The M25 Motorway is London’s Orbital Motorway, a 125-mile (200 km) motorway around London that gives access to destinations such as Heathrow Airport and the Port of Dover. One of Europe's busiest motorways, it carries 15% of UK Motorway traffic and has had to continually evolve, supporting the economy since 1986. 

In 2009, the government awarded a 30-year Design, Build, Finance and Operate (DBFO) contract for the M25 and its key arterial link roads to the Connect Plus consortium, with a remit to radically improve the travel experience. This contract included measures to increase vehicle capacity through carriageway widening and hard shoulder running, as well as the ongoing responsibility for asset renewal and the routine operation and maintenance of the network. The project is now in the Operation and Maintenance stage, with major construction works completed. 

Financial oversight of major developments

Arup was appointed in 2009 as the Lenders’ Technical Advisor (LTA) on all aspects of the M25 DBFO. In addition to this, we are delivering selected technical advisory tasks as part of our role on the design framework. We have provided Connect Plus and their operator, Connect Plus Services, with technical advice on a number of challenging structural technical issues that have contributed to the on-going success of this vital transport infrastructure.

Effective management through due diligence

Our objective from the onset was to provide high quality, timely advice for the effective management of the contract, focusing on financial responsibility throughout. During construction we performed regular monitoring visits and reported back to Lenders. In the current Operation and Maintenance phase (starting Spring 2015), we are responsible for issuing quarterly reports to provide Lenders with information on project performance and related risk issues. 

To ensure the success of the contract, we have taken responsibility for approving significant areas of investment on behalf of the lenders. This includes the asset management forward plan and setting out working plans on the network for the next year, five years and thirty years.

Our technical due diligence has supported and enabled agreement of changes to the contract and our regular reporting has provided Lenders with confidence in the performance of the project. Our regular liaison with key stakeholders is pivotal to successful collaboration on the project.

A significant thank-you for all professional first-class support throughout this journey, against extremely demanding timescales. We look forward to our continued relationship with Arup.

Stephen Worthy

Director, Deputy Head of UK Project Finance at Balfour Beatty Investments

Responding to strategic challenges and changes

We provided technical due diligence for a number of strategic changes on the DBFO network, agreeing contract changes where there are technical and associated commercial considerations.

We work closely with all parties to fully understand the proposals and their impact on the contract prior to making recommendations to the lenders. Our due diligence studies include the embedding of the Regional Technology Maintenance Contract (RTMC) into the DBFO contract as well as M3 All Lane Running. We continue to be involved in technical due diligence for strategic change, as there is a significant pipeline of expected changes to the network around Heathrow, the Lower Thames Crossing, HS2, Dartford Free Flow Charging, EUD as well as several junction improvement works.

Technical Due Diligence for Debt Refinancing

Our debt refinancing teams played a key role in the successful re-financing of the M25 DBFO during the summer of 2018. We produced the supporting technical due diligence report, providing thorough and timely responses to queries from the European Investment Bank and other Commercial Lenders. This refinancing programme was challenging, and to achieve success, we worked collaboratively within a complex group of stakeholders.

The refinancing was beneficial for Connect Plus as well as for the Secretary of State, with the original project funding raised during the financial crisis in 2009. At that time, banks were less willing to lend funding and were cautious in their approaches, pushing up the cost of debt. However, since 2009 the financial markets have become more buoyant and the cost of borrowing has dropped sharply, enabling borrowers to strengthen their balance sheets through refinancing. Recent client feedback positively reflects our performance under challenging circumstances on this vital piece of infrastructure for the UK economy.

As a result of our professional approach, our work was recognised at the 2018 IJGlobal Awards, winning European Refinancing Deal of the Year.