Procurement: City firms on alert as public private partnership projects soar to £36bn

The value of public private partnership (PPP) tenders in Europe has doubled compared to last year, presenting significant opportunities for UK lawyers, research revealed this week.



A new survey by DLA Piper Rudnick Gray Cary found that PPP projects now in tender across Europe have ballooned to 54 billion euro (£36 billion).


Italy topped the table for PPP projects in continental Europe this year with 22 billion euro under tender, more than double the previous year's figure. Spain came second with 10 billion euro, again almost double the previous year. Germany overtook France for third place, with 8 billion euro worth of projects, compared to 2.4 billion euro in France.


Road building made up some 62% of the total market, with substantial programmes coming on-stream in Germany, Austria and Spain. Light-rail projects accounted for 15%, while there was a significant growth in hospital PPPs, which accounted for 9% of the market.


Nigel Pritchard, a partner at magic circle firm Allen & Overy, said: 'There is a recognition from the Europeans that they can learn from what the UK has to offer. European projects are often done by a combination of local and international lawyers, which tend to be the UK firms. There is an opportunity for UK lawyers.'


He added: 'The main drivers for this growth have been budgetary constraints affecting European governments, and a view that procuring through the private sector is more efficient.'


Mark Swindell, co-chairman of the commercial group at DLA Piper, said: 'The momentum behind PPP as a globally accepted form of infrastructure and public service procurement by government has far exceeded our expectations.'


He added: 'My only concern is that an overheated market may lead to less rigorous evaluation of projects and less well-defined deals, which may deliver short-term benefits in terms of completed projects, but in the long run will devalue the currency of PPP.'


In the UK, the number of deals reaching completion dropped from an average of seven a month in 2004 to two a month this year. However, the outlook is strong, according to the research, with health, transport and education all key areas for PPP projects.


Mr Pritchard said: 'I have not noticed a particular downturn in the UK. There is the "Building schools for the future" scheme, hospitals are a big area, and the M25 tender has just been announced. There will also be street-lighting projects, and there is the Birmingham highways programme.'