Yearbook 2013
Corporate & Institutional
Building infrastructure? Start with a strong foundation. When it comes to funding infrastructure projects, Commonwealth Bank has the kind of experience and expertise you can rely on. With a proven track record, our team of specialists has arranged over US$65 billion^ in debt facilities during the 2011/2012 financial year. To see how we can help you, contact our infrastructure team today. Call Leon Allen, Head of Institutional Banking Queensland on 07 3237 3784 or visit commbank.com.au/infrastructure
Source: Bloomberg. Australia Mandated Lead Arranger League Table. June 2011 – July 2012 (FY12). Commonwealth Bank of Australia ABN 48 123 123 124. CLA1677
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Chairman’s message
2012 saw a significant shift for the Infrastructure Association of Queensland with the retirement of our longstanding Executive Director, Paul Clauson, and welcoming Roger Black into this role. This was a significant change for the Association, and one that also accompanied our strategic review, which is now being implemented by Roger. I wish to publicly acknowledge Paul’s longstanding contribution to the Association and his tremendous contribution to the promotion of infrastructure issues in Queensland more broadly. 2012 also saw a significant shift in the Queensland political landscape that continues to play out for the development and delivery of the infrastructure challenges ahead. In addition, significant reductions in coal prices have seen substantial shifts in the pipeline for proposed new mines and mine expansion as key operators re-assess the financial viability of projects. This has seen a number of proposed projects quietly deferred or shelved, with a corresponding reduction in pressure on the delivery of associated new infrastructure. Against this backdrop, a number of key public infrastructure projects remain in the planning stages for Queensland, with ready availability of government funding being a key limiting factor. The delivery of these projects is a shared goal for the Association and for government, and we have stepped up our interactions with government to identify where we can assist and provide thought leadership. This has seen us create a strategic plan for 2013 with a focus on key infrastructure themes, which we are implementing through our IAQ forum series. These forum events will be an ongoing feature, developing interaction between key infrastructure operators, government and our members throughout 2013. The IAQ has continued its support of major research projects undertaken by the Australian Research Council, in partnership with a number of universities, covering key infrastructure themes across construction capacity and competition, multinational contractor involvement, financing, and cost of capital. The output of these projects will be released in the next few months. There has been some significant outcomes that will add to the understanding of infrastructure as a asset class as well as around the efficient delivery of infrastructure by government. It is fair to say that some of this research and the associated outputs are world firsts, and we look forward to disseminating and promoting the findings to our members throughout the remainder of 2013. 2012/13 was another successful period for functions, which are also important contributors to our financial health. We have been able to provide our members with a host of quality speakers throughout the year. The speakers we were able to engage were:
• Paul Mulder, Managing Director, Coal, Hancock Coal Pty Ltd • Paul Coughlan, Project Director, Brisbane Airport New Parallel Runway Project • Anna Carroll, Project Director, Gold Coast Rapid Transit Project • Ian Walker MP, Assistant Minister for Planning Reform • Hon Jeff Seeney MP, Deputy Premier and Minister for State Development, Infrastructure and Planning • Hon Scott Emerson MP, Minister for Transport and Main Roads • Russell Smith, Chief Executive Officer, Port of Brisbane Pty Ltd. I am pleased to report that we have continued to maintain a solid financial position, as will be reported when we release our financial year 2013 report. However, this is an ongoing challenge, as we seek to both draw on a lot of support from our membership in terms of time and input, whist seeking to ensure we retain a low membership fee structure. We can only maintain this with the continued support of our members and we continue to promote our service offerings to potential new members to ensure our ongoing financial health. Roger Black has continued leading our engagement and dialogue with other aligned industry bodies, and this is developing into collaborative efforts in planned forums and events. This is an important feature of our Association as we strive to maximise our limited resources in conjunction with other industry bodies to progress key infrastructure-related themes. I wish to thank each of the Board members for their enthusiasm and dedication to the IAQ throughout 2012/13. We saw some notable shifts in Board representation at the October 2012 AGM, and this injection of new talent has been very positive for our Association. I would also like to acknowledge the members of the Executive Sub-Committee of our Board (Deputy Chair Leon Allen, Secretary Jonathan Williams, Treasurer Renaye Peters [retired in October 2012] and our new Treasurer Stephen Hammer) for their support and assistance in developing and driving our agenda. The (new) public face and drive to the IAQ is provided by Roger Black, our Executive Director. Roger has been particularly active in meeting our members and promoting the Association to prospective members, as well as utilising his own networks to further our reach across the government and industry networks pivotal to the IAQ’s role in promoting the delivery of infrastructure in Queensland. Lorelei Broadbent of Agenda Management has also continued to provide excellent secretariat services to the IAQ throughout the year. John Corbett Chairman
Infrastructure Association of Queensland Yearbook 2013
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Contacts Peter G Butler Partner, Brisbane T +61 7 3258 6521 peter.g.butler@hsf.com
Michael Back Managing Partner, Brisbane T +61 7 3258 6611 michael.back@hsf.com
Background
Infrastructure Association of Queensland Background The Infrastructure Association of QLD (IAQ) Inc was formed in 1994 by a number of interested parties to allow private sector participants involved in the development, ownership or operation of infrastructure projects the opportunity to meet their counterparts and discuss and act upon infrastructure issues that affect the industry as a whole. Relationship with government Since its establishment, the IAQ has developed a reputation as the pivotal private sector infrastructure body in Queensland. The IAQ consults widely with the Queensland Government and the various local governments throughout Queensland on critical infrastructure policy issues. The IAQ meets with government on a regular basis to address industry and projectspecific issues. Objectives The objectives of the IAQ are to: • • • •
be a body that is representative of private sector participants in the life cycle of infrastructure and to provide positive interaction with government consult with government in relation to its guidelines and policies on private sector involvement in the provision of public infrastructure provide a forum for the dissemination and promotion of developments relating to infrastructure amongst members, government and the community and facilitate networking amongst industry participants.
Membership The IAQ’s membership is sourced from a cross-section of infrastructure-related industries committed to improving the process of infrastructure provision in Queensland. A number of members are firms that have national representation. The following industries and professions are represented within the membership: • Engineering • Public Relations and • Construction Communications • Project Management • Environment • Surveying • Health • Law • Mining and Resources • Accounting • Human Resources • Architecture Recruitment • Banking and Finance • Government-owned • Stockbroking Corporations • Statutory Bodies.
Organisations and businesses with a major interest in infrastructure or infrastructure support are invited to become members. Structure A Board, elected by the members, controls the IAQ. The Board meets on a monthly basis, and comprises: • • • • • •
Chair Deputy Chair Immediate Past Chair Secretary Treasurer Committee Members.
The Association employs a part-time Executive Director and the Secretariat attends to the administrative needs of the Association. Guest Speaker Events Regular special networking breakfasts, with guest speakers addressing infrastructure-related topics, are held regularly to ensure that the membership is kept up-to-date with the latest information on government policy, projects and financing and delivery options. During the 2012 calendar year, IAQ members enjoyed hearing the views of key industry speakers including: • Paul Mulder, Managing Director, Coal, Hancock Coal Pty Ltd • Paul Coughlan, Project Director, Brisbane Airport New Parallel Runway Project • Anna Carroll, Project Director, Gold Coast Rapid Transit Project • Ian Walker MP, Assistant Minister for Planning Reform • Hon Jeff Seeney MP, Deputy Premier and Minister for State Development, Infrastructure and Planning • Hon Scott Emerson MP, Minister for Transport and Main Roads • Russell Smith, Chief Executive Officer, Port of Brisbane Pty Ltd.
Infrastructure Association of Queensland Yearbook 2013
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Contents 1
3
Chairman’s message
61
Urban development
Background
65
Roads
Infrastructure Association of Queensland Inc (IAQ) GPO Box 2146, Brisbane, QLD 4001 Tel: (07) 3211 4686 Fax: (07) 3211 4900
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IAQ Board members
72
Sustainability
Email: admin@iaq.com.au Website: www.iaq.com.au Published by
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Best practice
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Contracts
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Infrastructure
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Funding
40
Management
96
Training
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City building
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Infrastructure Association of Queensland Yearbook 2013
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IAQ BOARD MEMBERS BANNER
Chair: John Corbett John Corbett has extensive infrastructure experience gained through 23 years working in corporate and institutional banking and project finance for ANZ Bank and Suncorp, and through the past four years as a consultant. John occupied senior executive positions in both those organisations before moving into consultancy roles, initially working with Coffey International and now through his own advisory entity, Peli Capital, where he specialises in providing financial, strategic, corporate and governance advice to clients in the infrastructure field. John’s external Board involvement includes as a Director of Hassad Australia since mid 2009 (a large Australian agricultural company owned by the Qatar Investment Authority) and as a Board member of the Urban Land Development Authority from 2010 to 2012. John is the Chair of Hassad’s Audit & Risk Committee.
Deputy Chair: Leon Allen – Commonwealth Bank Leon Allen is the Head of Institutional Banking and Markets, Queensland, for the Commonwealth Bank. The Institutional Banking and Markets (IB&M) team provides equity, debt and core banking services, including payment systems, to the group’s institutional clients. Leon joined the Commonwealth Bank in 2007 from Queensland Treasury where his policy and program experience included economic policy, state budget formulation, energy policy, major projects, government-owned corporations and asset sales. Leon was a Director on the successful $3-billion sale of state government energy assets in late 2006. His resumé includes senior positions with the Commonwealth Department of Finance, Ergon Energy, and as Senior Economic Adviser in the Office of the Premier and Minister for Trade and the Office of the Treasurer. He holds degrees from Griffith University and the Australian National University, is a member of the Institute of Company Directors and is on the Board of the Infrastructure Association of Queensland.
Secretary: Jonathon Williams – Minter Ellison Jonathon Williams is an expert infrastructure project advisor and Special Counsel at Minter Ellison Lawyers. Jonathon draws upon 17 years’ experience advising government and the private sector on major projects with expertise across construction, procurement, finance and commercial contracts for social and economic infrastructure assets. He has noted skill in the rail and transport sector, delivering an in-depth and hands-on understanding of the engineering, financial, safety and regulatory issues relevant to government and private stakeholders. Recent major projects include Sunshine Coast University Hospital PPP, QR’s new-generation passenger rolling stock project, Queensland Bus Contract Reform Project, Port of Brisbane Motorway upgrade, Gold Coast Rapid Transit PPP, Abbot Point Coal Terminal Expansions, Newcastle Coal Infrastructure Group’s coal handling terminal, Gold Coast University Hospital Car Parks PPP and the Queensland Children’s Hospital Project.
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Infrastructure Association of Queensland Yearbook 2013
IAQ BOARD MEMBERS BANNER
Treasurer: Stephen Hammer – Leighton Contractors Stephen joined Leighton Contractors with vast experience across the infrastructure industry, working across diverse roles, contracts and projects in Australia and the United Kingdom. An infrastructure delivery specialist with civil engineering and finance qualifications, Stephen brings his diverse career experience to oversee business development in the medium to long term across Leighton Contractors Northern Region’s Transport, LNG and Resource Infrastructure and Major Projects business operations. Previous roles held by Stephen include Director, Corporate Finance at Deloitte Touche Tohmatsu, Project Director of the Go Between Toll Bridge, Contracts Manager for Major Infrastructure Projects Office for Brisbane City Council, and Project Delivery Manager and Contracts Manager for the London Underground.
Immediate Past Chair: Mark Fairweather – AECOM Mark leads AECOM’s Queensland Transport Group and leads the operational aspects of AECOM’s ANZ Transportation business. He specialises in the planning and design of transport infrastructure, building on a wide range of experience in business operations, project delivery, environmental approvals processes, asset management, construction and procurement. Mark’s current focus is the planning, design and delivery of integrated transport solutions throughout Australia, Asia and Europe.
Suzy Cairney – Holding Redlich Suzy is a Partner at Holding Redlich and specialises in front-end project development, operations and outsourcing. She has a wide range of project experience gained in Australia and abroad. She advises across a number of industries with a focus on ports, water and mining. Suzy has gained valuable experience working in-house and is able to provide highly commercial advice that improves business outcomes for her clients.
