Though Bouygues (pronounced Bweeg) is one of Europe's largest construction firms, it is far from a household name in the UK. But it is set to become one of the most important builders - at least as far as the NHS is concerned.
The company had sales of£4bn in 2000, while its construction division, which built the 1998 World Cup final venue, the Stade de France, employs more than 85,500 people.
With this much clout and the company's desire to spread into new markets, it is not surprising Bouygues is involved in the private finance initiative. And not a moment too soon, say some analysts, who fear there may not be sufficient capacity in the building sector to meet the demand for NHS PFIs.
Builders normally join other companies such as banks and facilities management providers in a special purpose vehicle (SPV) or consortium to design, build, finance and operate new or refurbished hospitals. But Nick Hughes, a director of Rock Consulting which specialises in managing PFI consortia, says only a limited number of builders can hope to enter the market through SPVs.
'Banks do not like risk so they will lend only to solid construction companies. The capacity is in the market to do most of what the government has on its mind but it is restricted because there are not enough builders the banks will lend to.'
Duane Passman, project director at Barking, Havering and Redbridge Hospitals trust, says the market has three sections - below£25m, above£25m and 'mega' projects worth£300m and over. Capacity is even more limited for the mega projects:
'Bouygues is probably the only company with the size and credit rating to lever enough money out of the City.'
But Bouygues cannot do every huge project, even if it wanted to - it is reported to be reluctant to take on more than one scheme at a time. Mr Passman believes this will prompt consortia to include more than one construction company, which is already happening on some of the larger schemes such as University College London Hospitals trust, for example.
Capacity in facilities management is also said to be limited to a handful of major players. Many of the big construction companies have their own facilities management business, including Carillion, Bouygues (Ecovert) and Balfour Beatty (Haden Building Management), while other companies mentioned by project managers include ISS, Sodexho, Granada Compass and Interserve, which includes Building and Property Group.
John Kelly, director of healthcare strategy consultants RKW, says the polarisation of the market could hit hitherto attractive schemes.
'Bidders can and will be more selective. They will feel they have to go for the big projects such as Leicester, Bart's and Birmingham.
Smaller projects will be seen as merely first division rather than premier league.
Even projects between£60m-£100m may not be sufficiently attractive for the big players - but too big for the others. There are a number of strong regional builders working at the£25m-£30m level but it may be seen as too risky to give them projects of this size.'
Dutch construction giant HBG is expected to enter healthcare PFI soon, and Amey - the PFI contractor which already has a leading presence in the transport, schools and defence markets - this month unveiled plans for a major expansion into the health sector. But new bidders are an exception.
'If you look back three or four years, European companies with large balance sheets were coming into the market but no new players are coming in now, ' Mr Hughes says.
'Things can be done about this but it needs a concerted effort to increase the market size. Companies seem to think a£30m contract is small but before PFI, most builders would have cut their right arm off for a£30m contract.
'In PFI, they think a£30m contract is small because of the cost associated with bidding.'
The major players
Amec Together with its French company SPIE SA, this company employs 50,000 people.
Projects It built the UK's first PFI district general hospital at the Cumberland Infirmary as part of the Health Management Carlisle consortium. It has also joined forces with Balfour Beatty on the University College Hospital project. (www. amec. com) Balfour Beatty It is better known in the health service PFI as Consort Healthcare, a consortium with the Royal Bank of Scotland. Services are provided through Balfour Beatty's subsidiaries, such as Haden Building Management.
Projects Its work includes the Royal Infirmary of Edinburgh, North Durham District General Hospital and University College Hospital London. In Edinburgh, Morrison Construction is also part of the consortium, while the UCH special-purpose vehicle is a joint venture with Amec and the Building and Property Group.
(www. balfourbeatty. com) Bouygues This French-owned firm is involved in many areas, including construction, services and telecommunications. It has a workforce of 40,000.
Projects: It has won three PFI contracts: West Middlesex University Hospital, Barnet, and King's College London.
Facilities management provider Ecovert is part of the Bouygues group. The Barnet project is financed by Metier Healthcare, a private-sector company owned by Bouygues and Ecovert South. (www. bouygues. com) Bovis Lend Lease This multinational constructor and project manager has 7,000 employees. Its PFI ventures are performed under the Catalyst consortium, together with its partners Bank of Scotland and facilities management provider Sodexho.
