Balfour wins deal to construct a £553m university hospital in Birmingham

Consort Healthcare, Balfour Beatty's PPP/PFI healthcare vehicle, has reached a financial agreement for the construction of a new university hospital in south Birmingham.

Balfour's chief executive, Ian Tyler said: "We are delighted to reach financial close on this very substantial project which will relocate most of south Birmingham's key medical facilities to a single, state-of-the-art site."

Consort will design, construct, finance, maintain and manage the lifecycle replacement of the new £553m Birmingham Acute and Adult Psychiatric Hospitals for the University Hospital Birmingham NHS Foundation Trust and the Birmingham and Solihull Mental Health NHS Trust.

The company will aim to build a new acute hospital with capacity of 1,213 beds, a 108-bed specialist psychiatric hospital and teaching facility and a separate 32 bedded mental health local facility in Sparkbrook. It is central to the reconfiguration of hospital services and the improvement of clinical facilities in Birmingham.

The mental health facilities will open in 2008 with the first phase of the main acute hospital expected to complete by 2010. The remainder of the new build acute facilities are scheduled to come on stream in 2011.

Balfour's partners for the scheme are the Royal Bank of Scotland and HSBC. The construction work, which has been underway for some time, is being carried out by a joint venture between Balfour Beatty Construction and Haden Young, the building services arm of the Balfour Beatty Group.

The deal will reinforce Balfour leading position in the UK PPP healthcare market. The international engineering construction and services group is reported to be contributing £23m of equity to the Birmingham project.