Reece Edwards – BDO Reece is a Partner at BDO with more than 16 years’ experience within the project finance and economics fields of corporate finance, specialising in the infrastructure (transport, education, health and utilities) and natural resources sectors (coal, and oil and gas). He has a background in investment banking through Macquarie Group and infrastructure economics through PwC and SKM.
John Ewings – Sinclair Knight Merz John Ewings is a Senior Associate and Project Director with Sinclair Knight Merz. John has over 20 years of experience in project delivery of public asset infrastructure. John’s former role has been the QLD Civil Engineering Manager for SKM, providing technical and commercial leadership to a team of professionals delivering infrastructure projects. John’s current role involves developing the capability and service delivery of non-process infrastructure projects across the SKM group within the mining and energy sectors. John has a strong interest and focus on alternative delivery methods and funding of infrastructure in regional areas of Queensland to support sustained growth, and an established positive legacy from the resources industry. John’s background and experience from design and delivery of infrastructure to support the transport, property, defence, health, mining and energy sectors, provides a beneficial insight to the challenges encountered in regional areas. John is a Member of Engineers Australia and a Registered Professional Engineer of Queensland. 10
Infrastructure Association of Queensland Yearbook 2013
IAQ BOARD MEMBERS BANNER
Michael Hassall – CGI Consulting Michael has 15 years of experience covering a broad cross-section of infrastructure projects for both the private and public sector. Michael’s private sector roles include project management for civil construction projects for one of Australia’s leading contractors, and consulting on feasibility studies for major projects as part of a leading infrastructure advisory team. His public sector roles include contract management of London Underground’s PPP, and feasibility studies and project planning for PPP projects for the Department of State Development and the Office of the Coordinator-General. Michael’s current role is as the commercial advisor supporting the preparation of the business case and procurement implementation for the SunWater Connors River Dam Project.
Cory Heathwood – Brisbane Airport Corporation Cory joined the IAQ Board in 2011 and is currently Marketing Business Development Manager for BNE Property, the property division of Brisbane Airport Corporation. Cory is responsible for developing long-term business relationships and is actively involved in BNE Property’s business development activities, ensuring synergy with airport strategic intent, direction and master plan. He is also creating, implementing and managing innovative, professional and strategic marketing initiatives. With more than 15 years’ experience in corporate, consultancy and government, Cory is highly regarded and well-respected in providing strategic advice, government relations and issues management to leadership and management teams. Cory is also a Fellow of the Public Relations Institute of Australia.
Helen Hutchings – Phillips Group Helen is a Group Executive Director at Phillips Group and leads the firm’s infrastructure and public sector projects. She has worked on projects of a sensitive and controversial nature in both metropolitan and regional areas, including the Western Corridor Recycled Water Project, Cross City Tunnel, RG Tanna Coal Terminal in Gladstone and Legacy Way. Helen provides advice on communication strategy, stakeholder and community engagement, issues and risk management and media management. She is a member of the Public Relations Institute of Australia and the International Association of Public Participation.
Chris Lawson – Aurecon Group Chris has over thirty years’ engineering and management experience in consultancy and local government. His work has included a wide range of civil engineering including traffic, roads and highways, pavements, water and wastewater, stormwater and flooding and asset management. A past member of the Board of Professional Engineers Queensland, Chris has prepared and presented expert testimony in the Planning and Environment Court and for Crown Law. Chris is currently Brisbane Manager for the Aurecon Group of Companies, which are based in 29 countries including Australasia, Middle East and Africa. He is a Fellow of the Institute of Engineers Australia, a Registered Professional Engineers and a Member of the Australian Institute of Company Directors.
Infrastructure Association of Queensland Yearbook 2013
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IAQ BOARD MEMBERS BANNER
Shane McDowall – Flinders Group Shane is the Managing Director of Flinders Group and has over 25 years’ experience in the planning, design and construction of public and private infrastructure. Shane was previously the Queensland’s Government’s Deputy Coordinator-General overseeing projects such as the SEQWater Grid and Airport Link. Shane is also a highly successful project manager both in Australia and overseas.
John McEvoy – Everything Infrastructure John McEvoy is a past Chair of the Infrastructure Association of Queensland. He has 30 years’ experience in the delivery of major economic, social and environmental infrastructure projects across Australia, as well as in Asia and Africa. John is an invited Fellow of the institution Engineers Australia. He has pursued particular academic interests in public infrastructure, at the Mount Eliza Business School, John F Kennedy School of Government (Boston), and Harvard Business School.
Ren Neimann – Allens Ren specialises in the area of construction and infrastructure and is a member of the Projects Practice Group. Ren has a wide range of experience in drafting, negotiating and advising governments, financiers, principals and contractors on construction, engineering and infrastructure agreements and related documents. Ren advises across a number of industries and sectors, including the transport, water and resources sectors, and has acted on various infrastructure projects, including PPPs, in Australia and Asia.
Robert Simpson – Parsons Brinckerhoff Robert is General Manager of Development in Parsons Brinckerhoff’s Global Mining business, specialising in the development and delivery management of resource-industry related infrastructure. Prior to this appointment, he headed up the engineering project development and delivery group across the energy, mining and industrial markets nationally. With nearing 20 years of consulting and client experience, Robert is a registered professional engineer and a member of the Australian Institute of Company Directors.
Charlie Strick van Linschoten – Golder Associates Charlie is currently the Brisbane office Geotechnical Group Manager with Golder Associates, a global consulting, design and construction company. Prior to joining Golder, Charlie worked in a variety of technical and business development roles. Charlie has been responsible for the project management of geotechnical investigations and design for large transport and infrastructure projects throughout Queensland and overseas. These have included the Channel Tunnel Rail Link, Gateway Upgrade Project, Inner Northern Busway, Townsville Port Access Road and Nebo Rail Maintenance Facility. Charlie was also involved in the maintenance and renewal of London Underground’s earthworks asset portfolio, responsible for meeting asset condition benchmarks set out in the PPP contract. He holds a degree in Civil Engineering and a Masters in Soil Mechanics and Business Management from Imperial College, London, and is a Registered Professional Engineer of Queensland.
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Infrastructure Association of Queensland Yearbook 2013
IAQ BOARD MEMBERS BANNER
Nadeena Whitby – Lend Lease Nadeena Whitby is Lend Lease’s Communication Manager, Queensland and Northern Territory. She has led community and stakeholder engagement teams on Sunshine Coast University Hospital, Legacy Way (formerly Northern Link), Go Between Bridge and major water grid projects. Nadeena was the state’s first Independent Verifier Communication and Stakeholder on Gold Coast Rapid Transit. Nadeena has extensive experience in issues management, where she provides strategic communication advice, together with hands-on practical support.
Mark White – Ernst & Young Mark is a Partner in the Transaction Advisory Services division of Ernst & Young’s Brisbane office, and heads the Ernst & Young’s Infrastructure Advisory Services practice in Queensland. Mark has extensive experience in infrastructure advisory, leading commercial negotiations, managing and facilitating major sale transactions, project finance advice (capital structures, cost of capital, regulatory pricing), investment evaluation, valuations, project feasibility studies, financial modelling, structuring debt funding and financial investment advice.
Roger Black – Executive Director Roger’s experience includes infrastructure project analysis, business case development, procurement and procurement options analysis (including PPP and PFI, alliance and traditional procurement options), financial modelling and the development, evaluation and delivery of social and economic infrastructure projects. He has experience in private sector bidding and bid development for PPP and PFI projects both in the United Kingdom and in Australia. Roger has been active in the Australian corporate finance and infrastructure sectors for the past 12 years, having worked in Johannesburg and London before relocating to Australia.
Shaping Queensland’s future Greenfield and brownfield infrastructure development will continue to shape Queensland’s future in 2013. We can assist you with these opportunities with our clear and practical advice. Our infrastructure professionals are trusted commercial advisers to governments, businesses and investors across the lifecycle of major projects – from business strategy and investment decision through to procurement, financing, delivery and operations. Our experience spans economic and social infrastructure (including mining, energy, road, rail, port, housing and hospitals). To hear more contact Graham Matthew on 07 3225 6807 or gmatthew@kpmg.com.au kpmg.com.au © 2013 KPMG, an Australian partnership. All rights reserved. December 2013. QLDN10523MKT.
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BEST PRACTICE
How do we help infrastructure owners get the right bang for their buck? By Geoff Hardy, Director of Advisory Services – AECOM.
In an economically constrained environment, AECOM’s Advisory Group is helping infrastructure owners maximise value from the limited funds they have available.
Investment in infrastructure across both the public and private sectors is vast, with billions of dollars spent each year on creating new assets and managing and improving existing infrastructure. However, the risks of infrastructure failure – lack of money to manage these assets, pressure to reduce operating costs and increased service expectations – are some of the challenges facing managers of this critical infrastructure.
Infrastructure owners are now having to make decisions about what to replace and repair, and what should take priority. This is the realm of strategic infrastructure management.
When our existing infrastructure was built, it was assumed that when it was no longer able to serve its purpose, it would be replaced or upgraded. We know that we need new and better infrastructure to accommodate population growth, improve the efficiency of our cities and to meet the ever-increasing expectations for improved services from our community – but in the constrained economy we are currently working in, we can’t afford it.
There is significant Geoff Hardy risk associated with getting infrastructure investment decisions wrong when it comes to service-based organisations. Reduced service levels or interruptions to service due to failing or poorly maintained infrastructure can result in a loss of revenue or damage to the organisation’s reputation or brand value. Delaying upgrades to infrastructure or deferring maintenance can also lead to higher costs later in the repair life cycle.
There is significant risk associated with getting infrastructure investment decisions wrong when it comes to service-based organisations.
To ensure the best use of limited funds, there should be a clear view of what the organisation wishes to achieve for its customers, and how it will go about it. A robust infrastructure management governance framework – encompassing policy, objectives and strategy – is a critical first step. Objectives must also have a clear line of sight to operational performance measures. continued on page 16
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Infrastructure Association of Queensland Yearbook 2013
Building the Foundations of Queensland’s Infrastructure
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At Piling Contractors, we are proud of our role as one of Australia’s premier specialist engineering companies. With an emphasis on providing outstanding results on resources and mining, infrastructure, civil and construction projects, we offer design and construction solutions, value engineering, alliancing, partnering and construct only services. In Queensland we work for a wide range of clients on projects associated with LNG, coal, road, rail, port and utility infrastructure as well as commercial building projects. We have an impressive track record for delivery on major Queensland projects such as QCLNG Upstream, Wiggins Island Coal Export Terminal, APLNG Upstream and APLNG Downstream. In 2013 we will continue on some of these projects and also provide foundations for the Inpex Ichthys LNG and Gateway Upgrade North projects. Piling Contractors is one of the largest piling companies in Australia, with operational bases and a portfolio of projects across all areas.
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BEST PRACTICE
continued from page 14
Seeking to optimise business outcomes, which is about much more than the condition of physical assets, requires a comprehensive understanding of the role of infrastructure in supporting the organisation’s strategy and purpose. Infrastructure management is often underfunded, because this role is not well-understood. As a result, service levels suffer, infrastructure costs increase over time (where renewal does not occur), and the assets themselves deteriorate, sometimes to the point of catastrophic failure.
