Last chance for private FE centre

8th November 1996 at 00:00
A flagship project in Stirling has run into trouble.

A Pounds 3.6 million further education centre to be built in Stirling under the Government's private finance initiative has been beset by delays, it has been revealed. "If we slip past December, we lose the project," Maxwell Sharp, depute principal of Falkirk College, said last week.

Falkirk, which is developing the centre with a consortium of private sector companies, has twice put off signing a final contract. At one stage it appeared the project was "coming seriously off the rails", Dr Sharp revealed. A third "critical" signing date has now been agreed for the middle of this month.

Dr Sharp added: "The cumulative effect of these delays has taken us to the brink." The entry date for the 200 Stirling students may now be postponed from next September until January 1998, almost four years after the board at Falkirk gave the project its blessing.

Any further hitches for what is a showcase education scheme will come as a personal embarrassment to Michael Forsyth, the Scottish Secretary, in whose Stirling constituency the FE centre is being established. Dr Sharp agreed it would have been simpler if Falkirk had arranged a mortgage, invited two contractors to tender and entered into a leasing agreement with the successful developer. But that would not have been politically possible, he says.

The PFI route has proved dramatically more expensive. The cost of preparatory work has soared to Pounds 200,000 from an original estimate of Pounds 20, 000. The Scottish Office is offering colleges just Pounds 50,000 to prepare bids. It has also agreed to guarantee financial support for the Stirling centre during its first three years.

The complexities of applying PFI to the public sector stem from the range of negotiations that have to take place with the private sector and finance groups that will take projects from the design stage to "facilities management" once the building is operational. The Stirling college consortium involves the M J Gleeson construction group, the Beacon Hall design consultancy, the Noble and Company finance house, the Chesterton facilities management group, and the Canmore Partnership, the project manager.

Falkirk had to ensure that financial guarantees were forthcoming from the Scottish Office, Forth Valley local enterprise company and the European regional development fund. This became critical after the project hit the first of many crises in May when Clackmannan College pulled out leaving Falkirk to absorb its quarter share of the costs.

The Falkirk board agreed to press on with three conditions: no further increase in costs; confirmation of the Scottish Office support package; and a guarantee that Forth Valley Enterprise would stand by its promise of funding. EU funding of Pounds 750,000 was eventually secured after outline planning permission was granted by Stirling Council in July.

But in September the project ran into three last-minute snags. Contractual delays meant that some agreements the college thought had been settled had still to be finalised, one of the banks withdrew and problems arose over title to the land in the centre of Stirling.

Dr Sharp has had to spend virtually all his time over the past 18 months on the Stirling project but continues to believe that "there is value in transferring the risk involved to the private sector".

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