Excellence in Public Private Partnerships

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Partnerships Victoria Excellence in public private partnerships

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Published May 2017 Message from Tim Pallas MP, Treasurer of Victoria

Victoria’s 2017-18 Budget capitalises The PPP model promotes efficiency on our robust economic credentials and social and economic returns and healthy population growth. from government expenditure and Victoria has an historic $30 billion ensures value for money over the infrastructure pipeline, investing an longer term. Since the 1990s, roads, average of $9.6 billion a year over prisons, hospitals, schools and many the next four years into other projects have been procured infrastructure projects. This will by the Government working with the continue to boost our economy, private sector to build high-quality create jobs and benefit Victoria infrastructure and services, using and its people for years to come. the PPP framework. Victoria’s infrastructure pipeline is underpinned by a triple-A rating Victoria is a world-class provider of and a strong balance sheet. high-quality education, research and training and is recognised as Infrastructure is key to meeting the Australia’s Education State. challenge of population growth and Victoria’s professional services is critical to unlocking productivity sector is sophisticated, large and benefits essential for a modern growing. Victoria has considerable economy. Better infrastructure capacity in the legal, accounting, deepens markets, brings consumers management consulting, closer to businesses, and offers architectural, engineering and workers more job opportunities. technical sectors, which can benefit those active in the PPP sector. The Victorian Government is regarded as a leader in the delivery of privately financed infrastructure. As one of the early adopters of public Tim Pallas, MP private partnerships (PPPs), Victoria Treasurer continues to evolve the PPP model by fostering innovation and encouraging industry development. The Partnerships Victoria framework makes it easier to do business in Victoria and aims to reduce the cost and time taken to tender.

1 Victoria: Australia and South-East Asia’s leading destination for PPPs

Victoria: Australia’s Investing in an infrastructure powerhouse expanding economy > Victoria’s economy has grown Victoria’s economy is one of the strongly and consistently for strongest in Australia, having more than 20 years, and experienced 3.3 per cent growth in accounts for close to 25 per cent 2015-16, significantly above the of Australia’s economic activity. national average of 2.7 per cent > Investing in world-class over the same period infrastructure projects is vital for The Victorian Government is Victoria’s continuing economic investing an average of $9.6 billion development and growth. a year for four years to fund > Infrastructure investment by the productivity enhancing Victorian public sector is up to infrastructure and address $73.6 billion in capital funding in Victoria’s growing population, the 2017-18 Budget. while maintaining a strong balance > In many infrastructure projects, sheet. There is a substantial and the Government will partner with ongoing investment in core services the private sector through PPPs. such as health, education and public safety, together with significant funding for transformative projects, including the Metro Tunnel and the West Gate Tunnel Project.

Government infrastructure investment

Average GII 2007-08 to 2016-17 Average GII 2017-18 to 2020-21 ($5.6 billion) ($9.6 billion)

10.1 10.1 9.8 9.3 8.4

5.8 5.3 5.4 5.4 5.6 BILLION 5.0 4.8 4.5 4.7

2011-12 2013-14 2015-16 2017-18 2007-08 2009-10 2019-20

Source: Department of Treasury and Finance

2 Pipeline of opportunities for investing in Victoria

The Victorian Government Plans are also underway for the understands the importance, for Western Suburbs Roads Package, both the public and private sectors, which incorporates capital projects of taking a long-term view of and road maintenance. This PPP planning and prioritising new demonstrates Victoria’s track record infrastructure projects. of highly sophisticated, innovative projects that contribute to the The Government has established greater public good. Infrastructure Victoria as an independent statutory authority to provide expert advice and guide decision-making on Victoria’s infrastructure needs and priorities. The pipeline for new PPP Infrastructure Victoria recommends projects in Victoria is strong. We a 30-year infrastructure strategy, think Victoria is going to be the to inform Victorian Government most vibrant PPP market in infrastructure investment priorities. Australia over the next few years. The strategy identifies projects Compared to other worth nearly $100 billion across a jurisdictions, the Australian number of sectors including PPP market is very active. transport, education, housing, Malcolm Macintyre, health, energy, water and justice. Director, Head of Origination, This is in addition to funding Capella Capital already committed to existing infrastructure projects.

