Project MoDEL (Ministry of Defence Estate London) consolidated the military estate in London, moving units from dilapidated facilities suffering from historic underinvestment into new, fit-for-purpose infrastructure on a reduced footprint.
The Ministry of Defence undertook a procurement exercise to appoint a development partner to fund the new facilities, take responsibility for the whole programme, relocate units and optimise development positions to realise best returns for land sales. The project was assigned no capital funding and all new built infrastructure and relocation would be funded by land sales.
VSM (a 50:50 Joint Venture comprising VINCI UK Developments and St Modwen Properties PLC) were appointed to lead this long-term, multi-phased, novel and complex project.
The MoD released six disposal sites in London and believed the value of these sites (with the benefit of suitable planning consents for redevelopment) would be significantly more valuable than the cost of construction and relocation activity. However, the MoD did not wish to fund any of this activity themselves, nor did they wish to take risk on the value of the sites released later in the project. VSM therefore proposed an innovative procurement methodology whereby a partner would fund the construction and relocation activity, repaying themselves from the disposal receipts from the sale of the surplus land later in the project. The partner was also required to obtain planning consent prior to any disposal of surplus land. The partner was therefore incentivised to analyse and identify the best programme for the wider project, balancing construction and relocation costs with likely land receipts.