ESTATE MANAGEMENT
Getting the best value out of PPP assets
Jamie Marsh and Adam Hurst, both Partners at construction, property, and management consultancy, Rider Levett Bucknall, discuss some of the key steps for healthcare estates management teams to take to ensure that PPP estate assets are optimised and offer the maximum value.
There are an estimated 156 PPP (public private partnership) healthcare schemes expiring in the next 24 years. These assets will effectively move back into NHS estate managers’ portfolios, with the necessary asset management, maintenance, and lifecycle replacement commitments that other parts of the NHS estate warrant. For many NHS Trusts who have worked with private
partners in the last 30 years, the assets – which are valued at billions of pounds – are often maintained to a better condition than other NHS properties. This is in part due to the stringent maintenance and lifecycle replacement requirements imposed by sometimes very onerous PPP contracts. With contracts in place for long periods, (typically 20-40 years), there has often been a reduced focus on the optimisation of these PPP assets to align with overall NHS estate objectives and deliverables which have evolved over time. By not engaging with these projects, NHS teams are ultimately missing opportunities to achieve the best value, and failing to unlock a PPP project’s full potential ahead of contract expiry, when all legal responsibility for the project transitions from the private to public sector.
Starting planning seven years in advance The Infrastructure and Projects Authority (IPA) recommends that ‘expiry and transition planning should commence at least seven years before the expiry date’. It thus follows that establishing transition teams 5-7 years before a contract expires, or even earlier, should help to facilitate a smooth transition. It can also allow Estates teams more time to build trust and confidence in the process. Without proactive planning, NHS teams may struggle to address changes in service requirements, or fully understand the implications of asset transition back to public ownership. At RLB, we would argue that this should be taken a step further, and that the transition team should include a much greater focus on portfolio-wide asset strategy and optimisation methodologies to drive greater value and better patient outcomes.
By asset optimisation, we mean taking the needs of the
service provision now, and considering how things might change, and the impact on a healthcare facility’s current configuration. This process should also consider the utilisation of an asset, and where this can be maximised – an element that should be taken into account as part of a wider Trust, or even ICB estate portfolio, optimisation exercise. Investing in estate optimisation of NHS PPP assets is essential to creating additional value and driving better patient outcomes. Proactive planning and earlier consideration of these assets could provide significant
opportunities, and help address future challenges and aspirations more effectively.
n The problem or business challenge Among the key challenges in ensuring the maximum value from PPP assets are: 1. Evolving service requirements: given that these contracts were originally signed 20-40 years ago, many PPP assets may no longer align with current or future NHS service needs. The rigid nature of these agreements often also limits the ability to adapt spaces to evolving service delivery models. The provision of NHS services over this period has undergone significant changes due to advances in technology, evolving healthcare needs, and policy reforms. The adoption of electronic health records, virtual consultations, and AI-driven diagnostics, has streamlined services, reducing the need for face-to-face consultations. In some cases, flexible multi-purpose spaces are required to support technology, IT infrastructure, or data centres. It isn’t clear what this all means for service requirements, and the scale of change that this brings, but it is clear that there will be change, and therefore a degree of future-proofing will be necessary to enable this. 2. Net Zero Goals: environmental sustainability has gained importance, yet most PPP assets are likely to only meet minimal standards (e.g. LED lighting upgrades). Significant progress toward the 2040 Net Zero target (and the ambition to reach 80% reduction by 2032) remains unaddressed. PPP providers are generally not motivated to reduce carbon emissions, but there is a significant opportunity if the parties can collaborate to understand each other’s needs. 3. Competing priorities: NHS Estates teams face numerous demands, and estate optimisation often takes
The authors point out that ‘a better understanding of assets enables NHS teams to optimise estate usage – reducing void spaces, and increasing service capacity’.
March 2025 Health Estate Journal 63
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