Map of Milan city outlining the M4 metro line trajectory and stops.; Map of Milan city outlining the M4 metro line trajectory and stops.;

Milan M4 metro line LTA, Milan

Behind Milan’s new M4 metro line: advisory services help assess project’s risk

The construction of the fourth underground line in Milan is an integral part of the city’s journey towards sustainable growth, and will deliver an even more integrated, resilient mass transit network. Connecting the south-western district of Lorenteggio/San Cristoforo with Linate Airport on the east, the new 15-kilometre M4 line will become a key transport corridor with several interchange stations supporting the growth of the metropolitan area surrounding the country´s financial capital.

In 2010, Milan’s municipality launched a Public-Private Partnership targeting public and private sector funds to back the construction of new line, which the municipality forecasts will transport 86 million passengers annually. Financing these complex, capital-intensive infrastructure projects is an undertaking invariably underwritten by a group of lenders.

Arup was appointed to provide Lenders Technical Advisory (LTA) services to the banking syndicate, helping them assess the project’s overall risk profile. Combining our commercial and operational know-how with specialist engineering skills, our infrastructure advisors provided detailed due diligence, together with complex, multi-disciplinary service contracts guidance, as well as monitoring services to the lending group.

Project Summary


€1.7bn PPP investment

15kmof underground line

30yearconstruction & operation concession

International experience and operational know-how help shape a bankable project

Through our design expertise, an established track record managing large infrastructure projects and know-how on project financing contracts and service provision standards, our consultants helped the financial institutions deliver a bankable arrangement that provides value for money for the city.

Besides providing technical Due Diligence services on the project, we also worked closely with the legal advisor, the sponsor and the lenders in shaping the project contracts; in particular the Engineering, Procurement & Construction (EPC) and the Operation & Maintenance (O&M) contracts.

We drove the inclusion of a series of protection mechanisms for the Lenders in the EPC contract based on critical construction milestones and, given the complexity of the project, an increase in project contingency to a value acceptable to all parties, and protective of the project success.

Our consultants also drew from years of international experience to deliver solid contractual and operational arrangements of the complex SPV structure. Through extensive discussions, simulations and thorough reviews of all project elements, we were able to support the syndicate of banks to get a better read of project risks, and successfully getting the project through their credit committees.

Assessing programme overrun risks was another key piece of work, helping frame contract arrangements for delays and extra costs; or dealing with budget overruns. We are currently overseeing construction on behalf of the lenders, providing monitoring insight into the evolution of project risks and relevant mitigation measures to implement.

Arup backed us in countless situations during negotiations with the Sponsors and effectively contributed to mitigating the technical risks and convey the transaction through, successfully, to our credit committees. ” Angelo Colombo Head of Infrastructure financing, Unicredit Bank on behalf of the Lenders

A growing network to reduce road traffic and local pollution

Milan is the second most populated city in Italy over 3M residents in the metropolitan area. The City has significantly strengthened its public transportation system over the last few years investing in two new metro lines to favour the development of rapid, sustainable and efficient commuting.

Once all five metro lines are operational, the city will have 118km of lines and 136 stations. With a 34% increase in its metro network length over ten years, Milan is to be one of the fastest growing cities in Europe for underground transport.

Once completed the new line will provide the long-awaited connection from the southern outskirts and the city airport to the city, significantly improving local air quality and journey times for local residents.