For example, the Metro Tunnel is Establishing Infrastructure the biggest public transport project Victoria shows Victoria is not in Victoria’s history. The Metro complacent. There’s a Tunnel PPP scope includes nine commitment to wanting to kilometre twin tunnels and five develop the market. new underground stations. Sandra Lee, The North East Link is a new Manager Private Markets, freeway that will complete the UniSuper missing link in Melbourne’s metropolitan ring road. The project is in the business Melbourne has the right metrics case development phase and is in place for infrastructure Victoria’s next priority road growth. It’s an expanding, project identified in Infrastructure exciting city. Relative to many Victoria’s 30‑year strategy. other jurisdictions around the The project will take trucks off local world, the government support streets and reduce congestion in environment is also quite Melbourne’s northern and eastern sophisticated. suburbs. It will provide an essential Trevor Hall, north-south connection, catering Executive General Manager for Melbourne’s future growth, while (Victoria, South Australia, linking the eastern suburbs to the Tasmania, New Zealand) northern and western suburbs John Holland Pty Ltd and the airport.

3 World leader in PPP projects

Victoria’s expertise and success in PPPs has been honed by nearly What is a public private partnership (PPP)? 20 years’ experience. The Government contracts the private sector to design, build, During that time, the State has finance and maintain infrastructure and provide services. executed 29 PPPs investing more than $15.6 billion in capital funding It is different to privatisation, with the PPP asset handed back to for major roads, hospitals, schools, government at the end of the contract period. prisons and water initiatives. High-quality infrastructure assets Payment is based on the services delivered and conditional upon such as CityLink, the Royal meeting performance standards. Children’s Hospital and the PPPs always have a private finance element, and there is clear and Melbourne Convention and enforceable risk allocation. Exhibition Centre demonstrate Victoria’s commitment to continually improve and refine its PPP framework. Victoria is a leader in terms of developing the PPP model. There is a long history in Victoria, and that means there’s a strong retained PPPs benefit Victorians through knowledge. This also means Victoria’s PPP model continues to evolve private sector design innovation, for the better. creating world-class infrastructure, and enabling and incentivising Paul Crowe, efficient and focused public Executive Director, Head of Origination, Plenary Group services. The structures embedded in PPPs incentivise the private sector to design the roads, hospitals and schools with an eye The PPP environment in Victoria supports an innovation mindset. on the long term. As a result, users Project scoping documents are articulated in terms of the benefit from assets that are well outcomes the client is looking to achieve, not in terms of how to maintained. achieve outcomes. Victoria’s experience brings a The Victorian market has matured over the years. The State gets the maturity to our relationships with balance of risk allocation right for the sustainability of the project both PPP consortia and and to ensure the right financial incentives. The breadth of projects professional advisory firms. in terms of their differing inherent characteristics, means there is a We strive to ensure our projects: recognition that the unique dimensions of individual projects are properly thought through. > are built on time and on budget; Kate Evans, > transition smoothly from the Partner PwC delivery phase into services and ongoing operations; and > benefit the community through improved service delivery.

4 Investors and other PPP participants can be confident they are operating The decision-making process in a consistent and well-supported has traditionally been the most environment. straightforward and accessible to the private sector without Victoria’s extensive experience in losing any aspect of the risk PPPs is the bedrock of Australia’s transfer and the public-sector sophisticated and comprehensive policy outcomes. framework for PPP investment: the National PPP Policy and Guidelines. John Walter, The State’s Partnerships Victoria Partner (construction), Corrs Requirements complement the Chambers Westgarth National Guidelines. This means PPP participants operating in Victoria are confident Private sector investment over individual projects are informed by a 25-year timeframe makes it the certainty of Australia-wide critical that we design and guidelines. build with a long-term mindset that incorporates redundancy, The State’s detailed Partnerships maintenance, energy Victoria Requirements gives the efficiency and efficiencies of private sector a consistent labour – this all drives a quality approach, underpinned by a outcome. commitment to reducing bid costs and negotiation time, and ensuring Our involvement in PPP transparency. projects in Victoria has enabled our business to The attractiveness and certainty sharpen its skills in applying offered by doing business in innovative thinking to design, Victoria is further supported by construction, and taking a Australia’s sound legal and bigger picture view of how governance frameworks. Australia these impact on the ongoing ranks in the top 10 countries for rule operation. of law (IMD World Competitiveness Yearbook 2016). David O’Shaughnessy, Project Director for the Australia’s strong financial services Bendigo Hospital and sector is ranked by the World Bank Royal Children’s Hospital as fourth in the world for supporting projects, Lendlease Building business efficiency (Worldwide Governance Indicators 2016).

