He may wonder why on earth a sailor was put in charge of the Ministry of Defence's £15.3bn estate, but vice admiral Peter Dunt has attacked the job with military precision. He talked to Mark Leftly about PFI, budget cuts and how he got the job

"It's strange, isn't it?" ponders a former civil servant, shaking his head. "Putting a sailor in charge of estates …"

That sailor is vice admiral Peter Dunt, the chief executive of the Ministry of Defence's property arm, Defence Estates. He has been in the Royal Navy since 1965, having followed his brother into the service when just 18 years old, envious that he "was having such a great time". His brother also reached the exalted position of vice admiral before retiring five years ago. Dunt is clearly of impressive stock, then, but he echoes the former civil servant's concerns: "Why on earth is an admiral doing this?" he smiles.

It's a good question. A £15.3bn estate, which needs constant maintenance and a complete revamp, including the construction of modern buildings and the disposal of excess estate to the tune of £250m a year, is quite a responsibility for someone without an obvious built environment background. But over the course of the interview, the articulate Dunt goes some way to showing why his peers on the Public Sector Construction Clients Forum, set up last month to improve procurement on their building programmes, have been so impressed by him. "He's good," says one.

"He's extremely passionate about the issues."

Dunt needs these attributes in what could prove a difficult year. A decision needs to be made on whether to continue with the Bovis Lend Lease-Babcock Debut consortium for the second phase of the single living accommodation project when the £1bn first phase draws to a close in 2008; pressure is growing on the use of PFI following scares and delays in hospital projects; and Defence Estates may have its budget cut as the government switches money to building missiles rather than office and residential blocks.

vice admiral Peter Dunt

vice admiral Peter Dunt

Giving the order

The single living accommodation project, or Project SLAM, was the biggest construction deal signed in 2002. The five-year contract charged Bovis Lend Lease and Babcock with providing the MoD with 10,000 new bed spaces by 2008. At £1bn it is highly lucrative, but there is another prize in sight: phase two, which will also last five years. Dunt says that Defence Estates will decide whether to continue with the Debut consortium in the spring, when the evaluation process will be complete.

At times it seems Dunt is certain to grant Debut an extended contract, lauding it for "delivering to time, cost and quality and getting very positive feedback indeed". But he warns: "There are lots of others delivering this sort of accommodation, such as Mansell, Carillion, Mowlem and Henry Brothers in Northern Ireland."

Dunt is a very exacting man, and it is easy to imagine that he would not tolerate any negative assessments that the evaluation process might throw at Debut. His love of precision is illustrated by the pinboard in his London office - his main location is Defence Estates headquarters in Solihull in the West Midlands - which for the past two years has had just a single sheet of A4 attached to it.

In just a few lines, it details the entire programme for Defence Estates' regional prime contracts, which divide the UK into five regions with the winning contractors responsible for planning, cost control and E E subcontractor selection. The final prime, which was worth £500m, was signed in November, just two weeks behind schedule: "Hugely unusual for a contract this size," he beams.

"Time" is clearly the criteria above all others on which Dunt judges his contractors. If this is the case, Sir Robert McAlpine would almost certainly be a current favourite for its work on the £2bn Colchester Garrison PFI. Strictly speaking, this is not a Defence Estates contract, since the bidding process for it started prior to the agency's formation in 2002 and it remained an army project. But Dunt is regularly updated on the project as the MoD's property supremo and is obviously impressed, letting slip that he has been told that the first phase is likely to be ready in May, nearly six months early.

The problems with NHS trusts have not made me at all frightened of PFI. We will use it where appropriate

The Sir Robert McAlpine consortium, which includes Atkins and Sodexho, is a little more wary, with one source warning that with more than 70 buildings in the first tranche of work, there could still be problems that push it closer to November's deadline: "Something a little bit wrong might take a while to turn right."

