue period, including providing advice in relation to and full input on the draft project agreement. We also provided advice on key risk areas such as the identity of the procuring authority, route of the project road, significant new structures, management of utilities companies and ground conditions risk. We developed particular knowledge of security package requirements for bond-financed projects.
Overview
We acted for Arriva Trains in relation to its bid for the franchise to run this circa £375m project procured by Transport Scotland. Our role covered advising on the franchise documentation, documentation for the capital funding, property, employment and construction. We also provided advice in relation to public procurement, state aid, and competition law and merger control aspects of the project.
Overview
This £50m project involved the development of a new campus for Inverness College/the University of the Highlands and Islands across two sites in the North of Scotland. We acted as lead advisers to Project Co and the sponsors in relation to all of the project and finance documentation. This scheme utilised Aviva capital or lease-based project finance and established a number of market precedents that are now being followed in the other projects.
Overview
We advised on the £30m project involved the procurement of new community campus in Alford including a nursery, primary and secondary education facilities for almost 1000 pupils, with integrated community facilities including a library, swimming pool, indoor and outdoor sports and parking by Aberdeenshire Council pursuant to the North hub Territory framework.
This was the first school DBFM project to reach financial close under hub North Scotland’s Scotland’s Schools for the Future project – a £1.25 billion programme delivered by the Scottish Futures Trust. The project saw a significant public sector capital investment, reducing the amount of private sector borrowing and rent paid by the public purse. This model had to meet stringent EU regulations and our team was instrumental in drafting the required structure.
Overview
This was a DBFM Project completed under the Scottish Government’s hub Initiative. We acted as lead legal adviser to the Project Company (sub-hubco) and the sponsors of the project in relation to all of the project and finance documentation. This was the first time that two public sector bodies jointly entered into a single project agreement for new facilities under the hub Initiative. Our team was instrumental in devising a simple and straightforward solution to overcome the vires issues that might otherwise have prevented the project being procured in this way without the requirement for legislation. The Project is also notable as being the first Scottish revenue funded (i.e. PPP) project to close utilising Aviva’s capital or lease-based project finance solution.
Overview
The team acted on this project first as advisers to the original senior lenders through the initial procurement to financial close. Throughout our involvement on this project we advised on an extensive list of unforeseen issues, including:
- Insolvency of the original service provider and procurement of the replacement service provider
- Disputes between a number of parties
- The effects of the insolvency of the construction contractor
- Major refinancing of the project
- Changes to the facilities
Dealing with these issues has given the team market leading experience of the impact of such issues to allow us to advise on the best way to ensure projects can survive.
Overview
We acted for Derwent Housing Association which was the facilities management contractor for and investor in the [email protected] plc which provided new student accommodation for the Hatfield campus for the University of Hertfordshire. This market leading project closed utilising a private placement bond and was one of the first of its kind in Europe. The scheme provided 3000 new student accommodation spaces for the University.
“They’re certainly at the leading edge of the area. They’ll do whatever’s needed to get the project to close – they have expertise, commitment, drive and enthusiasm.” “They have a good reputation and good relationships on the private sector side.”
“Euan Pirie advises a wide range of clients including city councils, developers, project companies and contractors. He possesses considerable experience in the structuring of PPP projects in the education, healthcare and transport sectors.” Clients note “Euan is extremely diligent and has a terrific grasp of the legal and commercial aspects of very complicated and opaque contracts…he’s able to articulate his arguments and points in a very clear and succinct manner.”
“Euan Pirie has a strong practice assisting with PPP secondary market transactions and contract variations in the healthcare and education sectors.” Clients comment “He has a very good breadth and depth of knowledge within the PFI/PPP field.” and “He fully understands our needs and commercial position as a client and provides innovative thinking around what options we could consider.”
“Well-established reputation in PFI and PPP projects, and is particularly active in the domestic market. Team head Euan Pirie handles large construction and engineering projects, with particular experience of projects procured under the hub initiative. Senior associate Catriona Kemp is knowledgeable about all the aspects of infrastructure and other major projects, with particular strength in related project finance transactions, as well as corporate law issues.”
CONTACT US
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