Photographer: John Gollings

5 CASE STUDY ONE

Victorian Comprehensive Cancer Centre $1.27 billion net present cost

The Victorian Comprehensive The resulting innovative design Consortium lead Cancer Centre (VCCC) is home to solutions not only maximise Peter MacCallum Cancer Centre, collaborative potential between Plenary Group Executive Director, treating more than 30 000 patients member organisations, but have Head of Origination, Paul Crowe: a year. It is one of the most also delivered an aesthetically ‘We took some significant risks, as advanced cancer centres in the striking and uplifting facility. all bidders do, in terms of how you world, attracting recognised formulate a strategy and respond leaders in cancer research, clinical Laboratory clusters were designed to the brief. treatment, education and training. to manage expansion and linkages built between the VCCC, the Royal ‘This is a very rewarding project to The VCCC, located within Melbourne Hospital and the Royal be involved in. Being involved at the Australia’s premier biomedical and Women’s Hospital to optimise the front end gives you an opportunity research precinct in Parkville, patient-centric model of care. to deliver something that captures Melbourne, is helping consolidate the imagination of the client and Victoria’s reputation as a world The VCCC’s flexible design enables the users, while also bringing the leader in health care and research. it to host up to 1 200 cancer project together financially. researchers with more than The VCCC was delivered on time The VCCC brings together Australia’s 25 000 square metres of dedicated and to program, and the feedback leading cancer treatment and research space for Peter we have received has been research organisations, including: MacCallum Cancer Centre, very positive.’ Melbourne Health, and the > the Peter MacCallum University of Melbourne. Cancer Centre; The facilities will be home to the User > Melbourne Health (through largest cancer immunotherapy According to Professor Sean the Royal Melbourne Hospital); laboratory in the southern Grimmond, the Bertalli Chair in > the University of Melbourne; hemisphere, involving researchers Cancer Medicine and Director, the from the Peter McCallum Cancer > the Walter and Eliza Hall Institute University of Melbourne Centre for Centre, the Peter Doherty Institute of Medical Research; Cancer Research, located in the and the University of Melbourne. VCCC: ‘The VCCC provides an > the Royal Women’s Hospital; opportunity to pioneer new > the Royal Children’s Hospital; techniques and research and build Partners > Western Health; new partnerships between a > St Vincent’s Hospital Melbourne The Plenary Health consortium is community of world-leading (including St Vincent’s Institute); responsible for the design, research and clinical experts.’ construction, finance and ongoing > Austin Health (including the maintenance of the majority of the Olivia Newton-John Cancer VCCC facilities over the 25-year Research Institute and Austin contract term. LifeSciences); and > the Murdoch Childrens The lead parties within Plenary Research Institute. Health are Plenary Group as sponsor and investor, the The commitment by the consortium Grocon/PCL joint venture as the to build a world-class facility that builder, and Honeywell as the meets the needs of patients, facilities manager. The architectural clinicians, researchers and staff design team was led by DesignInc, was underpinned by the Silver Thomas Hanley and McBride stakeholder engagement process Charles Ryan. Equity investors in early in the design phase. the project are Plenary Group, investment vehicles owned by UniSuper and investment vehicles advised by Partners Group.