Another option available to infrastructure owners is a proactive program of asset optimisation: using streamlined processes, scheduling, and workforce management to get to the lowest-cost operating model possible without compromising service levels. Where there is insufficient money to properly manage infrastructure assets, there can be divergent views between executive managers and technical operators around funding given to infrastructure management and how priorities should be assigned. To overcome such internal conflicts, organisations should develop a governance framework, ideally based on internationally recognised standards, to provide guidance in determining priorities for optimising infrastructure investment. This also brings external credibility where such a program is visible to investors or customers. The development of a proper governance framework will also facilitate conversations at all levels of the organisation to improve understanding of the importance of focused infrastructure management. Another option available to infrastructure owners is a proactive program of asset optimisation: using streamlined processes, scheduling, and
workforce management to get to the lowest-cost operating model possible without compromising service levels. This can release funds to reinvest in maintaining the asset. This will often involve the use of sophisticated reliability and modelling tools to provide analysis on which to base investment decisions and evaluate options. Best practice infrastructure management requires an organisation to provide and maintain infrastructure in such a way that it enables agreed levels of service to be delivered in accordance with a risk profile or tolerance – one that is specified in a Board-sanctioned policy. In turn, this requires: • an understanding of the extent to which service level expectations depend on infrastructure performance, and the impact of failure on service levels • an understanding of the current and projected future condition and/or performance of the assets across their expected working life • an understanding of the impact of growth in levels of service on the asset • an understanding of the risk of asset failure as a result of external events • an understanding of life cycle cost economics and whole-of-life cost optimisation, particularly for services that must be delivered through several asset life cycles. This may require rebalancing the level of service and reliability required from infrastructure, the funding required and availability to maintain it, and the risk of failure or breakdown. Optimisation of infrastructure funding in this context focuses on spending no more than is necessary to keep the infrastructure in a state of good repair, but spending sufficiently to ensure that the risk to service level expectations (including compliance) is acceptable. AECOM’s Advisory Group has developed sophisticated models to support this riskrated investment approach and is currently working with a number of clients nationally to develop governance systems, strategy, and the implementation of organisational strategic infrastructure management programs. continued on page 18
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Infrastructure Association of Queensland Yearbook 2013
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BEST PRACTICE
continued from page 16
Applying this organisations
thinking
in
service
How do you help infrastructure owners focus the allocation of their asset management funds? AECOM Advisory’s Head of Asset Optimisation for Australia and New Zealand, Mike Stoke, explains, ‘Our client (state rail operator) was using operating performance indicators for its network that ensured services ran on time and asset maintenance funds were prioritised on the rail infrastructure in a corridor where timely performance was an issue. ‘While this sounds sensible, a broader analysis of the client’s operations found that in another corridor, which had better timeliness but
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Infrastructure Association of Queensland Yearbook 2013
carried many more passengers, the impact of a disrupted service was much greater. By switching investment priority to the more heavily used corridor, AECOM was able to help the client achieve their ultimate goal: satisfied customers.’ This approach has also been used to review costly, unplanned mine shutdowns. The causes of infrastructure failure were identified and maintenance strategies and investment plans were developed to reduce the likelihood of future occurrences. This optimisation approach also involved cost-reduction reviews for utilities, focusing on asset criticality and the development of a plan for investment in infrastructure maintenance, which prioritises customer service levels.
Australia’s Project Management Experts For 28 years, Hinds Blunden has provided independent expert advice and assistance to the construction and engineering industry in Australia, New Zealand, Asia and the Middle East. From project planning and management to contractual advice and dispute assistance, Hinds Blunden offers its clients optimal solutions across all stages of their project.
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BEST PRACTICE
One company, three major divisions, three pillars of growth Integrated services offering, sustainable solutions, with international expansion. ACCIONA.
When did ACCIONA come here? ACCIONA opened its first Australian office in Melbourne in 2002. Over the last 10 years, ACCIONA has invested more than $650 million in its Australian operations and employed 500 people across the country. ACCIONA has renewable energy, infrastructure and water projects planned over the next few years that will contribute to Australia’s water and energy security, its infrastructure needs, its technological advancement and its sustainability goals. 20
Infrastructure Association of Queensland Yearbook 2013
ACCIONA is a global company and one of Spain’s largest corporations, with activities in more than 30 countries on five continents. ACCIONA is a pioneer of sustainable development in energy, infrastructure, water and services. Since 2007, ACCIONA has been a world sector leader on the Dow Jones Sustainability Index. The company forms part of the Madrid Stock Exchange’s Ibex-35 blue chip index. It has a workforce of around 31,000 professionals and posted consolidated revenues of €5.165 billion in the three quarters to September 2012. continued on page 22
WHAT IF? It’s a question we ask ourselves every day. What if there was another way? A smarter way. A solution less obvious but ultimately more rewarding. What if thinking outside the box, with innovation and imagination, could result in leaner and more efficient construction delivery? We’ve been questioning convention since 1938, when the Thiess brothers challenged the plan to tunnel through sandstone at Heifer Creek, near Toowoomba – and saved a fortune by proposing a cutting instead. A commitment to innovative and cost-effective outcomes guides us to this day. Take the redevelopment and expansion of the Lotus Glen Correctional Centre near Mareeba in Far North Queensland. Smart thinking and meticulous planning enabled us to
complete the $375 million project in a ‘live’ facility – allowing the centre to operate as normal throughout the works. Our innovative solutions on the Springfield Rail Project (pictured) will also save taxpayers $171 million in highway reconstruction costs – and we will complete the work in 2013, two years ahead of schedule. And when 262 Toowoomba Range Rail sites were damaged or destroyed in the 2011 floods, we completed the recovery work in less than half the time forecast – which helped return $15 million a week in coal exports to the Queensland economy, as well as injecting $30 million into the region through the use of local suppliers and labour.
THIESS.COM.AU
ROADS » RAIL » TUNNELS » DAMS » RESOURCES » WATER » MARINE » POWER DEFENCE » HEALTH » CORRECTIONAL » EDUCATION » COMMERCIAL
BEST PRACTICE
continued from page 20
Why did ACCIONA come here? Aside from primary business activities, ACCIONA’s unique business model incorporates a research and development (R&D) division that invests in new innovative technologies across all six business divisions, being energy, infrastructure, water, real estate, logistics and transport services, and environmental and urban services. It is these initiatives that make ACCIONA preferred allies among clients and partners alike. One of the two main focuses of this R&D facility seeks new ways to improve procurement accuracy and efficiency. ACCIONA has developed a fivedimensional building information management (BIM) simulation, recognised within the industry as one of the most advanced project-modelling tools of its time. It allows architects, engineers and production directors to visualise each constructive element in all five dimensions: the three physical ones, as well as measurement and the associated cost of materials. The other key focus of ACCIONA R&D is to develop new techniques that minimise both environmental impact and financial expense during project delivery. At present, the use of end-of-life tyres (ELTs) is one of the most important environmental problems, not only due to the huge space required for landfill, but also because of the ELTs' controlled burning, which generates a large amount of pollutant emissions into the atmosphere. The use of the rubber from ELTs through the production of asphalt mixes not only limits this environmental problem, but provides an added value to the pavement layer because the use of this type of modified mix gives better mechanical properties than the conventional ones. Initiatives such as these are inspired by ACCIONA’s commitment to recognising the limitless opportunities to balance environmental and economic ambitions held across the global, national and local realms of our society. What benefit has ACCIONA brought to the Australian economy? ACCIONA has injected innovation, sustainable growth and value for money into the Australian community. Since establishing ACCIONA Energy in Australia in 2002, the company has built
three major wind farms and developed a strong pipeline of projects for construction over the coming years. ACCIONA Infrastructure leads the consortium that is building the landmark $1.5-billion Legacy Way tunnel in Brisbane. ACCIONA Agua is part of a consortium that designed, built, and now operates a $1.83-billion desalination plant south of Adelaide. What is ACCIONA Infrastructure Australia currently working on? Within ACCIONA’s infrastructure division, three major projects are currently being delivered. These are the $1.5-billion tunnelling project, Legacy Way, and two road reconstruction packages in the Mackay West and Fitzroy Regions, valued at $88 million and $67 million respectively. Commissioned by Brisbane City Council, Legacy Way is the 4.6-kilometre road tunnel that will connect the Western Freeway at Toowong with the Inner City Bypass at Kelvin Grove, reducing travel between these points to four minutes, as well as relieving congestion on alternative routes such as Coronation Drive and Milton Road. As part of the Transcity joint venture, ACCIONA is leading the construction component of the project. With the view to minimise greenhouse emissions and costs associated with the removal of the tunnel’s spoil, the employment of a spoil conveyor tunnel from Toowong to Mount Coottha Quarry has eliminated the requirement for 96,000 haulage truck movements on surface roads. Brisbane City Council Lord Mayor Graham Quirk recognised ACCIONA’s brilliance by naming it winner of the 2012 Brisbane Lord Mayor’s ‘Business Innovation’ award. The Honourable Lord Mayor said, ‘ACCIONA’s drive to constantly find new and better ways to operate is evident in its design and construction of the Legacy Way road tunnel.’ The end of 2012 saw yet another milestone for Legacy Way with the excavation of the first of 36 cross-passages completed beneath the Toowong Cemetery. Located every 120 metres along the tunnel alignment, these passages will provide tunnel users with a safe passage from one tunnel to another in the event of an incident. 2013 promises to be another busy year at Legacy Way. continued on page 24
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Infrastructure Association of Queensland Yearbook 2013
GAS. POWER. WATER. TELCO.
A FORCE IN INFRASTRUCTURE SERVICES Our skilled workforce delivers engineering, construction, maintenance and project management services in the gas, power, water, telecommunication and mining sectors across Australia. Zinfra embodies a culture of uncompromising quality and safety in delivering cost competitive solutions to our clients. Our expertise combined with our competitive business approach ensures our clients gain the most value from their critical network assets. Contact details: Zinfra Lot 3, 112 Darlington Drive, Yatala QLD 4207 Telephone: (07) 3827 8100 www.zinfragroup.com.au
BEST PRACTICE
continued from page 22
The project’s two TBMs continue to excavate the twin tunnels at record speed and have already unearthed more than 400,000 tonnes of rock as they power towards Kelvin Grove. Annabell, the TBM launched in August 2012, has excavated 2.02 kilometres of the westbound tunnel and is currently under Rosalie, while Joyce, launched in October 2012, is currently under Auchenflower having excavated 1.5 kilometres of the eastbound tunnel. Together, both TBMs are averaging excavation at a rate of more than 150 metres per week, which sets the project at a world-class standard for production. In the first quarter of 2012, ACCIONA, in joint venture, undertook the repair and rehabilitation of the road network in Mackay West and Fitzroy regions. The Department of Transport and Main Roads (DTMR) commissioned the reconstruction
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The focus now turns to the 2011 flood event rehabilitation works across all three project regions to ensure the program progression before the late wet season arrives
BEST PRACTICE
projects as a result of monsoonal rain and numerous tropical cyclones across central Queensland in 2010, as well as flooding in 2011. All works are being carried out under live traffic management and pose many challenges due to the sheer geographical nature of the sites and resource availability in the region. January saw another 16 kilometres of twocoat seal putting the project well on the way to completion before mid-2013. The Mackay West Project continues with its impeccable safety record to date, with no lost time injuries (LTIs). The hard work from the safety team was reflected in the project obtaining Federal Safety Accreditation for ACCIONA Infrastructure Australia through rigorous site audits held late in November and December. The focus now turns to the 2011 flood event rehabilitation works across all three project regions, to ensure the program progression before the late wet season arrives.
Throughout 2012, ACCIONA contributed to social wellbeing and the creation of value for our stakeholders in a number of ways
On the Fitzroy site, the BMD ACCIONA team reached significant milestones in the first month of 2013, including 30,000 square metres of stabilising, which was completed in just five and a half days. Stabilisation and paving will continue from January through to March on a further three sections, while the focus will be on shoulders and excavation of the table drains on another stretch. All suitable material from this work will be used in the embankment, minimising the possibility of recurring road damage from potential future flooding.
How is ACCIONA contributing to Australian social wellbeing? With the development of ACCIONA’s commercial activities in Australia have come many opportunities to demonstrate ACCIONA’s mission and values among our various stakeholders. Our mission is clear: ‘to be a leader in the creation, development and management of infrastructure, energy and water – actively contributing to social wellbeing, sustainable development and the creation of value for our stakeholders’. Throughout 2012, ACCIONA contributed to social wellbeing and the creation of value for our stakeholders in a number of ways. These included ACCIONA’s participation in the Griffith University IAP project in creating value for our future stakeholders, providing undergraduate and postgraduate opportunities to gain insight into ACCIONA’s expertise, and to develop workready skills through the completion of an industrybased project designed to deliver meaningful outcomes for organisations and students equally. ACCIONA was also positioned to contribute to social wellbeing in collaboration with the Queensland Art Gallery (QAG), hosting the ‘Portrait of Spain: Masterpieces from the Prado’ exhibition, which gave 111,000 visitors the opportunity to admire the masterpieces by leading painters of the 16th, 17th and 18th centuries. The exhibition featured over 100 masterpieces from the Museo Nacional del Prado, Madrid, and illustrates the evolution of painting in Spain over three and a half centuries. The collection represents the largest and most significant international loan the Prado has ever undertaken, and is also the first exhibition from their collection ever to be shown in the Southern Hemisphere. What’s next for ACCIONA? ACCIONA takes great pride in its presence in the Australian marketplace and looks forward to the exciting new prospects and opportunities to continue to establish itself as an industry leader in Australia.
