The Victorian Government has received bids from consortia for an “Australian first” Public Private Partnership (PPP); watched closely by other jurisdictions in Australia, New Zealand and Asia Pacific who are keen to examine the outcome for appropriate risk transfer and value for money.
The Outer Suburban Roads (Western Package) PPP will see the upgrade of approximately 800 kilometres of arterial and local roads in the western suburbs of metropolitan Melbourne, and their maintenance over a 20-year concession period. This “availability based” PPP model has been employed in the UK, but it is understood this is the first time the bundling of multiple roads across a wide network with road widening, rehabilitation, safety upgrades and long term maintenance responsibilities, within a single privately financed project, has been undertaken in Australia.
Aquenta was engaged to prepare an Independent Technical Advisor Report as part of the first stage of works. The report examines the technical elements of the bid including the capability of contractors, the design solution, construction methodology, maintenance / lifecycle methodology, building and maintenance costs, internal consortium contract structure, replacement contractor analysis and the payment mechanism.
The scope of the capital works (road widening, structures improvements, pavement rehabilitation and ongoing lifecycle and reactive maintenance) is similar to the periodic upgrades and maintenance carried out traditionally by VicRoads, subject to available periodic funding. By bundling the scope into one PPP contract, the State is committing to:
- Allocating delivery responsibilities to the successful private sector consortium.
- Seeking coordination of construction and maintenance works to minimise traffic disruption.
- Paying for the works via a regular service payment over the concession period.
- Establishing a strong incentive to maintain the assets as Service payments will be subject to the maintenance of the road network to prescribed measurable performance standards.
- Obtaining the handback of the road network at the end of the concession term at specified level of quality.
- Receiving an incident response services in close collaboration with VicRoads ongoing network management role.
- Encouraging the application of new technologies across pavement and structures performance monitoring and management, construction methodology (including traffic management during construction), stakeholder communications and incident response.
- Mandating commitments to minimum Local Content, Apprentice employment and Indigenous employment levels.
The project is being undertaken by the Victorian Government’s “Partnerships Victoria” policy. It’s anticipated that upon the successful award of the project, two other geographical packages of work may be undertaken (subject to State funding commitments) under the same PPP model, in Melbourne’s south east and northern suburbs.
Whilst the outcome of the consortia submissions may or may not be judged to meet the State’s project objectives, including value for money, there is evidence the industry has responded positively to taking long term road upgrade and maintenance responsibilities and have developed innovative construction, asset condition measurement and incident response solutions to achieve a vastly improved road network.
James Mitchell is considered a trailblazer in PPP industry circles, having been part of the early industry response to the modern Public Private Partnership (PPP) model for delivering major works in Australia. James is based in our Melbourne office.