6 Facility operator Peter MacCallum’s Chief Operating Officer, Felicity Topp believes PPPs with their long-term maintenance obligations, are an excellent option for greenfield site hospitals. ‘The builders were really invested in the longevity and design of the building and fully engaged with staff and clinicians, which has delivered a world-class outcome. The clinicians working in the building were involved at the very beginning of the project. Their input was incorporated into final designs, and this has had a really positive impact on their working environment and patient care. ‘We know that hospitals degrade relatively quickly, and that it’s difficult to dedicate capital funds to maintenance requirements when prioritising other budget commitments. Ongoing payments through service level agreements with agreed KPIs takes care of this, which is key to the hospital retaining its newness. ‘Honeywell has been with us from the beginning of the project, and, as a result, we are able to build on our strong relationships and knowledge base as we transition into the operational phase of the PPP. It’s like a 25-year marriage.’

7 Private sector capability – well positioned for the international PPP marketplace

Victoria’s early leadership in PPPs With nearly 20 years’ experience, and our commitment to evolving Victoria knows when projects are Victoria very early in the piece and improving the model through suitable for the PPP model, and just adopted a mature response to shared experience has been the as importantly, when they are not. PPPs as a commercial incubator for a growing and transaction. Their view on sophisticated private sector, This is a competitive strength as delivery of infrastructure is ready to apply their skills in the the upfront rigour applied to PPP commercial not ideological. international PPP marketplace. decision making can have a direct Value for money, clear correlation to the project’s eventual guidelines and supporting In Victoria, bidders are encouraged success: a principal objective of commercial capability and supported through the PPP both government and private underpin Victoria’s approach. process to be forward thinking sector partners. Victoria uses the and innovative, and to deliver appropriate form of contract for Victoria has been a stand out value‑for‑money outcomes at the appropriate circumstances and in supporting a culture of the same time. recognises that risk transfer should excellence for companies like be optimised, not maximised. us. Our people who have A number of Australian companies advised on PPP projects in involved in complex and significant The competitive environment Victoria and across Australia PPP projects in Victoria are already encouraged by the Victorian are taking their skills into the active in overseas markets, Government provides Australian- international market, including Transurban, Lendlease, based companies with an particularly into Asia. Macquarie Group and a number of appreciation of the benefits of a superannuation funds such as the partnership approach attuned to Darrin Grimsey, Future Fund, IFM, Australian Super, the long-term success of an Lead Client Service Partner, UniSuper and Hastings Fund infrastructure project. Ernst & Young Management. This translates to a competitive Victoria has clearly defined rules of advantage in exporting skills in PPP engagement, and clarity of focus of projects in international markets. Australia’s advanced PPP a PPP as a commercial transaction. market has resulted in a Victoria’s PPP skills base is further capability for delivering PPP We understand the difference supported by capability-building projects that is highly sought between privatisation and PPP initiatives such as the University of after domestically and projects and don’t confuse the two. Melbourne’s Public Private internationally. Our PPP Partnerships Leadership Program. specialists have a real A key to the success of perspective on first principles. infrastructure in Victoria is the The course is designed for detailed business planning process professionals involved in all aspects This gives them an undertaken before any project, be of bidding for, planning and understanding of the it a PPP or other delivery model, is realising PPP projects, and is closely fundamentals in working on a approved to move to the bid phase. linked to the Partnerships Victoria successful PPP project framework. anywhere, they are able to negotiate outcomes that work for the client and are appropriate for the transaction. Sammy Isreb, Division Director, Macquarie Capital

8 Global market participants in Victorian PPPs

Europe Asia Examples include: Examples include: CCC International Holdings North America Acciona, Amber, Ferrovial, Limited, CRRC, HSBC, Bank of Examples include: Ghella, InfraRed Capital China, United Overseas Bank, CDPQ, Honeywell, GEO Group, Partners, John Laing, Salini ITOCHU, Bank of Tokyo PCL Constructors Impregilo, Siemens, Bougyes, Mitsubishi UFJ, MTR Partners Group, Credit Corporation, Mizuho Agricole CIB, Natixis Corporate Bank

