British company Laing O’Rourke has signed a contract to complete the Royal Liverpool Hospital project of Royal Liverpool and Broadgreen University Hospitals NHS Trust on which construction came to a halt in January after the Carillion collapse.
The agreement, comes into effect immediately, was reached in principle in September 2018, after the Trust Board agreed to terminate the PFI contract.
Laing O’Rourke will now be responsible for completing and operating the hospital.
The Hospital Company (Liverpool) will transfer its contracts to the Trust, which include Laing O’Rourke as management contractor.
The new Royal will now be publicly funded, and the Department of Health and Social Care, through Public Dividend Capital funding, is providing support for the remaining construction work identified to date.
Under the original contract, the funders will receive a £42m termination payment from the Trust, as well as funding held by The Hospital Company at the time of winding up.
This will cover PFI unitary payments that The Hospital Company will no longer receive, and deducts the cost of the remaining construction work and the projected cost of maintaining the hospital, both now under the Trust.
Along with earlier payments made by the Trust, the total cost to the public sector will be lower than envisaged when the project agreement was signed.
According to the risk transfer arrangements in the original contract, the lenders will lose a substantial proportion of the funding they have advanced. In addition, the equity funders (Carillion Private Finance and Pensions Infrastructure Platform) will lose their entire investment.
The agreement provides substantial savings to the public sector.
The company said that it will continue to work with the government, and regulator NHS Improvement to ensure restart of construction as soon as possible.
The government is now finalising details of the funding package that will allow the Trust to complete the project.
Royal Liverpool and Broadgreen University Hospitals NHS Trust CEO Aidan Kehoe said: “Our priority now is for Laing O’Rourke to get construction work restarted as soon as possible.
“We hope to be able to continue working with the existing subcontractors, so that work can be completed quickly. We expect to see some work on site from November, with the new Royal expected to be completed in 2020.”
Image: Laing O’Rourke signs contract to restart construction on Royal Liverpool Hospital. Photo: Courtesy of RLBUHT.