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Leighton Contractors’ asset management approach – changing the way organisations operate Across the world, modern and efficient infrastructure is increasingly understood as a core requirement for economic development, with significant financial resources being committed to infrastructure development and maintenance. Momentum is shifting towards a worldwide, standardised asset management framework to be released in March 2014, and Leighton Contractors says Australian infrastructure service providers should plan to understand and participate in these industry changes.
Michael Bushby, Executive General Manager of Leighton Contractors’ Services Division, said the introduction of a worldwide asset management framework will change how companies have operated, from being simply focused on maintenance management, to taking a ‘holistic’ approach across all stages of an asset’s life. ‘Leighton Contractors operates and maintains key infrastructure assets providing asset management, maintenance planning and life 26
Infrastructure Association of Queensland Yearbook 2013
cycle analysis through to dayto-day facilities management services,’ Mr Bushby said. ‘Over the past two years, we have invested significantly more resources in asset management to optimise our systems to drive better performance of our clients’ assets.
Michael Bushby
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‘A key aspect of this work has been the revision of our national asset management framework to enhance our service offering. ‘At the heart of this work is our unrelenting commitment to being a trusted partner integral to our clients’ success.’ Understanding asset management Leighton Contractors’ asset management team leader, Dr Mark Jordan, has been developing and directing the team to understand, set and drive best practice in asset management. ‘Over recent years, business attitudes have shifted to maximising the life of the physical asset and minimising the costs in both the public and private sectors,’ Dr Jordan said. ‘Infrastructure cannot and should not be treated as just a form of social service – it provides significant benefits and value for money to the public and economy alike. ‘Across the globe, a host of governments have travelled down the road of commercialising their infrastructure to release equity, while others have maintained it “in-house”. ‘Both approaches require a “mature” asset management foundation to deliver cost-effective services – not simply considering the physical assets, but also the associated human, financial, information and intangible assets.’
organisations’ current methodology of operating their businesses to a holistic continuous cycle of improvement methodology. This improves business robustness, efficiency and consistency at delivering services within a window of 20 to 30 years, not just a 12-month to three-year forward view. Dr Jordan said some of these efficiencies could include more cost-effective or optimised life cycle analysis of assets and their associated remaining lives, balanced with economic benefits to the community or shareholder considerations. Asset management in the past In recent years, a number of asset management documents have been released around the world, resulting in many organisations reviewing their approach and outlook on asset management. For organisations yet to fully adopt or implement asset management, these new or revised documents have assisted them to ‘fast track’ asset management principles and approaches. Knowledge of asset management has also been gained through benchmarking of organisations and learning what has and has not worked in the context of that organisation.
Dr Jordan said asset management in the past has been misunderstood: there has been a perception that it is a complicated discipline that requires stringent guidance. ‘Asset management should not be something additional that makes your business more difficult to operate, nor should it be viewed as just the latest “trend” for companies,’ he said. ‘To put it simply, appropriate asset management should not only be a reflection of how your business is operating to achieve objectives, but also how you want it to operate to best serve the efficiency and effectiveness of providing your services through an integrated management system.’ The introduction of whole-of-life asset management is driving change to adjust most Infrastructure Association of Queensland Yearbook 2013
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BEST PRACTICE
Dr Jordan said many organisations had adopted simply one document as their asset management ‘bible’; however, there are risks with this approach. ‘What usually ensues is a strong focus on some areas, while some elements of weakness are shown in other areas,’ Dr Jordan said. ‘Each document possesses strengths and weaknesses in its own way. Some countries are more focused on asset management requirements through government legislation and hence their documents lean towards complying with those requirements. ‘Many organisations and individuals have referenced such materials to provide a “baseline” to deliver an asset management road map – that is, identifying key items and the associated priorities to improve on the delivery of the current framework for the varying types of infrastructure assets. ‘A more complete and “holistic” framework will be required to address the incoming ISO 55001 requirements.’
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The driving forces behind an international framework PAS 55, Publicly Available Specification, issued by the British Standards Institute in the United Kingdom, has become increasingly acknowledged as the default international framework for asset management. Originally released in 2003 with an update issued in 2008, PAS 55 has increased in popularity over the past few years, with asset owners becoming more interested in viewing it as a mechanism in which they can measure the maturity of a service provider against its framework, Dr Jordon said. When it was originally released, it was written at a more technocratic level for organisations. With the momentum shifting behind the requirements for a standardised framework across the world for asset management, work commenced on developing an ISO standard, whereas PAS 55 was developed as a specification. The culmination of this work will be realised in March 2014, when ISO 55001 (Asset Management System) is released. Approximately 23 countries, including Australia and the United Kingdom, have been involved in its development, with a number of others acting as observers, such as New Zealand.
BEST PRACTICE
The new ISO will result in a fundamental shift in how service providers undertake their contractual obligations, should asset owners specify it as a requirement. Laying the foundation for our clients’ success With the implementation of these planned changes, asset management service providers will no longer carry out maintenance activities without conducting an investment analysis through life cycle techniques to determine the most appropriate solution over a network’s whole of life. Dr Jordan said this whole of life may be a rolling 20-year window that is reassessed annually. ‘One of the more significant changes is the introduction of not just financial analysis improvements, but also economic analysis to determine the benefits and return on investments (ROI) associated with various scenarios across a network,’ Dr Jordan said. ‘Asset management is no longer just the assessment of the physical assets, but also the human, financial, information and intangible assets, such as reputational factors.’ In anticipation of these changes, Leighton Contractors has been developing a new framework enabling its service offering to shift from being maintenance-management driven to asset-management driven. ‘Our framework will enable us to respond to the needs of our clients and, importantly, realise the true value of our clients’ assets through more cost-effective and efficient solutions,’ he said. ‘In the development of the framework, including our asset management delivery model, we have enhanced enterprise-wide business processes, life cycle and project processes, the investment analysis and performance framework, and prioritisation optimisation techniques.’ A key aspect of Leighton Contractors’ framework is the ability to integrate a set of transparent criteria that directly links back to our clients’ asset management framework. ‘This change places greater emphasis on a holistic solution that integrates and creates dependency
on the various types of asset management with both parties. ‘This means the financial, physical, human, information and intangibles are now being integrated in a manner to increase learning and identify the interdependencies that position Leighton Contractors as a more cost-effective and efficient service provider to clients.’ Leighton Contractors delivers projects for clients across infrastructure, resources, industrial, energy and telecommunications sectors. Project solutions span every stage of the life cycle from finance, project management, design and construction, to long-term operations and maintenance. Current projects include the operations and maintenance of the majority of toll roads in Sydney and Brisbane, the maintenance of more than 5500 kilometres of road network in the Wheatbelt and Pilbara regions of Western Australia, facilities management for the first digital hospital in Australia, energy providers in Victoria and Western Australia, and schools in south-east Queensland’s major growth areas. About Michael Bushby Michael is responsible for Leighton Contractors’ services business, supporting clients in the long-term operations and maintenance of key infrastructure projects across Australia and New Zealand. His career spans more than 30 years, where he has held many key strategic and senior operational positions, including Chief Executive of the Road Traffic Authority New South Wales. Michael is a Fellow of the Australian Institute of Company Directors and Chairman of EROAD, New Zealand’s leading transport technology and services company. About Dr Mark Jordan Dr Mark Jordan joined Leighton Contractors in 2010 as the Asset Management Lead. He is a chartered engineer with over 20 years’ experience in a number of countries where he has managed road networks through to working on development bank projects. Dr Jordan is also the Brisbane chapter chair for the Asset Management Council.
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Infrastructure
Sustainability in the real world At Queensland University of Technology, the fundamental core of our sustainability research is the study of systems – usually large and complex systems containing many parts that interact, often in simple ways.
QUT is proud of its heritage as a ‘university for the real world’ and actively seeks to deliver not just high-quality research outcomes, but also coursework programs that are designed around imperatives for a sustainable future.
One example of the systems we deal with is the built environment and construction system, in which we focus on the life cycle of buildings, and develop tools to improve the sustainable design and construction process, and safe and efficient delivery of built assets.
The new Master of Engineering degree addresses the current and future skills needs of industry through specialisations that focus on vital contemporary issues: networking and communications, mechanical engineering, sustainable energy and transport. Futuremindedness, complex problem-solving, information literacy, theory application, life-cycle thinking and professional interactions are integrated into the course to equip students to actively participate in the development and effective communication of sustainable solutions.
Other key systems in our built environment are transport services and energy delivery. These are both intense generators of greenhouse gases, but they also underpin our current society. It is imperative to develop sustainable models for both the provision of transport services, reducing time lost, and greenhouse gas emissions and pollution generated through congestion.
Details about research programs and masters courses can be found at www.qut.edu.au/science-engineering.
Take your engineering career to the next level with QUT’s new Master of Engineering degree. The program is designed to meet industry needs and equip you with the tools to master skills that focus on vital contemporary issues. Choose from four study specialisations: networking and communications, mechanical engineering, sustainable energy and transport, or select a more diversified study plan to suit your personal career needs. An alternative entry pathway to the masters degree exists through a Graduate Certificate program.
A masters engineered for sustainability
With direct access to world-leading researchers and academics with real-world expertise, you’ll be positioned at the forefront of real-world engineering solutions that can make a world of difference. Be inspired and stay in demand. For more information about our new Master of Engineering degree or how to apply, please visit www.qut.edu.au/engineering
CRICOS No.00213J © QUT 2012 BEE-12-332 19285
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Infrastructure
More than an airport – Brisbane’s new business destination Renaye Peters, General Manager – BNE Property
Brisbane Airport is transforming into a significant business hub and a destination that promotes and encourages innovation, development and growth.
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Infrastructure
Uniquely placed in south-east Queensland to take advantage of national and global markets, Brisbane Airport offers unparalleled connectivity to the city, the state and international destinations, which is highly sought after. The core numbers are extraordinary under any measure
The plan embraces new benchmarks for the quality of place-making and for the achievement of objectives for sustainability.
Brisbane Airport has been Australia’s fastestgrowing airport since privatisation in 1997. It is the third-largest airport in Australia – having welcomed 21 million passengers in the last financial year – and has two major terminals, providing services to 27 airlines flying to 43 national and 29 international destinations. To meet the growing demand, Brisbane Airport Corporation (BAC) is funding more than $2.5 billion worth of infrastructure over the next 10 years, including a new parallel runway, road terminal expansions, road upgrades and a number of new commercial buildings. Brisbane Airport is already home to more than 420 businesses and 20,000 workers, with this number expected to expand rapidly in coming years. Dynamic, innovative and sustainable So it is within this dynamic context that BNE Property, the property division of BAC, is working to create something special that will be considered world’s best in planning, design and property development. In an increasingly competitive global setting, there is greater emphasis on ingenuity, skill development and effective cost management. This is balanced with the need to ensure quality within the work environment and external surrounds to maximise productive output and achieve exceptional outcomes. There is no question that Brisbane Airport is wellplaced to significantly contribute to Brisbane achieving its vision as a well-connected ‘new world city’. The 2012 Property Development Master Plan (PDMP), the first of its kind for an Australian airport, was developed to guide the transformation of developable airport land over the next 50 years. 32
Infrastructure Association of Queensland Yearbook 2013
The plan set a new standard for airport development, providing benefits for both the airport and surrounding communities supporting the aim for Brisbane to be considered Australia’s ‘green’ airport. The PDMP outlines a vision for property development centred on five key nodes as part of a highly connected, 24-hour aviation, logistics and commerce hub. Significantly, the plan enhances Brisbane Airport’s primary aviation function with commercial and lifestyle offerings that will make it a key destination in its own right. Michael Keniger, Chairperson of BAC’s Development and Design Integrity Panel, captured the essence of the plan when he said: ‘At the heart of the Plan is the “DNA” – a set of six fundamental design and planning principles that together provide guidance for the design process, whilst identifying the underpinning infrastructure needs. The establishment by the Brisbane Airport Corporation of the Development and Design Integrity Panel, which I chair, provides a crucial independent check and overview to ensure the principles espoused in the Master Plan are upheld, maintained and enhanced. The plan embraces new benchmarks for the quality of place-making and for the achievement of objectives for sustainability. Further, it establishes key design expectations, including those for landscape integrity and public amenity spaces.' With the PDMP in place, BAC is working closely with the government and key stakeholders to complement the Brisbane CBD and the growth of the wider south-east Queensland region and the state more broadly.
