Figures compiled by Partnerships Bulletin have given a snapshot of the global PPP market, revealing that the UK continues to tender new projects at a faster rate than other countries.
According to data from projects tracker website, Projects Bulletin, 19 projects in the UK that are in procurement made some progress during the six months to September 2022 - considerably ahead of the next country, Greece, with six projects moving forward.
The data highlights the continued momentum within the UK market despite the current political turmoil in the country, with Prime Minister Liz Truss resigning after just 44 days in the job.
However, the projects progressing in the UK are being procured at a local level, by councils, NHS trusts and similar organisations, rather than from central government departments - a trend that the UK has seen taking hold in recent years since the demise of PFI and PF2. Many projects making progress through procurement are being developed by councils seeking joint venture arrangements for regeneration, leisure and housing initiatives.
Interestingly, some UK procurements have started to return to the language of PFI, with references in tenders to ‘design, build, finance’ models. A tender in September from Staffordshire University, for example, explicitly sought bidders for a design, build, finance and operate (DBFO) student accommodation project.
Another project - not included in the data because it was tendered in early October - also shows this trend, with partners being sought by the East of England Ambulance Service for a strategic estate partner to design, build and finance its planned project.
These projects - together with the UK’s strong pipeline (as well as those in procurement, a further eight projects entered the planning phase during the six-month period) - demonstrate how regional and local organisations are continuing to deliver new infrastructure and partner with the private sector to get the investment and results they desire, without any central government support.
In Greece, however, the story is the reverse, with all six of its projects that moved through procurement during the period being developed by the national government and its PPP agency. Greece also had five more schemes enter the pipeline, as the government looks to ramp up its investment in infrastructure and is keen to use the PPP model to deliver on its ambitions.
These projects are also of significant scale: the five schemes approved by the central government’s PPP committee to enter into the planning phase are expected to be worth a combined €1.5bn. They are focused on road and water projects and are designed to hit the sweet spot for investors, both in terms of contract value and types of projects, being relatively replicable to schemes seen both in Greece itself and other parts of Europe.
Other European countries with projects progressing through procurement include Germany (four) and Ireland (three). Both countries remain stable if unspectacular providers of PPP pipelines, delivering a small yet consistent pipeline of projects for investors to consider.
It is largely North America where pipelines are progressing at pace, however, with California leading the charge among the US states. The ‘Golden State’ had four projects moving through procurement, and another four entering the pipeline in the six months to the end of September, underlining its role as a market leader.
Again, these projects are coming at a city or county, rather than state, level, with places like Fremont, Sonoma County and Whittier all bringing projects forward.
Further north, Ontario continues to perform well, driving the Canadian market almost single-handedly with five projects making progress in the procurement phase and a further three entering the planning stage. The province has long been a standard bearer for PPPs across North America and is widely regarded as one of most innovative and forward-thinking PPP markets anywhere in the world.
Infrastructure Ontario regularly publishes updates on its pipeline, which shows not only the projects in our database, but a series of future deals that are awaiting approval, and/or still deciding which model to use.
Looking at the numbers from a sector perspective, it is clear that there is a continued interest in social infrastructure.
Whereas over the past decade, transport schemes have often been considered priorities for their ability to increase economic productivity, more and more authorities around the world are now turning to regeneration to provide a similar function.
As a result, across the globe there were 75 social infrastructure projects that either came into the pipeline or made some progress in procurement during the six months to the end of September. Within that, the majority fell into the housing, leisure and regeneration category (35), again driven in no small part by UK authorities’ focus on regeneration joint ventures to help drive change.
In the wake of the pandemic, many local authorities and central governments have begun to seriously reassess how they foster economic growth within towns and cities, as traditional heartbeats of the community have seen footfall significantly reduced due to an acceleration in online shopping and reduced numbers of office workers.
As a result, the creation of social and community hubs, with the public sector often acting as an anchor tenant, is becoming increasingly attractive as authorities seek to boost flagging downtown locations.
Meanwhile, the energy transition is continuing to play out in the development of new projects. Over the period, 17 energy and transmission projects either started or moved forward in procurement. Transmission projects, of which there were six during the six months, will be equally important to the transition to Net Zero as the green power production schemes themselves: experts warn that the switch to things like electric vehicles will put a huge burden on existing networks, while the sources of power will also be coming from more disparate locations such as offshore wind farms.
Overall, the snapshot of six months’ worth of projects suggests a healthy pipeline for the industry - however, increasing economic uncertainty and fears that another global recession may be on the way could have an impact, both in terms of new projects coming through the pipeline and the progress of these existing deals.