BT set to outsource care of 8,500 buildings

BT is to outsource the management of more than 8,500 of its buildings to a consortium led by Carillion, the building services group, in the UK's biggest private-sector facilities management contract.

The deal is worth more than £500m, over five years. Carillion has 51 per cent of the services consortium, with 24.5 per cent taken each by a subsidiary of Balfour Beatty - the former BICC - and Reliance Integrated Services, a security group.

The deal will be closely watched by other large corporate property occupiers. Over recent years, there has been a move towards outsourcing property, enabling businesses to concentrate on their core activities.

Many large companies, such as ICL and JP Morgan, have tried to put together a Private Finance Initiative-inspired deal, which would also involve the transfer of ownership of the premises to property specialists. Consortia, such as Trllium, which is backed by Goldman Sachs, have promoted such deals, modelled on the government's outsourcing of parts of its enormous property portfolio. However, these deals have proved difficult to negotiate in the private sector.

The BT deal announced yesterday provides a simpler model to PFI-style contracts, as the property will remain in BT's ownership.

Some 4,000 people will work on the contract, including BT employees currently looking after these buildings, who transfer to the consortium.

The services provided by the consortium will range from cleaning and catering to maintenance of the fabric of buildings and external ground maintenance. The buildings involved include large offices, computer centres, research centres, telephone engineering centres, motor transport workshops and telephone exchanges.

Both Balfour Beatty and Carillion have sought to move away, increasingly, from their original activity of construction. Facilities management work offers steadier income, less risk and - in theory - a higher rating from the City.

Balfour Beatty shares ended 0.5p higher at 79p, while Carillion closed 2p lower at 103p