Infrastructure
An economic generator and community contributor Brisbane Airport is perhaps unique as both an economic generator and community contributor for business and lifestyle pursuits, and will play its part in the planning, lead-up and logistics of key events such as the G20 and Gold Coast 2018 Commonwealth Games. Through appropriate levels of commercial, retail, industrial, mixed industry and business, hotel and short-term accommodation, the diversity and opportunity of real sustainable development opportunities has created an air of excitement that will increasingly attract the interest of industries including mining, technology, logistics and professional service firms.
The Green Motherboard creates the coherent and integrated framework that links all the nodes together to create a place where people want to come to work, shop and meet. Fundamentally, place-making will ensure that Brisbane Airport is not only a place of transit, but also a unique destination in its own right, featuring geographically defined precincts, each with distinctive character and market identity. With the right vision and planning, Brisbane Airport is well-positioned to become a selfsustaining commercial centre for business, retail and leisure that will continue to support the growth of the city and the state. Brisbane Airport is not only open for business; it is Brisbane’s new business destination.
Without a doubt, this is a very exciting time for property at Brisbane Airport. In just the last few months of 2012, the following occurred: • the completion of Five Lobelia Circle – the first commercial building in the International Terminal precinct • commencement of construction of DHL’s new air freight facility • the naming of the iseek Communications Data Centre development as ‘Queensland Development of the Year’ by the Property Council of Australia • the purchase of the ‘2 Boronia Road’ commercial office building • commencement of the service centre development and first stage of the golf experience centre. Sense of place Fundamental to any infrastructure development is a full appreciation of the concept. Brisbane Airport is creating that sense of place and fully realising the potential of what is a wonderful and superbly located asset. Central to the vision and integrity of the plan is the formation of hubs around internal boulevards, providing public open space and facilities. This is important in making Brisbane Airport the natural address for companies seeking a reputation for responsible development practises.
Brisbane Airport Corporation
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Infrastructure
Resources infrastructure By Mark White, Partner, Infrastructure Advisory; and Paul Laxon, Partner, Transaction Tax – Ernst & Young
Over the last three years, there has been a significant shift in the way critical economic capacity building infrastructure has been delivered. Historically, our state government has largely been responsible for funding and constructing such infrastructure, primarily through relevant government-owned corporations (GOCs) since their inception. However, that approach has now largely been abandoned as the state government seeks to repair its fiscal position, starting with a stabilisation of the current debt load. In turn, that has led to the state government looking to the private sector to fund such crucial infrastructure. Projects need to be aligned with private sector developments and have clear macroeconomic benefits for the state (including greater royalty outcomes and employment opportunities) and, as a result, some of the challenges for the state government include: • clarifying specific role/interest in such developments and how best to effect that • ensuring the policy settings are focused on the efficient use of capital and the creation of an environment that enables a broad spectrum of project proponents with varying credit worthiness to participate. Australia’s ability to sustain market share and capture future benefits hinges on the efficient planning, development and operation of additional capacity in resources export infrastructure networks and projects. Here we examine the current state of play for the industry, and options for both large and small exporters to more effectively access, develop and manage infrastructure resources.
The role of the public and private sectors Both public and private sectors agree that the mineral export infrastructure networks need to be able to proactively respond to early indicators of sustained resource sector growth. The 2010 Infrastructure Australia National Ports Strategy1 identifies that it will be essential to reform the up-front planning and development processes that drive the larger investment decisions on upgrading the port and rail systems serving Australian exporters. The key practical question remains: who will fund and control these expanded networks? The sustained 1990–2000s privatisation reforms did not remove government ownership of key port and rail assets. They did, however, generally reorganise them under regulated, open-access, corporatised structures as a mechanism to provide efficient capacity development that fairly balanced the needs of all exporters. Current infrastructure bottlenecks indicate this approach has not proven as effective as planned. Given the state government budgetary restrictions and, in more recent times, volatile commodity prices, the development of additional capacity will continue to present a dilemma for both the state government and the private sector. The ability to efficiently move planned projects into development and operation represents a key risk to the resources export community. The Bureau of Resources and Energy Economics July 2012 report ‘Australian Bulk Commodity Exports and Infrastructure – Outlook to 2025'2 concluded that the exports outlook for coal, iron 1 ‘National Ports Strategy’, Infrastructure Australia website, accessed 20 February 2013. 2 Bureau of Resources and Energy Economics website, accessed 20 February 2013.
continued on page 36
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Infrastructure Association of Queensland Yearbook 2013
Here’s to a
ighter future
Australia’s largest enclosure manufacturer, B&R Enclosures provides solutions to major infrastructure projects across Queensland. Queensland projects include: • Airport Link Tunnel • Tugun Bypass • Clem7 Tunnel • Gateway Upgrade • Port of Brisbane • Bicentennial Bikeway • New Farm Walkway • Gold Coast University Hospital
www.brenclosures.com.au
Infrastructure
continued from page 34
ore and liquid natural gas (LNG) will become increasingly reliant on projects that are currently planned, but not yet under construction. The clear threat is that the required funding commitments and approvals are still to be developed, and need to be in place before the next demand peak. long-term
Government, miners and financial investors must work together
A fundamental issue that infrastructure-intensive industries such as the resources industry face, is the significant lead times experienced from project planning/inception to delivery. In the past, governments have largely invested ahead of the demand curve; however, deteriorating state government balance sheets specifically in Queensland, and more broadly across the nation, have resulted in a reluctance to allocate capital up-front and take on inherent risks. The challenge for all mineral resource exporters will be around how to optimise the use of limited or rationed capital to effect mine and infrastructure development schedules that minimise holding costs and delivery lags.
Our experience in advising a wide range of resources projects on combined resource logistics developments is that traditional processes and structures do not address the key barriers that impede efficient development and access of logistic infrastructure, namely:
Key challenges infrastructure
–
funding
The Queensland coal network experience highlights a key limitation that constrains asset development efficiency: the wide gulf between the financial strength of tier-one miners and the smaller entities. While tier-one miners have the balance sheets and organisational capability to solely fund and develop large-scale logistics assets, smaller entities must either: • seek access to third-party or multi-user networks, which relies on the efficiency of the competition frameworks and the development processes of the network owners to produce effective capacity enhancement. Delays and cost blowouts can occur where the regulated asset owners have sought to override regulatory regimes. An issue here is whether the structures proposed by thirdparty developers actually deliver commercial outcomes to enable the development of these assets Or • form consortia to jointly fund and develop needed infrastructure with clear risk allocation principles. This process is expensive and timeconsuming, with substantial capital needed to 36
develop proposals to the point where financiers can be approached with a bankable project. Further, it tests the ability of groups of miners to co-develop projects, requiring alignment of commercial interests, development timelines and, in some cases, a sharing of credit risk.
Infrastructure Association of Queensland Yearbook 2013
• government needs to develop strategies that reflect that they are no longer primarily responsible for the development and financing of these assets, but are key beneficiaries of successful development through increased taxation flows and broader benefits stemming from improved economic activity • miners tend to have an antagonistic view of the benefits of consortium approaches to large-scale and complex projects. There are, in some cases, few other options, and participation in a consortium may offer a better level of control over the development of the necessary infrastructure • financial investors tend to have a negative view of the risk exposure implied in expansion proposals for their operating facilities. Longerterm price paths are required to better reflect the economic life of the assets so as not to undermine the feasibility of projects. The complexity of these competing drivers means that neither the private sector nor government can solve the key issues alone. Recognition of the roles that all parties must play in improving network capacity and performance, and a substantive reform program to back up role delineation, is required. The federal government has a key role to play, primarily through the activities of Infrastructure Australia, in encouraging efficient early development and selection of productivityenhancing infrastructure projects. This should be backed up by financial assistance from the
Infrastructure
Regional Investment Fund for resource-related projects that meet key risk and return metrics. Resources companies hold the key to success The key opportunity rests with the resources companies, who have the incentive to develop efficient structures and control information to assist governments to accurately plan the integrated capacity development path to match demand. Miners should take action and seek partnerships with key government development agencies to drive the reform process by adopting the themes from the National Ports Strategy3 across all of the infrastructure requirements. They should also support: • wider and more transparent capacity planning between miners • coordination between government and miners over their ability and appetite to expand necessary infrastructure
The long-term aim is a sustainable development process that proactively responds to market signals and delivers capacity when and where it is needed. Such an infrastructure network will enable Australia to maintain and grow its mineral export market share. For more information please contact: Mark White, Partner, Ernst & Young +61 7 3243 3728 mark.white@au.ey.com Paul Laxon, Partner, Ernst & Young +61 7 3243 3735 paul.laxon@au.ey.com The views expressed in the article are the views of the authors, not Ernst & Young. This article provides general information, does not constitute advice and should not be relied on as such. Professional advice should be sought prior to any action being taken in reliance on any of the information. Liability limited by a scheme approved under Professional Standards Legislation.
• greater integration of all infrastructure owners (for example, rail, port, electricity and water) • directing limited government funding towards the high-risk early feasibility phase of key infrastructure projects
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• utilising the availability of third-party financing where an appropriate commercial outcome can be achieved. The prize in the medium term is the development of project pipelines that present a compelling and consistent picture of the timing and viability of planned infrastructure developments and upgrades, with consequential rapid federal government assessment and enhanced thirdparty financier interest. Understanding the different private sector financiers (including foreign pension funds, domestic superannuation funds/institutions, and foreign and domestic infrastructure fund owners and operators), their appetite for risk, and required project returns, is critical for the state government in determining which policy settings it needs to implement to result in the development of an efficient solution for the economy.
3 ‘National Ports Strategy’, Infrastructure Australia website, accessed 20 February 2013.
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Infrastructure
Research revolution Queensland University of Technology’s (QUT’s) exciting new $230-million Science and Engineering Centre is planned to thrust QUT to the forefront of teaching and research in the critical areas of science, technology, engineering and mathematics.
• transport
With a focus on sustainability, this world-leading research centre and dynamic community hub will plug into the real world as only QUT can.
• robotics and aerospace systems.
The five-star energy-rated precinct is home to leading practitioners and researchers tackling significant global challenges in infrastructure, energy and the environment. Research developed here will transform our world by advancing science, technology, engineering and mathematics solutions in a world-leading model. QUT research programs focus on key areas of global importance, such as: • energy and resources • environment and food security
• information systems • applied mathematics • biomedical engineering
At the forefront of visualisation and simulation, the centre will host a multi-screen facility to interact with research, assist teaching and connect with the wider community. A 50-metre pool and gym, and vibrant eating and retail outlets, will blend with technology-enhanced spaces that invite collaborative learning and research. The centre’s building management system, with structural and mechanical sensors for data collection and monitoring of renewable energy systems, will itself act as a living laboratory and a valuable tool for research and teaching. Details about research programs and masters courses can be found at www.qut.edu.au/science-engineering.
• infrastructure Be inspired and stay in demand. Our masters degrees focus on vital contemporary issues in engineering, and feature strong sustainability, project management and leadership skills development. They foster career advancement and creative thinking for long-term global solutions that can make a world of difference. Engineering masters degrees are available in the areas of: • engineering management • project management • engineering. An alternative entry pathway to the masters degree exists through a Graduate Certificate program.
Lead a sustainable future Postgraduate students will enjoy all the advantages of our new ‘five star green star’ Science and Engineering Centre.