More damningly, the source is bemused by why the project was not transferred to Defence Estates when it was formed: "The MoD is a funny organisation. While Defence Estates looks after estates generally, this project is driven by the operational unit."

RMA Sandhurst in Camberley, Surrey, built as part of Project SLAM, the £1bn single living accommodation scheme

RMA Sandhurst in Camberley, Surrey, built as part of Project SLAM, the £1bn single living accommodation scheme

Holding fire on PFI

Despite his enthusiasm for Colchester Garrison, Dunt's name is often associated with a reticence to use PFI - the procurement route has not been used on SLAM or the regional prime contracts. He insists that he has been misquoted on the issue: "I've not been critical of PFI at all. Aquatrine [Defence Estates' £2.5bn utilities PFI, divided among leading water companies] has been very successful, to time and to budget. As for the problems with NHS trusts, they have not made me at all frightened of PFI. We will use it where appropriate."

Some doubt his support of PFI. At the end of last year, Dunt launched two suppliers' associations. One was for those involved in the utilities contracts, the other for major contractors involved in SLAM, the regional prime contracts and a third contract, prime housing. But no PFI construction companies are included - which is telling, given how Dunt raves about the results: "Look at the water companies. They're now talking to each other and are writing letters to me signed by all three rather than writing individually, which is quite a breakthrough."

Dunt's defence for not including PFI contractors on the associations is not entirely convincing: "We had to be selective from the outset and keep the groups at a reasonable size. We've got to get it working first before we broaden it out - there's no intention to exclude. Bear in mind that a lot of the PFI contractors are involved in the other contracts, such as Mowlem."

Mowlem - or Carillion, as it is in the throes of being bought out by that company - has a package of work for a prime contractor and is preferred bidder on the £5bn Allenby and Connaught army barracks PFI. This contract certainly has not been a good advertisement for the procurement method. Already running massively late, the expected signing by Christmas was missed and Dunt believes it will now reach financial close in the spring: "There were difficulties placing the bond. If you miss the Christmas bracket, this delays you further. It is quite a complex PFI."

Again, having started prior to the formation of Defence Estates, it is run by the army. Either way, though, it is unlikely to have impressed a time-conscious admiral who perhaps harbours more doubts over PFI than he suggests.

Finally, Dunt ponders the changing priorities of the government. As terrorism and wars involving Western countries are on the increase, so too might be the need for new missiles. In which case, Defence Estates' budget would almost certainly be cut. Dunt's response would be robust: "Now that we have this one agency, which is to champion estates, the department will be aware of the consequences of not funding problems surrounding its property. If cuts do happen then we will not be able to improve the estate."

Behind him on a bookshelf sits The Utility of Force: The Art of War in the Modern World by General Sir Rupert Smith. It is not hard to imagine Dunt using lessons from that book if the MoD erodes his empire.

The plan of attack

Much of the MoD’s building stock is old and very inefficient in terms of energy use. What is Defence Estates’ plan for tackling this?
I want all five regional prime contractors to work together to see how they can use energy more efficiently
across the estate. The suppliers’ associations are quite specifically looking at this. We will have targets, but it is unrealistic to expect them until the end of this year in time for the next financial year.

Will the suppliers associations work together?
The UK is divided into three water packages – Project Aquatrine – and then five regional prime contracts so there are geographic crossovers. There are instances where they’re already integrating. The Aquatrine and prime contractors are meeting in March. The utilities side is vital to regional prime contracts, and vice versa.

What are the long-term plans for the estate?
It’s very difficult to tell how much we will rationalise in the next 10 to 15 years. About a quarter of the
240,000 ha we own is built estate; the rest is rural, which we need for training and testing new missiles.

How did you get this job?
Presumably everyone else who applied did something wrong. In the navy I was quite business-orientated. I managed and operated an establishment in Cornwall and was involved in the navy’s personnel area. I had a good understanding of what a soldier requires from accommodation and that has been hugely advantageous.