9 CASE STUDY TWO

Peninsula Link $849 million net present cost

The $849 million Peninsula Link is a > S ocial amenity 27-kilometre toll-free road between The project enhances the amenity Carrum Downs and Mount Martha, of the corridor through high which significantly reduces quality urban design, noise congestion on key traffic routes in attenuation solutions and socially Frankston and the Mornington sensitive construction and Peninsula, particularly during operations management; and peak periods. The link enables > V alue for money commuters to avoid eight The project delivers value for signalised intersections and five money for the State and road roundabouts on the Frankston users through innovative design, Freeway and Moorooduc Highway. optimum risk allocation between The result is that users benefit from the project parties and a whole material travel time savings, by up of life approach to the design to 40 minutes. and operation of the road. Other benefits of the Peninsula Link project include: Partners > Ensuring an integrated The Southern Way consortium transport network, by is responsible for the design, – improving freight and construction , finance and ongoing commercial vehicle access maintenance of the roadway over within the corridor; the 25-year contract term. – delivering related traffic The lead parties within the information systems; Southern Way are Abigroup – integrating the project with Contractors Pty Ltd (construction); the existing surrounding Lendlease Services (operations and transport network; maintenance); Plenary Group (asset – providing flexibility to improve manager); AMP Capital Investors public transport services both Clients and Whitehelm Capital within the project and on the Clients (equity partners). surrounding transport network; and Asset manager – retaining flexibility for future enhancement of the ‘The PPP provides great value for Peninsula Link. taxpayers and road users, due to our stringent maintenance and > Environmental sustainability safety regime. We have a 24/7 The project preserves and, responsibility for making sure traffic where possible, enhances the moves as safely and effectively as local environment while adhering possible, we are responsible for all to applicable government laws, landscaping and conservation, and guidelines and standards we partner with a local sculpture concerning environmental gallery to provide a rotating series protection (including noise, of public artworks alongside the water and air quality); freeway,’ Kylie O’Halloran, Senior Asset Manager, Plenary Group.

10 11 12 Openness to innovative financing and readiness to adapt to the market

Preparedness to support innovative financing solutions has played an In our view Victoria has always been a leading party in the PPP sector. important role in the evolution and We have been impressed by the commercial approach to PPPs in success of Victoria’s PPP program. Victoria, which has always been first class. Victoria has responded to Victoria’s engagement with construction parties, financiers and significant shifts in the way global operators in the private sector, through the market sounding process financial markets generate private has always been very positive. sector financing for PPP projects. Martyn Jackson, The global financial crisis, for Amber Infrastructure example, had a significant impact on changing the landscape for PPP financiers; long-term bond financing was replaced with At the height of the global financial crisis, Victoria’s $5.7 billion Victorian relatively short-term bank debt (five desalination plant was the largest and most complex PPP project to seven years). globally. You could ask how it was able to be successfully delivered when projects were falling over left and right all around the world. This type of financing model provides opportunities to secondary The answer was two-fold: Victoria had a track record in delivering PPPs. market investors interested in taking And just as importantly, the PPP was structured so that every a longer term position in PPP encouragement was given to provide the private sector with the projects once the lower risk confidence to come up with the financing including acting as a last operational phase has commenced. resort source of financial support. I think the flexibility shown by This often coincides with the first Victoria in dealing with the difficult PPP circumstances is a real refinancing for the project. market strength. Notwithstanding, there are signs that John Walter, the financial market’s appetite for Partner (construction), Corrs Chambers Westgarth longer term financing is gradually returning to the Victorian PPP market. The Victorian Government has supported private sector alternative financing solutions that offer value to the State. In Victoria, we are not prescriptive: we look to the private sector to put together the finance solutions. The Victorian Government’s commitment to a successful outcome has also played a pivotal role in providing market confidence to invest in difficult times. The State’s commitment demonstrates its understanding of how markets operate and the importance of flexibility and quick action to adapt when required.