Our new Master of Engineering degree offers four current study specialisations: networking and communications, mechanical engineering, sustainable energy and transport, or the option to select a more diversified study plan to suit your personal career needs. For more information about our masters degrees or how to apply, please visit www.qut.edu.au/engineering
CRICOS No.00213J © QUT 2012 BEE-12-331 19285
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323894A_Queensland University of | 1875.indd 1 Infrastructure Association ofTechnology Queensland Yearbook 2013
2/5/13 2:46 PM
Precision Drafting Australia (PDA) has been operating out of Darwin, Northern Territory for nearly 30 years delivering high quality steel detail drafting services to the mining, materials handling and general fabrication industries.
sophisticated 3D modelling and design visualisation technology with a dedicated team of 3D modellers, checkers and 2D editors supported by project managers, document control and IT staff with stringent quality control procedures in place.
PDA is an innovative company with extensive expertise in structural, mechanical, material handling and architectural/commercial steel detailing. PDA use the latest in
With a highly skilled team of over 75 people in three offices, PDA deliver clear, concise and complete steel details to the highest professional standard on time and on budget.
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www.precisiondrafting.com.au
Management
The need for a new approach to regional Queensland Investment and infrastructure development in regional Queensland is rapidly expanding, bringing with it enormous benefits to local communities and the Queensland economy as a whole.
However, there are some key social impacts being experienced in regional communities, which include:
consultation fatigue with a strong risk that an organisation will lose its social licence to operate.
• perceived and real loss of community identity
Experience within regional communities dealing with cumulative impacts suggests that these impacts are best addressed collectively across industry, government and community.
• ability of social services to meet demand • increased traffic congestion • reduced amenity
Collaboration and engagement
Managing the combined effects of these pressures to ensure that communities are resilient to key changes is driving a new approach to community engagement.
A combined and collaborative approach among industry and government, characterised by a more inclusive dialogue with the community to understand and respond proactively to their issues, concerns and aspirations, is required to shift the paradigm.
Community dialogue or engagement activities to date have been between one company or project and the community. However, when there are multiple projects in an area causing significant impacts, a traditional one-way, top-down approach will eventually lead to community
The key difference for the emergent models of community engagement will be a company or project’s will or ability to collaborate and pool resources with other parties or agencies to lessen the overall effects of their operations on the community as a whole.
• loss of key habitats and environment.
Strategic collaboration
The management of cumulative impacts should have high investment on the part of all sectors and agencies, and requires a strategic approach to forming and building collaboration. 40
Infrastructure Association of Queensland Yearbook 2013
Collaboration efforts can vary according to complexity and effort. The management of cumulative impacts should have high investment on the part of all sectors and agencies, and requires a strategic approach to forming and building collaboration. The old approach – where individual companies work on individual projects and only collaborate through informal networking and a ‘stovepipe’ approach to issues analysis – is redundant and companies must take into account the impact
Management
of public outrage and backlash on their social licence to operate when using an operational or tactical collaborative approach in the new stakeholder era.
Information exchanges and networking are relatively common across the industry and can include forums or workshops across industries to discuss common issues, identify potential solutions and coordinate activities. To achieve exceptional results, all sectors and agencies, especially in the mine-to-port supply chain, must adopt an approach where – above the sharing of information – there is an integration of disciplines and responsibilities, investment in community insight and an alignment of programs or projects to mitigate the risk of community outrage and activism. In the new era, a transition will make sustainable development challenges easier, provided that there is a willingness by all parties in the supply chain, including government, to: • align goals, strategies, systems, people and processes
• commit to the collaborative process and desired outcomes from the top down and across functions • openly share knowledge and information to establish trust and productive engagement • think, plan and commit beyond the short-term program and provide the resources required to support development, innovation and differentiation to sustain growth and mitigate cumulative impacts • share risks and rewards. Keeping in mind the wide range of situations that may influence the relationship between supply chain collaborators and the community, it is important that government also plays a key role in the process to maximise capacity in addressing community expectations and to realise the potential for regional communities. How to collaborate Information exchanges and networking are relatively common across the industry and can include forums or workshops across industries to discuss common issues, identify potential solutions and coordinate activities. Additionally, a collaborative and fully engaged approach, including the proactive management of the timing and location of developments and the collective management of data (for example, community issues), can be more challenging to implement, but can deliver some good outcomes. Infrastructure Association of Queensland Yearbook 2013
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Management
Companies’ engagement activities need to be coordinated with the community to help understand what is important to communities in a local context, and to prioritise investment (time and resources) into the areas that count. This will also aid in assisting the government and industry in maintaining these relationships and strong resilient communities during demobilisation and rehabilitation stages of projects.
Community engagement activities will continue to change and evolve to meet new growing pressures of the time – but the strategic and collaborative approach by government and industry will facilitate the long-term sustainability and resilience of our regional communities An exemplar model may lie in parties within the mine-to-port supply chain; for example, having an independent body that collectively manages stakeholder issues and positively engages with the community to ensure that emerging issues are identified and that the industry is managing and meeting regulatory and community expectations. Such a process or machinery may assist with reducing expectations and finding solutions for all organisations involved through a culture of collective accountability. From a practice perspective, the fundamental community engagement principles still apply when designing engagement strategies and plans for these communities. Given the accessibility of readily available information and the sophistication of these communities, organisations have to be well-prepared prior to engaging with stakeholders. 42
Infrastructure Association of Queensland Yearbook 2013
Community engagement activities will continue to change and evolve to meet new growing pressures of the time – but the strategic and collaborative approach by government and industry will facilitate the long-term sustainability and resilience of our regional communities during a time of rapid growth and investment.
About Phillips Group Phillips Group is a multi-disciplinary consultancy that works with business, government and communities to provide strategic communication and engagement services surrounding issues of public concern. We have a long history of delivering community and engagement activities within regional Queensland and have aligned stakeholder expectations with company performance to deliver real solutions to complex and challenging issues facing organisations and the industry. Phillips Group works to develop proactive community engagement and reputation management strategies to secure support from the wider public. Through understanding emerging international policy and the changing expectations at a government and community level, we help organisations assess their risks and behaviour, and empower them in their response to enhance their reputation and secure their licence to operate. We use a social licence to operate framework that enables sustainable development in communities, organisations and government by developing strategies, policy and communication that give all our clients the competitive advantage and a resilient business and enhanced brand reputation. Information on Phillips Group, insights and our capabilities can be found on our website at www.phillipsgroup.com.au. Find us on Facebook and Twitter @PhillipsConnect.
At the start of every great project since 1936. For over 75 years Acrow has been the leading scaffold and formwork supplier for the Australian construction industry.
Introducing our latest innovation. Acrow Powershore High Load Shoring System
• Fully galvanised components • Fast, efficient and versatile falsework structure • Corner brace design maintains squareness and rigidity during crane handling of the tower throughout its height • Adjustable bases at the bottom and adjustable bases with U-head attachments at the top of the tower provide infinite height adjustment • Capable of supporting leg loads in excess of 300kN based on tower and bracing frame configuration. Acrow Powershore was used on the Kedron Arches as part of the construction of the Brisbane Airport Link.
More innovations from Acrow. Acrowall-80
Acrow GASS
• 100% compatible with existing European systems offering higher panel strength and durability • Robust and versatile, powder coated steel frame panel with 18mm plywood face • Simple assembly with a minimum of components • AS3610 guaranteed class 3 finish • Maximum permissible concrete pressure of 80kPa for single panel heights up to 3.3m – maximum wall heights up to 13.5m.
• Light weight and easy to erect and dismantle for significant labour savings • Load capacity up to 140kN • Minimal loss of strength at any height • Can span up to 3m on light commercial applications • Ideally suited to “table form” applications.
Wall Forming System
Light Weight Aluminium Shoring System
For more information or to find your nearest Acrow branch, visit www.acrow.com.au or call 1300 138 362.
Management
The changing face of project management The project development and delivery landscape has changed. Being able to actively demonstrate true value for money (VFM) has become crucial to successful project procurement and delivery. Over the past decade, project proponents have been free to focus on ‘bigger, better, shinier’. Our economic prosperity, particularly in the Queensland market, lent itself to big projects, with big budgets. These projects were often managed over several phases according to the natural project life cycle – concept/feasibility, design, construction, and commissioning/ handover – by a range of discipline managers such as design managers/construction managers. This approach, while resulting in the delivery of an impressive portfolio of projects, has come under criticism lately for being ‘economically wasteful’. While innovation has been high on the agenda, this has, in some cases, come at a capital or whole-of-life cost. When one looks at this management approach in more detail, the opportunity for budget wastage becomes clear. Firstly, the budget expended in
bringing new teams up to speed as the project transitions from one stage of the life cycle to another, and therefore from one project team to another, is not insignificant. Add to that the cost of the loss of valuable lessons learnt and knowledge capital from previous phases, as well as the potential for rework and duplication of effort, and it is clear that this method of project delivery comes at a price. At a broader level, having a project manager who is part of the planning, design or contractor organisation can present conflicts of interest when targeting value-driven project delivery. Will budgeted design or work hours be cut back if the opportunity is presented? Or, will they be used to the full extent of the budget to satisfy the company bottom line? Are efficiencies being found by dedicated professional project managers trained to seek out these improvements? Or, do we have other discipline specialists who have worked their way up and out of their field of knowledge, into a related, yet vastly different professional role? At Flinders Group, we firmly believe designers and contractors should do what they do best – deliver the best designs and the highest-quality construction outcomes possible – and that professional, career-trained project managers should do the project managing. Supporting this belief, we have developed a new model for project delivery that optimises the benefits offered to projects by professional project managers and their associated support services, and removes the burden of this task from other discipline leaders. Flinders Group’s whole-of-life project management model represents a new paradigm in VFM project delivery. Under this approach, the project is managed from concept to completion by one of our experienced project managers who works on behalf of the client and the project to
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Infrastructure Association of Queensland Yearbook 2013
Management
As with project management, these specialist services benefit from being independent of design and construction contractors lead the consultant designers and contractors through project development and delivery, driving greater VFM project outcomes. Our specialist project managers continually look for budget-saving opportunities through smarter design, enhanced constructability and improved pre-planning of all project activity. They maintain important knowledge capital, implement improvements through lessons learnt and reduce the need for rework and duplication. They have a more intimate knowledge of the project, its drivers and client requirements, and can ensure that these are applied daily, not just at reviews or approval milestones. They also bring with them the related specialist project services required as the project progresses through its life cycle. This includes environmental assessment and management, approvals management, communication and stakeholder engagement and commercial assessment. These services naturally sit within a project management portfolio as they are integral to the effective management and delivery of the project. As with project management, these specialist services benefit from being independent of design and construction contractors, as they can then offer unencumbered, best-for-project assessment, advice and solutions. To obtain maximum VFM outcomes, Flinders Group would ideally commence working with clients during the early planning phase of each project, where we would assist in determining the feasibility of the project, appropriate delivery model options, risk management options and associated commercial arrangements. The earlier we are involved, the earlier we can identify how to add value and how to ensure value is delivered. Our project managers and other professionals work as part of an integrated project team, either from client offices using client systems, or
from our own offices or dedicated project office, using our own tailor-made management systems and processes. In either case, we ensure the systems and processes are applied consistently and rigorously throughout the entire project life. Flinders Group’s whole-of-life project management model provides the infrastructure industry with a new, more efficiently structured, effective, value-driven process in which designers and contractors can focus on their core discipline and deliver outstanding outcomes. Our professional project managers and associated project services teams focus on providing the necessary frameworks, governance, knowledge-bank and holistic project management to ensure the best possible project outcome and a clearly demonstrated VFM result. Flinders Group We are a multidisciplinary project services firm that harnesses the talent of the best people across core project management displines. We have a unique ‘all angles’ understanding of project drivers based on our people's experience which ultimately benefits our projects and our clients. Our people are engineers, scientists, planners and other professionals with extensive infrastructure experience, coupled with specific project management training. They have gained their experience from careers as the client, in key roles in government, as the planner, commercial manager, constructor and the final asset owner. As we are not an engineering or construction firm we have the unique ability to integrate with any discipline at any stage of the project life cycle and to work alongside project designers, contractors, owners, or government departments and agencies to provide greater project value, certainty of delivery and enhanced risk management. We collaborate closely with the client to understand their needs and provide the skills to achieve the desired outcomes. Our independence from the commercial drivers of design and construction firms means we are able to provide frank, honest advice to our clients to ensure costeffective, timely delivery.
