German PPP Schools Study (2019)

COUNTRY | Germany

REGION | Europe

SECTOR | social infrastructure

SUB-SECTORS | education

QII Principles | Principle 2 Economic Efficiency, Principle 6 Infrastructure Governance

QII Sub-Principles | 2: Value for money analysis, 2: Life-cycle costing, 2: Operation and maintenance, 2: Risk management, 6: Procurement transparency, 6: Financial & debt sustainability, 6: Access to information and data, 6: Transparency of infrastructure investment

Overview

PPP Construction cost of 50 PPP-projects: 1,3 bn €; maintenance costs 0,7 bn €;

PPP Size: 1 mio. m2 GFA; new built and renovation projects with one or more schools

Parties involved (public and private): 13 PPP-Companies, 43 PPP-cities, municipalities and counties

Relevant contractual details: (1) Contract type: design, build, finance and operate (maintain)(2) Length: Ø 20-25 years

Context: strong public criticism of PPP cost effectiveness and value for money

Aim(s) of the project: put the discussion on a reliable data base; main focus on maintenance as one of the most essential parts of life cycle costs

Brownfield or greenfield: Both

Timeline

Key dates including procurement, construction, operations: see above under benefits

Relevance to QII

See benefits

Benefits

Highlights: The comparison of conventional and PPP-projects shows

12-31% lower PPP-construction costs for a comparable average building standard
over 30% shorter construction times and
a four-fold advantage in terms of maintenance:
1. The conventional budgets are 50% or more below, whereas the PPP-budgets are within recognized benchmarks; the higher PPP maintenance budgets can c.p. be financed through the lower construction costs without additional life cycle charges.
2. Significant better PPP-maintenance quality over 25 years
3. Maintenance budget within the recognized budgets avoid / reduce the risk of secon¬dary damages: local authorities analyses show a 38 % reduction in service lifes or structural damage of rebuilding costs; low maintenan¬ce budget are one of the main reasons for the investment backlock of € 42,8 billion (2019) for the 44.200 german schools nationwide.
4. PPP organization geared towards the life cycle of the building: The target quality of the main structural components is stipulated for the duration of the contract and the necessary budget is provided (liqui¬dity follows quality); in conventional structure it is often vice versa (quality follows liquidity). Users benefit from service levels and in¬cen¬tive systems (fee reduction due to poor performance); mainte¬nance calculations for specific structural components are PPP stan¬dard – there meanwhile lies a wealth of valuable experience. In conventional contracts, new budget resolutions must be passed each year where¬as the PPP-budget is secured over 25 years by reserve accounts. Con¬ventional facility manager describe this as quantum leap forward and say that todate this is not possible in conventional procedures.

Metrics

Conventional construction costs data from BKI - construction costs information centre of the German Chambers of Architects; maintenance data from KGST (local government association for municipal administration); questionnaire and interviews; analysis of the published maintenance calculation of a PPP-reference project

Name of Institution

University of Applied Sciences Mainz (Department of Construction and Real Estate Management / Facilities Management) in coope-ration with Ministry of Finance of Rhineland-Palatinate (PPP-Unit)