13 CASE STUDY THREE

Melbourne Convention and Exhibition Centre $515 million net present cost

The Melbourne Convention and At the 2016 World Travel Awards, Partners Exhibition Centre (MCEC) is an MCEC was voted Australasia’s example of the flexibility of ongoing Leading Meetings and Conference The Plenary Conventions consortium arrangements that are a part and Destination. The number of events is responsible for the design, parcel of the PPP environment in held at MCEC continues to grow with construction, finance and ongoing Victoria. The project is a prime 980 events being hosted during maintenance of MCEC over the example of value creation. The new 2015-16, delivering an economic 25‑year contract term. convention space was complemented benefit of $959.4 million to the The lead parties within Plenary with neighbouring commercial Victorian economy. Conventions were Plenary Group as development opportunities (retail, sponsor and investor, Multiplex office, hotel, residential), the value of Expansion flexibility Group as builder and facilities which offset the upfront cost to the manager, Austexx (commercial State of the MCEC. In 2015-16, the Victorian Government precinct developer) and NH committed an additional $205 million The new convention centre opened in Architects/Woods Bagot/Larry for a 20 000 square metre expansion 2009 and the 25-year contract Oltmanns (architects and designers). of MCEC, which will add nearly includes the facility management of The MCEC expansion is being built 9 000 square metres of flexible, both the convention centre and by Probuild Constructions and multi-purpose event spaces. existing exhibition centre. Events are maintained by Brookfield Global Integrated Solutions. managed by the Melbourne The project shows the benefits of Convention and Exhibition Trust. introducing flexibility into the masterplan and the importance of The State contributed $370 million Consortium lead, equity complementary facilities, such as a toward constructing the convention investor and project manager hotel and other commercial activities. centre, and the remaining commercial It is also a good example of how a According to Plenary Group’s development was financed privately. successful PPP project can offer Executive Director, Origination, The City of Melbourne contributed an significant expansion opportunities. Paul Crowe: ‘The MCEC project is additional $43 million for municipal an example of the benefits gained works around the precinct. And as from introducing flexibility into a part of the PPP arrangements, the master plan that recognises the State received $93.2 million from the importance of inter-related assets, Plenary Group for development rights such as a hotel and other of the precinct. A subsidiary of the commercial activities.’ group, Austexx Plenary Melbourne, received a 99-year leasehold for the commercial areas, and a 25-year leasehold for land relating to the MCEC.

14 User Speaking about the project’s PPP partners, MCEC’s Chief Executive Officer, Peter King said: ‘We are like-minded in the way we see the event world. The PPP arrangements allows MCEC to focus on our core business and what we do best. Having long-terms partners has also meant that our Stage Two build, which was originally contemplated as a simple extension of exhibition space, is being designed architecturally in a way that complements the existing convention centre.’ With regard to MCEC’s ongoing facilities management: ‘The venue looks wonderful, especially considering that we hold about 1 000 events and move around 2.5 million people through the centre every year, and it’s already nine years old.’

Client Contract Manager, Karen Pepperell, Department of Economic Development, Jobs, Transport and Resources: ‘In my mind there is no doubt that on the asset management side, things are being done well. The processes are a lot more rigorous within a PPP arrangement and as a result, the centre is well-maintained with asset replacement planned for the duration of the contract.’

15 Partnership approach achieves long-term community benefits

The Victorian Government supports PPPs because they are proven to The guiding principles that provided direction for the building of our innovate and benefit communities. school was that it should be perceived as a hub for the community. This thinking delivered a facility with an adjacent early childhood Government selects a PPP model centre. The facility was also constructed with its very own wetlands to based on a comprehensive analysis support a strong focus on sustainability and environmental in a business case. The PPP tender education programs. process is conducted to encourage potential bidders to innovate to Frank Vetere, create additional benefits for the Principal, Point Cook Prep to Year 9 community. PPP projects are ideally positioned to deliver community benefits, with Because the clinicians and staff were so involved in the design numerous partners (including process, the Royal Children’s Hospital was built to reflect the everyday architects, builders, financiers, and needs of the staff and patients. The children that come here need an facility managers) collaborating in open and friendly environment and that was uppermost in our minds a competitive environment that when designing and building the hospital. encourages a holistic view, beyond merely building a piece of Martyn Jackson, infrastructure. Amber Australia Additional outcomes benefiting the community include: Our patient surveys clearly show they are appreciating the hospital > associated child care, conference environment and the way it is being maintained. centre and hotel at Bendigo Hospital, and at the Royal Felicity Topp , Children’s Hospital associated Chief Operations Officer, Peter MacCallum Cancer Centre child care, retail, and community programs; > early learning centres, community hubs at multiple schools sites as well as learn-to-swim pools at two schools; and > bike paths and improved public transport interchanges as part of the Peninsula Link and EastLink road projects. Under ongoing PPP arrangements, system upgrades and repairs enable the introduction of new technology, which helps ensure infrastructure retains its currency. This is particularly important for PPP projects such as roads, schools and hospitals. In major commercial projects, such as the new Melbourne Convention and Exhibition Centre, the PPP involves the provision of hotel accommodation and commercial business operations, which provide additional economic benefits to the State through job creation and tourism.

