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Carillion confirmed as £353m Midland Metropolitan Hospital winner

Carillion has been selected as preferred bidder on one of the first hospital projects to be procured under the government’s PF2 project financing model.

A Carillion joint venture with Richardsons Capital and Infrastructure UK – known as The Hospital Company – will build and manage the £353m Midland Metropolitan Hospital for the Sandwell and West Birmingham Hospitals NHS Trust as part of a 30-year concession contract.

Carillion was left as the only bidder on the hospital after a Laing O’Rourke/Interserve joint venture pulled out in April.

Under the PF2 model, a replacement for the Private Finance Initiative, Carillion will invest £16m in equity into the 670-bed hospital.

The capital cost of the project is expected to be £297m, while hard facilities management and life-cycle maintenance services are expected to net the firm £140m in revenue over the course of the contract.

The deal is expected to reach financial close at the end of the year, with construction due to get underway in early 2016 and completion scheduled for mid-2018.

In an echo of difficulties experienced under PFI, delays have beset a number of PF2 projects since the launch of the programme, with contractors hesitating over hospital bids and the procurement of a number of schools slipping behind schedule.

However, Sandwell and West Birmingham NHS Trust has insisted that the Midland Metropolitan project will stay on timetable.

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