The hub initiative
The Scottish Government's hub initiative
Our Infrastructure & Projects team has been active in the Scottish Government's hub initiative from the outset. We are one of the few firms to have been involved in advising parties in connection with 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
From 2012-2019 our team advised on hub infrastructure projects with a combined value of almost £750 million.
Euan Pirie, our Head of Infrastructure & Projects, has acted as 'lead legal adviser' on 37 separate hub projects – 12 DBFMs and 25 DBDAs – involving 12 different public sector bodies.
These projects have been procured in three of Scotland's five hub territories.
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.
Our team played a significant part in establishing the "ground rules" for hub projects and has unrivalled experience in advising on hub projects - with a total value in excess of £750m.
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Work examples
Schools and health projects
Our work with HNS has also involved a total of eight separate schools projects, with a combined capital value in excess of £200m, as well as two health projects. Two of these projects have completed as revenue funded schemes (Alford Community Campus in April 2014 and Wick Community Campus in December 2014) and one as a capital funded project (Inverness Royal Academy in July 2014).
Our involvement in the HNS Scotland's Schools for the Future (SSF) Programme has allowed us to develop a detailed understanding of how the standard form project agreements (both DBDA and DBFM) require to be amended for the schools sector.
We have introduced significant innovation to the standard form project agreement to streamline, simplify and reduce the cost of undertaking the financial close process. Our team has played an instrumental role in developing detailed guidance on the completion of technical documents (construction and FM) to be included as part of the project agreement and for the resolution of technical issues (including asbestos removal, ground conditions risk, operational functionality issues and the “triggers” for the issue of warning notices under the agreements).
- Aberdeen Community Health Care Village - the provision of a new £16m primary care health facility in Aberdeen and the first hub DBFM project to reach financial close. Our team advised HNS and the Sub-hubco established for the project. The project was significant in that it established the viability of the standard form hub DBFM project agreement and its acceptability to funders.
- Forres Woodside and Tain Bundle Project - the second hub DBFM project to reach financial close. This was a highly innovative scheme, involving the provision of three separate primary health care facilities, for two different health boards, through a single Sub-hubco and project agreement. It was also the first project financed deal to close in Scotland utilising Aviva's lease-based structure.
- Kittybrewster Custodial Estate DBDA Project - the procurement of a £12m custodial facility for Grampian Joint Police Board. The project presented a number of (sector-based) project specific issues that required to be addressed. The key driver for Grampian Police in selecting a hub procurement route was speed of delivery.
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