Infrastructure Association of Queensland Yearbook 2013
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Management
BIM in Australia – where are we up to? By Ren Niemann (Partner) and Goran Gelic (Lawyer) – Allens
Building information modelling (or ‘BIM’) seems to be the hot new topic in the Australian construction industry.
Although BIM has been received positively in other jurisdictions, the Australian construction industry has been less receptive to it in the past. Procurement, legal and insurance issues have commonly been cited as barriers to its implementation in Australia. That said, the tide seems to be turning. Recently, both the federal government and major industry players have expressed strong support for the widespread adoption of BIM. With this intensified focus, the widespread adoption of BIM in Australia is no longer an ‘if’, but more a ‘when’, with changes for the Australian construction industry being inevitable. Overview of BIM Although BIM has been defined in many different ways, at the most basic level, BIM can be characterised as the digital representation of the physical and functional elements of a structure. Importantly, BIM is a shared knowledge resource for information about a structure, which can be used to make decisions about the structure during its design and construction until the end of its life cycle. On this point, it is important to remember that BIM is a new approach to design development – it is not a new technology to design development (although suitable technology is required in order to effectively undertake BIM). BIM was primarily introduced to overcome the limitations of traditional building design. Traditional building design was largely reliant upon two-dimensional drawings and limited collaborative input. For various reasons, this approach did not generally allow for efficient 46
Infrastructure Association of Queensland Yearbook 2013
It has been frequently suggested that the implementation of BIM in Australia would give rise to complicated legal and insurance issues and that it would require ongoing training and support for staff (and cost-effective) construction and delivery of major projects. In contrast, BIM goes beyond the traditional building design method by augmenting the three primary spatial dimensions (width, height and depth) with time and cost as the fourth and fifth dimensions. BIM covers more than just geometry – it also covers spatial relationships, light analysis, geographic information, and quantities and properties of building components. For projects that have used BIM, the benefits have been substantial. Savings in time, cost and improved asset management have been frequently cited as some of the main benefits flowing from BIM. For example, the development of Coca Cola Place in North Sydney (a 21-level commercial building) realised substantial cost and time savings by using BIM. That being said, BIM appears to have its disadvantages. It has been frequently suggested that the implementation of BIM in Australia would give rise to complicated legal and insurance issues
Management
and that it would require ongoing training and support for staff. Although these concerns may be legitimate, the experiences in jurisdictions where BIM is used demonstrate that these challenges can be overcome. Although the uptake of BIM in Australia has generally been slow, other jurisdictions have successfully used BIM for the past decade. In the United Kingdom, BIM has been received positively by both the public and private sectors, with many projects (such as the Leadenhall Building, a major skyscraper in London) using the technology. Similar experiences are also evident in the United States, with many high-profile projects, such as the Fort Benning hospital project, using BIM.
Work is currently being progressed by both government and major industry investing resources to find solutions to the challenges in adopting BIM.
• multidisciplinary education (BIM training for professionals is required) • compliance and certification (regulatory bodies need training and guidance on how to approve and assess BIM-based projects) • product information and BIM libraries (the Australian construction industry needs to digitise its information so it can be used in BIM models) • process and data exchange (clear standards for exchange of BIM data are required). Similar concerns have also been expressed by major industry players. The Australian Institute of Architects suggested in their 2010 'BIM in Australia Report’ that legal and contractual requirements have not yet developed to reflect the collaborative potential of BIM. Likewise, the Air Conditioning and Mechanical Contractors’ Association (AMCA) suggested in their BIMMEPAUS Road Map 2012 Parliamentary Launch report (BIM-MEPAUS Report) that a major challenge to the adoption of BIM in Australia is that current BIM standards in Australia have been prepared without consideration of project delivery workflow requirements.
BIM in Australia
Steps to find solutions
Challenges to implementation
Work is currently being progressed by both government and major industry investing resources to find solutions to the challenges in adopting BIM. At the government level, the federal government (together with buildingSmart) established the Built Environment Industry Innovation Council (BEIIC) to help facilitate the adoption of BIM in Australia. Importantly, the National Building Information Modelling Initiative outlined four key recommendations:
Although BIM may be the new ‘hot topic’ in the Australian construction industry, the adoption of BIM in the Australian construction industry can be traced back over the past decade. For example, projects such as the development of Kurilpa Bridge in Brisbane, and the Monash Law School in Melbourne, have used BIM. However, old habits die hard in the Australian construction industry, particularly given the perceived challenges. The National Building Information Modelling Initiative (a report published by ‘buildingSmart Australasia’ in June 2012 for the federal government) identified the key challenges to the widespread adoption of BIM in Australia. These challenges included: • procurement (new contractual arrangements to accommodate BIM are required) • the development of BIM guidelines (clear standards for BIM users are required)
• require full 3-D collaborative BIM based on open standards for information exchange for all Australian Government building procurements by 1 July 2016 • encourage the Australian states and territories through COAG to require full 3-D collaborative BIM by 1 July 2016. Importantly, with this recommendation, the federal government aims to develop Australian BIM contracts by 1 July 2014
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Management
• implement the National Implementation Plan
BIM
Initiative
• establish a taskforce with key stakeholder representation to manage delivery of the National BIM Initiative Implementation Plan. Major industry players have also intensified their participation in BIM acceptance initiatives. In recent years, various bodies such as AMCA, buildingSmart and the Corporate Research Centre for Construction Innovation have increased their engagement in BIM by developing BIM initiatives, raising awareness, collaborating with key stakeholders and assisting the Australian Government in adopting BIM. In addition, major Australian universities are starting to embrace the BIM phenomenon, with many now offering both undergraduate and postgraduate courses with a focus on BIM. For example, in 2010, the Royal Melbourne Institute of Technology became the first Australian university to launch a BIM studio in an academic setting, capable of research and project collaboration. Future initiatives While both the Australian Government and major industry seem to be taking positive steps to implement BIM in Australia, much still needs to be done. At present, there are still no agreed guidelines (at either the contractual or technical level) as to how BIM should be integrated in the Australian construction industry. BuildingSmart is currently working with the federal government through the National Building Information Modelling Initiative to find solutions to these challenges. The BIM-MEPAUS Report suggested that to progress the implementation of BIM in Australia, the following is needed: • an increased level of leadership coordination across the supply chain
and
• development of industry skills, training and education • reaffirmed enthusiasm compatibility development.
for
software
Similar messages are found in the ‘Productivity in the Building Network’ 2010 report. This report 48
Infrastructure Association of Queensland Yearbook 2013
suggested that to accelerate the adoption of BIM in Australia, not only are clear plans and timelines needed, but that the Commonwealth and state governments could help accelerate BIM adoption by using BIM in their procurement. Final thoughts The next couple of years will be an interesting time for the Australian construction industry. With increasing market competition and an intensified focus on productivity, broad-scale adoption of BIM can no longer be ignored in Australia. Although the precise changes are yet to be determined, it is clear that the Australian construction industry will need to adjust its practices to accommodate BIM. At present, both the Australian Government and major industry are intensifying their efforts in BIM acceptance initiatives. For all participants in the Australian construction industry, it will definitely be interesting to watch and participate in this space.
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Fugro Spatial Solutions delivers complete, end-to-end solutions related to the acquisition, interpretation, management and dissemination of survey and spatial information. We have the resources, technology and operational experience to provide the right solution to public and private sector customers anywhere in the world. Utilising the latest state-of-the-art technologies in airborne and satellite imaging, lidar, land surveying services, and geospatial consulting, Fugro Spatial Solutions is the leading provider of geospatial products and services
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Management
The importance of clarity in information and decision-making – Archimedes in a constrained market By Wade Arthur and Michael Hassall – CGI Consulting
A slowdown in the resources sector, and capital rationing by all levels of government as scarce funding is redirected to disaster recovery and fiscal constraint, has seen a number of major projects either delayed or provided with limited seed money to progress studies until markets and government spending recover.
These projects, which were seemingly a step away from a green light, have joined the evergrowing list of priority projects. For those projects that had been given approval to proceed to the market, the importance of the decision to change course or stop implementation is amplified. There are a number of recent major projects in Queensland that have been cancelled or, more optimistically, deferred by the sponsors. There are examples from both the private and public sectors and from all stages of project development, including: During development business case: • Toowoomba Crossing
Bypass
of and
feasibility Second
or
Range
• Kuranda Range Upgrade • Cross River Rail. During procurement: • Abbott Point Multi Cargo Facility • Surat Basin Rail. 50
Infrastructure Association of Queensland Yearbook 2013
There are numerous causes for projects to be delayed or cancelled. The decision to cancel a project is not necessarily invalidating the work completed in previous stages of the project; it is typically a reflection of the current position of the project owner or the market that they operate in. Project owners are facing changing constraints in terms of the availability of project funding, resource and commodity prices, and the high cost of delivering infrastructure. The project in question may still be the right project; it just may not be the right project at that point in time.
What is interesting to consider with projects that either continue or are delayed at any time in their development is the clarity of the information and the transparency in the decision-making process.
Management
Without the right information, at the right time, projects may continue to gather momentum without true justification and generate unrealistic expectations. Any decision to delay or cancel a project is a difficult one to make, and certainly not a decision that an astute owner would make lightly. Project owners and funders, therefore, need to have access to clear and concise information regarding the project, and a clear and transparent decisionmaking framework. The need for clearly presented high-quality information is greater in these constrained times than in the midst of a spending cycle. What is interesting to consider with projects that either continue or are delayed at any time in their development is the clarity of the information and the transparency in the decision-making process. Accurate information presented the wrong way can portray a poor project. The opposite is also true for information presented with optimism bias and project advocacy attempting to accelerate or continue a project. Without the right information, at the right time, projects may continue to gather momentum without true justification and generate unrealistic expectations. To counter this, organisations should develop and consistently apply rigorous frameworks for project assessment to avoid good projects not proceeding and less worthy projects being given the green light. The concept of optimism bias is welldocumented, and with it comes ownership and emotional investment. What is also observed in well-structured projects and project teams is a necessary and healthy tension between the project team members and the project owners and decision-makers. Project team members are required to be, and are through their very nature and commitment, advocates for their project, thereby becoming emotionally invested in the project proceeding. Project owners and their key advisers need to be able to remain removed
from the inherent project momentum to be able to make rational, objective and logical decisions based on the need for, and the merit of, the project at a program or portfolio level. Greek scholar Archimedes may provide us with some perspective on how this could be overcome. Archimedes noticed when he stepped into a bath that the water level rose, proving that the volume of water displaced must be equal to the volume of the part of his body he had submerged. He was so eager to share his discovery that he leapt out of his bathtub and ran through the streets naked. Archimedes's insight led to the solution of how to assess the purity of a crown where it was suspected a thrifty goldsmith removed gold and added the same weight of silver. (Deconstruction of priceless jewels was generally not supported.) Equipment for weighing objects already existed, and now that Archimedes could also measure volume, their ratio would give the object's density: an essential indicator of purity. The application of Archimedes’s thinking and concept of purity is appropriate in the development of projects at any time, but even more so in our current constrained market. In the current market conditions, project sponsors from the private and public sectors must demand somewhat of a purity test by answering a consistent set of questions at all stages of a project’s development, such as: • What are our strategic objectives? • How does this project advance or fit within our strategic objectives? • Is there a strategic need for this project? • What are the benefits that will accrue by undertaking this project? • What are the risks associated with undertaking this project? • How can we manage the risks and maximise the benefits in progressing the project? • Do we have sufficient financial, management and technical resources to undertake the next phase of the project?
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Management
The importance of this process is in the disciplined testing of the project at defined milestones to continue to test the project’s validity and purity rather than the length of the list of questions. These questions, or ones like them, should be continually asked by both project owners and project teams as they pursue their projects.