16 17 CASE STUDY FOUR

New Schools PPP projects $750 million net present cost

The Victorian Government has built Partners User more than 25 new primary and secondary schools using the PPP The Axiom consortium is Frank Vetere, Point Cook Prep to procurement approach (invested responsible for the design, Year 9 College: $255 million in 2008 and construction, finance, and ongoing ‘The PPP approach has enabled me $495 million in 2015). Located maintenance of eleven new schools to focus on my core business, which across Victoria’s metropolitan and procured in 2008. The consortium is teaching and learning, and not regional growth areas, the new comprises AMP Capital as equity have to focus energy around schools address high population owner and SPV manager, Abigroup building infrastructure and growth and enrolment demand. as builder, Cushman & Wakefield as maintenance. Our students have facilities manager, Hayball and daily access to wetlands, which has To ensure the design and approach Gray Puksand as architect and been built into our environmental to building a school is linked to YMCA as community partner. studies curriculum, and has supporting better educational amazing features. outcomes, school principals and The Learning Communities Victoria communities are consulted to input consortium is responsible for the ‘Our partnership with the YMCA, for into the development of a set of design, construction, finance and example, is allowing us to provide guiding principles for each school. ongoing maintenance of 15 new child care facilities onsite as well as These guiding principles underpin schools procured in 2015. run our Middle Years outdoor the schools’ design and build. The consortium comprises Amber education program.’ as sponsor and SPV manager, One of the many schools to benefit INPP as equity investor, from the PPP approach is Point ClarkeHopkinsClarke as architect, Consortium lead Cook’s Prep to Year 9 College, which Watpac as builder, Spotless as Martyn Jackson, is located in one of Australia’s facilities manager and YMCA and Amber Infrastructure: fastest growing municipalities. CERES as community partners. ‘We have responsibility for the delivery of the project through the For Point Cook’s Prep to Year 9 Client design development, construction College, a guiding principle was and operating phases for the term that the school should be viewed as Andrew Major, Department of of the agreement. To meet this a community hub and provide Education and Training: obligation we look to actively access to community partnerships ‘We have a structured and engage with the State and make during and after school hours. The methodical process for assessing the sure our delivery and operational PPP solution delivered a child care quality of PPP proposals. This helps teams have the skills and resources centre through a partnership with give us transparency around outlay necessary for each of these phases. the YMCA, which is linked into the and risk, and all parties involved school’s transition to Prep program. understand their obligations. ‘It’s important to maintain the From an educational and student partnership in PPPs and in our perspective, the YMCA partnership ‘The PPP process allows a critical experience Victoria has a good was also extended to run the mass to be brought to bear, so that approach to the partnership school’s environmental programs. one-off design gains are able to be concept, this is partly because of spread across a number of sites. the quality of the people they commit to the projects.’ ‘There are also no lumpy unexpected surprises for school principals. There are clear standards that have been set in place, and the Education Department has a robust team approach to holding the private provider to account.’

