Publications
Mind the gap: banking construction risk in the London Underground public private partnership
The London Underground Public Private Partnership was one of the largest and most complex public infrastructure projects of recent times.
Senior Associate Robert Lonergan, who recently returned from the UK, advised one of the winning consortia in the London Underground PPP. The project was voted PFI/PPP International Deal of the Year 2002 by Infrastructure Journal and European Rail Deal of the Year 2002 by Project Finance Journal.
In March 1998, the British Government announced the restructuring of London Underground to allow much-needed private sector investment and management.
The resulting Public Private Partnership (PPP) involved letting contracts for London Underground's infrastructure to three new privately owned infrastructure companies, each with its own PPP contract.
The contracts required the infrastructure companies to finance, maintain and upgrade the London Underground infrastructure over a 30-year period.
In this article, recently published in the International Construction Law Review, Robert reviews the way in which project risk was allocated and discusses the impact that this risk allocation had on the project's funding structures.
The London Underground PPP demonstrates the limitations of traditional construction risk models in the context of a long-term PPP arrangement, and illustrates the ways in which construction and other project risks can be allocated between the public and private sectors in order to produce a "bankable" project structure.
Robert's article will be of interest to those involved in the banking, rail, construction and public sectors who have an interest in project finance or who wish to consider an in-depth analysis of a leading PPP structure.
Click on the PDF to read the full article.
Disclaimer
This publication is necessarily brief and general in nature. You should seek professional advice before taking any action in relation to the matters dealt with in this publication.
