I imagine your admin fees are based on a percentage of what you pay, rather than a fixed amount.
Put it this way:
If you do the full IVA, with an extension in lieu of equity release, you would be contributing 72 x 218 = 15696 plus the ppi of 5500 (was this net of claims fees?), so they will be getting 21196 (assuming no increase in monthly payments), less 15% fees (we will ignore nominees fees, as these will be the same in each case) = £18016.
If they accept the current offer of 5000 in full and final, they will be getting 12 x 218 paid so far = 2616, plus ppi at 5500 (same assumptions as above), plus your offer of 5000. This comes to 13116, less the fees, as above, at 15% = £11148.
Which would you go for ? For them to take a loss of a further 6868 they would need a compelling reason, which would threaten their chances of getting the full amount under the current terms (long term illness, loss of job sort of thing).
I imagine they'd take a smaller offer than the £11686 required to bring them to the amount they now expect, on the basis that a lump now is better than dribs and drabs over the next 5 years. It would depend upon how robustly your IP presents the offer.
My opinions are merely that .. opinions based on experience. Always seek professional advice.
IVA Completed 23rd July 2013 .... C.C. 10th January 2014