Projects: It is building a£76m hospital for Calderdale. (www. bovislendlease. com) Carillion This has been the name for Tarmac's construction and facilities management business since 1999. The company, with 14,000 employees, is placing increasing emphasis on its services.
Projects: It won contracts at Swindon and Marlborough, Glasgow Southern General Hospital and South Tees Acute Hospitals trust (with John Mowlem and Company). (www. carillion. co. uk) Equion Laing's PFI arm offers expertise on planning, funding, design, construction and operation in private finance schemes.
Projects: Its work includes the rationalisation of services at Newham General Hospital and the new Norfolk and Norwich Hospital. (www. equion. plc. uk) Kier This leading building and civil engineering group employs 6,500 people. Annual turnover is in excess of£960m. Kier Project Investment is the group's PFI arm.
Projects: Kier has won contracts for developments at East Kilbride in Scotland, West Berkshire Hospital and the Baglan Moor Hospital in Wales. (www. kier. co. uk) Alfred McAlpine It sold its housing division to Wimpey recently to concentrate on construction, but has an inhouse facilities management provider.
Projects: It has just completed a£65m site rationalisation at South Manchester University Hospitals trust and is working on the new Hereford District General Hospital. Together with Kier, it is bidding for the new acute hospital in Derby, where it is on the shortlist.
(www. alfred-mcalpine. com) Sir Robert McAlpine This construction firm offers no services.
Projects: Has been awarded two projects (Law and Dudley hospitals) under the Summit Healthcare consortium. It is not bidding for any more health service PFI projects. (www. sir-robert-mcalpine. com) Skanska This Swedish-owned construction firm has 85,000 employees worldwide.
Projects: It is working on the£75m redevelopment at King's College Hospital as part of the Hospital Partnership Consortium (HpC) and has completed the£95m redevelopment at Greenwich Healthcare trust and the£10m neighbourhood unit in Chepstow. (www. skanska. co. uk) Taylor Woodrow It specialises in construction, housing and property, with an annual turnover of£1.5bn. It also offers facilities management.
Projects: Through its United Healthcare consortium, it has been awarded contracts for the£38m South Buckinghamshire trust redevelopment and the new£155m hospital for Bromley. (www. twc. co. uk)
Names behind the money
Much of the funding for NHS private finance schemes comes from high-street banks. Projects funded by the Royal Bank of Scotland include the Royal Infirmary of Edinburgh, and Dartford and Gravesham Hospital; it is working mainly with Carillion on the South Derby and Walsgrave projects.
Abbey National, NatWest and the Bank of Scotland are also high-profile financiers. Innisfree, an equity fund dedicated to PFI, is involved in several schemes, including West Berkshire Hospital. Investment bank Charterhouse has also dipped into healthcare PFI at West Middlesex University Hospital trust.
Most NHS deals have been funded through mortgage-style bank borrowing, but some have opted for bond issues, including the new£84m hospital for Greenwich and the£122m South Tees development. An underwriter, Barclays Capital in both these cases, agrees to buy any unsold bonds.
Constructive approach: who's bidding for the smaller projects Projects worth less than£25m have become the domain of the smaller and regional construction companies, such as Ryhurst and Miller Construction.
Project manager MIM concentrates at the smaller end of the market, and has built a£20m community hospital in Willesden, north London. In PFI schemes MIM offers facilities management and financial modelling, and puts equity into the deal. Chief executive David Hudson believes his company's approach offers value for money: 'We employ the constructor, which is usually a local builder, rather than the builder leading the consortium. This helps prevent costs escalating, ' he says.
Occasionally, some of the bigger firms bid for some of these smaller schemes - Skanska won the£20m contract at Southampton University Hospitals trust - but this is becoming less common as the big players are unwilling to shoulder what they believe to be unreasonably high bidding costs.
Some effort is being put into batching smaller schemes together in order to attract investors but while bigger, less complicated contracts are available, the big players are unlikely to pay much attention to combined projects.
The Department of Health hopes two new initiatives will cut bidding costs and attract private finance into smaller projects.
NHS LIFT will concentrate on funding batched primary care schemes in priority areas, while ProCure21 will create four-year partnerships with private concerns for PFI projects of between£1m and£20m.
A number of builders and service companies, including Jarvis Accommodation Services, Miller Construction, Ryhurst and Amey Ventures have expressed an interest in LIFT.
But Rock consultancy's Nick Hughes is unsure either scheme will be successful. 'There is a lot of suspicion about ProCure21 and whether it will pass EU competition rules.'