18 Partnerships Victoria: Victoria’s first point of contact for PPPs

The Victorian Government is For bidding consortia, this helps committed to PPPs that promote provide confidence and certainty Partnerships Victoria’s efficiency and provide value for that they understand the experience is generated from a money, as well as social and requirements. It also helps facilitate 20-year consistent pipeline of economic returns from quality responses from PPP projects. We work closely government expenditure. bidding consortia. with government project teams and seek the views of private This commitment by the Victorian The Partnerships Victoria sector proponents up-front to Government is underpinned by framework provides the private structure projects efficiently. support from Partnerships Victoria sector with clear policy and And we don’t forget about and helps explain why Victoria has guidelines underpinned by a monitoring long-term such a long and successful history number of whole of government performance. Partnerships in PPP projects. infrastructure policies. Victoria welcomes the The experienced Partnerships Templates to facilitate the bidding opportunity to learn from Victoria team in Victoria’s process are available to make it others to ensure Victoria’s PPP Department of Treasury and easier for the private sector to model is leading practice. Finance has a central coordination, participate. Standard expression of Jason Loos, advisory and facilitation role in interest, request for tender and Director, Partnerships Victoria managing the tender process. The base contract documents are team also advises Victoria’s helping reduce bid costs, while Treasurer, who presides over the increasing certainty and The government team is open State’s PPP policy and approves transparency for PPP participants to engagement, and this helps key PPP project milestones. and investors. bidders seek verifications and The Partnerships Victoria team From the Victorian Government’s understand the project risks also serves as a conduit for view point: a well-run tender better. The approach yields communication between the process means greater better results for government private sector and government. contestability, which has a direct and for bidders. Victoria is a impact on value for money and clear market leader in this area. Because of its extensive PPP infrastructure quality. Paul Crowe, delivery experience, the Executive Director, Head of Partnerships Victoria team is well Recognising that long-term Origination, Plenary Group placed to provide expert guidance partnerships are critical to PPP to government agencies to ensure success, Partnerships Victoria is their requirements are developed also responsible for ensuring PPP recognising private sector contract managers undertake PPP The State and the bureaucracy perspectives. training. The training covers the know what to do, and have got a technical skills required to manage track record. That’s very Partnerships Victoria also works a PPP project (e.g. performance comforting. Like all of us, we know closely with the private sector to monitoring), as well as important the State has had good communicate public sector behavioural skills such as dispute experiences and bad requirements. The interactive resolution and negotiation. experiences. This is important tender process clarifies tender because you want to know you document requirements are partnering with a government throughout the bid phase. or entity that can deal with challenges and stay the course. Kent Robbins, Head of Property and Private Markets, UniSuper

19 Further information

Further information, including in relation to current and upcoming projects and opportunities can be found at: > www.dtf.vic.gov.au/Infrastructure-Delivery/Public-private-partnerships > www.budget.vic.gov.au/ > www.dtf.vic.gov.au/Publications/Infrastructure-Delivery-publications/ Partnerships-Victoria/Partnerships-Victoria-Requirements > www.infrastructure.gov.au/infrastructure/ngpd/index.aspx > www.business.vic.gov.au/export/meet-the-international-vgbo-trade- team > www.nics.gov.au/ > www.infrastructurepipeline.org/ Contact us: [email protected]

20 Partnerships Victoria Project Project cost Project status (year of contract execution) (net present cost as at as at May 2017 contract execution, $ million) CityLink-Tulla widening (2015) 872 Under construction High Capacity Metro Trains (2016) 2 343 Under construction New Schools PPP (2015) 495 Under construction Ravenhall Prison (2014) 2 529 Under construction Ballarat North Water Reclamation Project (2006) 52 In operation Barwon Water Biosolids Management Project (2007) 78 In operation Bendigo Hospital (2013) 1 110 In operation Biosciences Research Centre project / AgriBio (2009) 288 In operation Campaspe Water Reclamation Scheme (2002) 51 In operation Casey Community Hospital (2002) 120 In operation County Court (2000) 195 In operation Desalination Plant (2009) 5 720 In operation Eastlink (2004) 2 500 In operation Fulham Correctional Centre Extension (1997, 2015) 593 In operation Hopkins Correctional Centre (2010) 394 In operation Melbourne Convention and Exhibition Centre (2004) 515 In operation Metropolitan Mobile Radio (2004) 120 In operation Mobile Data Network (2003) 140 In operation Partnerships Victoria in Schools (2008) 255 In operation Peninsula Link Project (2010) 849 In operation Port Phillip Prison Extension (1997, 2015) 1 831 In operation Royal Children's Hospital (2007) 946 In operation Royal Melbourne Showgrounds (2005) 101 In operation Royal Women's Hospital (2005) 365 In operation Southern Cross Station (2002) 309 In operation Victorian Comprehensive Cancer Centre (2011) 1 278 In operation Victorian Correctional Facilities (2004) 275 In operation Emergency Alerting System (2004) 100 Completed Wodonga Wastewater Treatment Plant (2001) 32 Completed