The greatest gains seen in projects have been the result of developing a consistent culture of embedding value for money in planning, procurement and implementation, including all decisions and subsequent actions. Those projects that have successfully navigated these questions at each stage of the project life cycle have the greatest chance of success and will likely continue to be successful projects. With the appropriate measures and an assessment against an agreed baseline, the project can be monitored during its development and delivery. This reinforces the need for project owners to develop and consistently apply a rigorous project assessment. This decision-making process reflects the ongoing pursuit of value for money There is no escaping the pursuit of value for money. It is a decision-making process that gained significant support in the evaluation of alliances and other collaborative contracting. The phrase has proved to be so popular that it is not just used in government, but it is also gaining popularity in professional word-bingo circuits, along with the dated business terminology of paradigm and synergy: Bingo! Regardless, there is a continued focus and emphasis on projects that are funded achieving value for money. Value for money is seen as a measure of project success, reflecting what the project was originally funded 52
Infrastructure Association of Queensland Yearbook 2013
for (the baseline or value proposition) and the project benefits realised (the outcome). The greatest gains seen in projects have been a result of developing a consistent culture of embedding value for money in planning, procurement and implementation, including all decisions and subsequent actions. This is because value for money is largely created and destroyed at each stage in the project life cycle and the decision-making process that sets the boundaries for it. Continuing to validate and measure the project as it develops increases the importance of information at hand to allow the hard decisions to be made. There will always be the political or executive imperative to develop individual projects that might not otherwise be pursued. If the projects have been developed using a comprehensive assessment framework, those making the decision to proceed can at least proceed armed with a detailed understanding of the expected benefits and costs of the project. There are numerous assessment tools used by public and private sector organisations, including the Queensland Government’s Project Assurance Framework, the Partnerships Victoria Framework, Infrastructure Australia’s National PPP Policy and Guidelines, and the Gateway Review processes used in most states. The minor details of these policies may differ, but at their core they all promote rigorous testing of projects at every stage of the life cycle: a necessary discipline that is being reinforced in these challenging times. As with gold crowns and naked Greek scholars, our current market requires projects of pure gold – silver linings are not just nice to have anymore.
CGI Consulting is passionate and committed to listening to industry and observing the world to create relationships and deliver solutions. We are based in Brisbane, providing services across Queensland and interstate.
CITY BUILDING
In an Australian first, the building features exterior lighting, which ‘pulsates’ at night by 52,000 computercontrolled LEDs, showcasing the artist Alexander Lotersztain’s work ‘Breathe’.
One One One Eagle Street – a world-class building inspired by nature Infrastructure Association of Queensland Yearbook 2013
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CITY BUILDING
One One One Eagle Street in Brisbane’s ‘Golden Triangle’, designed and constructed by Leighton Contractors for The GPT Group, is simply unlike any other office tower.
Its unprecedented, organic, vertical structure is arguably the world’s first high-rise built using the principles of biomimicry, inspired by the way plants grow upwards towards the light. One One One Eagle Street is one of Brisbane’s most significant developments, adding to the dynamics of the Brisbane CBD riverfront. Planning for the Riverside Centre master plan commenced as early as the 1980s, with further planning approvals extending into the mid 1990s. The master plan was to have three major office towers that would work within one collective precinct, being the new commercial centre of Brisbane known as the ‘Golden Triangle’. When One One One Eagle Street achieved practical completion in June 2012, the vision, dating more than 30 years, had been transformed thanks to its developer The GPT Group, architects Cox Rayner, and design and construction partner Leighton Contractors.
At 199.7 metres tall, One One One Eagle Street comprises 57 levels, including 44 typical office floors, two plant rooms, a roof level and a sixlevel basement, as well as a foyer bistro by renowned chef Philip Johnson and an espresso bar at the mezzanine level. On completion, the office tower delivered more than 63,385 square metres of Property Council of Australia Premium Grade-rated Net Lettable Area (NLA) to the local office market – the first building in Brisbane to achieve the Premium Grade rating. By driving efficiency in structure, architecture and services design, Leighton Contractors delivered over 1000 square metres of additional Net Lettable Area without increasing the building’s gross floor area. At practical completion, One One One Eagle Street had successfully leased 83 per cent of floor space, exceeding the building owner’s 40 per cent target. Every aspect of the project, from construction to completion, has embraced global best practice in sustainability, pushing design, aesthetics and construction boundaries. The overall design of the building features a glass tower supported by the innovative ‘fig tree’ columns, which add to the building’s unique facade. No two office floors are the same due to the shifting geometry and perimeter raking columns reducing in size from 800 millimetres x 800 millimetres at the base to a mere 300 millimetres x 300 millimetres at the top level.
The building is inspired by the fig trees opposite One One One Eagle Street. The reserve these trees occupy was given to the people of Brisbane by Queen Victoria’s representative in 1889, and provided respite to workers from the wharves. 54
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Leighton Contractors Project Manager Jamie Kunst said the building’s fig tree columns not only added to the architectural identity of the tower, but also significantly contributed to the building’s sustainability. ‘By adopting these columns, Leighton Contractors was able to reduce the amount of
CITY BUILDING
contributed to the building being awarded a 6 Star Green Star Rating – Office Design v2 from the Green Building Council of Australia. ‘This particular credit point was created to encourage and recognise sustainable initiatives that are currently outside the scope of the Green Star rating tool, but have substantial or significant environmental benefits,’ he said.
At its peak, there were 370 people employed on-site; however, during the span of the project, more than 2000 workers were inducted. Ninety-eight per cent of these workers were from SouthEast Queensland. materials, such as concrete and reinforcement, needed for construction of the building, which had ongoing reduction benefits for production times and costs,’ Mr Kunst said. By integrating the ‘fig tree’ columns into the overall building design, One One One Eagle Street successfully gained an ‘Inn-3’ credit point for Environmental Design Initiatives, which
In addition to their sustainability benefits, the fig tree columns also increased the building’s structural redundancy, resulting in a more stable and sustainable building. The structural design cleverly addressed site constraints, and has provided Leighton Contractors with significant new knowledge, from design accuracy, differential shortening, and fire performance to construction techniques – setting new industry benchmarks. The outcomes of the project are a direct result of the client’s strong vision, the cutting-edge design by Cox Rayner, the engineering expertise of ARUP, and Leighton Contractors’ significant contribution to design and construction. The GPT Group Development Manager for One One One Eagle Street, Jamie Nelson, said
During demolition of Indigo House and construction of One One One Eagle Street, live monitoring of dust, noise and vibration was conducted. During the demolition of the tallest building in Brisbane to date, sprinklers were used to control the dust and maintain a healthy air environment for the surrounding area. Infrastructure Association of Queensland Yearbook 2013
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the building has achieved outstanding results architecturally and environmentally, setting a new benchmark for premium commercial office towers in Australia.
operations – from demolition of Indigo House (the tallest building in Brisbane to have ever been demolished) through to project completion
‘From the beginning, The GPT Group wanted to create a world-class, sustainable building for Brisbane,’ Mr Nelson said.
• perimeter raking columns shrinking in size from 800 millimetres x 800 millimetres to 300 millimetres x 300 millimetres at the top level, with no two floors the same
‘The initial design concept for the project was developed as part of a competition, with the successful team selected by The GPT Group on the basis of the design and innovation evident in the competition-winning concept. ‘The final design was created using a discipline known as biomimicry to replicate the growing patterns of the Eagle Street fig trees, creating a building that was not only an iconic addition to Brisbane’s skyline, but also contributed to the structural integrity of the building.
• delivering higher ceiling heights around the perimeter of the office floors than normal, without increasing the floor-to-floor heights • removing more than 22,000 cubic metres of excavated soil through an existing basement and loading dock with minimal disruption.
‘The collaborative relationship between GPT and Leighton Contractors has brought together a world-leading team of designers and construction personnel. This team pushed the boundaries on the project’s key objectives from the earliest stages and maintained it through a challenging construction program and economic climate to produce an outstanding environment for business.’ The result at practical completion is a project that has pushed the boundaries across all project aspects to deliver outstanding outcomes to the benefit of the building owner and developer, The GPT Group, and its tenants, and importantly set new benchmarks for future design and construction of high-rise commercial towers. Key project challenges • constructing a 57-level office tower and six basement levels within a footprint of approximately 40 metres x 40 metres • ground conditions of soft marine clay soils and a high water table due to proximity to the Brisbane River • maintaining a construction program similar to the construction of a conventional tower with an unimpeded site • ensuring minimal disruption to the existing Riverside properties and users throughout 56
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One One One Eagle Street in Brisbane’s ‘Golden Triangle’, designed and constructed by Leighton Contractors for The GPT Group, is simply unlike any other office tower.
Ella Bay secures
Queensland’s first integrated resort approval in 30 years
A $1.8-billion integrated resort development in Queensland’s Ella Bay is set to transform the face of ecotourism in the Tropical North and provide a welcomed boost to the region’s economic and job prospects. But what really sets this project apart is a magnificent location like no other. Seven years after embarking upon state and federal government environmental approvals, the Ella Bay Integrated Resort Development has been given the go ahead. The first such approval in 30 years, it is a nod to the ecological integrity of the development, which neighbours some of the state’s most spectacular natural environment. The 450-hectare parcel of freehold land at Ella Bay is located on the coast, 90 minutes south of Cairns and east of Innisfail – where pristine rainforest meets one of the Natural Wonders of the World, the Great Barrier Reef. The site is an island of freehold land that sits within the World Heritagelisted Wet Tropics Area, which runs along the coast from Cairns to Innisfail. Stringent Australian environmental regulations make similar opportunities to develop coastal property within a three-hour radius of Cairns near impossible.
Ella Bay’s masterplan will transform partially cleared cattle property into a multi-purpose resort community. The development is an opportunity to cater exclusively to a new breed of international and domestic ecotourists, and will be a catalyst for tourism growth south of Cairns. It will also work to reinstate Queensland as an ecotourism market leader, following strong growth in competition from interstate and overseas players, who can offer comparable and sometimes better experiences and infrastructure. With tourism revenue and expenditure in Australia forecast to double over the next 10 years, the right infrastructure in a premium Tropical North Queensland destination will help secure a larger proportion of that growth. Ella Bay will be staged over 15 years to meet that increase in demand. When completed, it will cater for 2,000 tourists and 1,000 residents with four resort and four residential precincts, and a village featuring retailers, professional services,
restaurants, an 18-hole competition golf course and sporting facilities. The unique setting and proximity to World Heritage Areas will further enhance the eco-resort experience. Ella Bay will have a minimum ‘carbon footprint’ – solar power, on-site water capture and treatment, reticulated recycled water supply for non-potable uses, on-site stormwater management, energy-efficient tropical building design, and environmentally-friendly transport alternatives. In addition, 500,000 trees for fauna corridors will be planted and provide carbon offset for the night-time LNG generator power supply. The project’s development value is estimated at $1.8 billion, with 10 million man-hours of direct construction employment during the 15-year construction period. To learn more about investment and development opportunities at Ella Bay contact us today: enquiries@ellabay.com.au
CITY BUILDING
Building community resilience Aurecon is a leading, vibrant, global company providing engineering, management, advisory and specialist technical services for government and private sectors across the world. We provide industry-leading technical solutions and draw on our capability across 70 countries to offer our clients in-depth local market knowledge, backed by international expertise.
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CITY BUILDING
The work required to rebuild communities after natural disasters is immensely challenging Rebuilding communities Queensland has endured widespread damage from numerous natural disasters since 2010, with 99 per cent of the state disaster-declared by March 2011. Aurecon’s commitment to making a difference and building effective relationships has proven critical in supporting communities to recover from these devastating natural disasters. Chris Lawson, Manager of our Brisbane Delivery Centre, explained, ‘Aurecon is genuinely committed to making a real difference in our communities. We put the safety of the community, our clients and our people first. ‘While we provide engineering, management, advisory and specialist technical services to government and private-sector clients across the world, at a local level, all of our people are encouraged to support their local communities, regardless of their role,’ added Chris. Aurecon’s rapid response when flooding and Tropical Cyclone Yasi caused widespread damage to infrastructure in January 2011 reflects our philosophy when it comes to servicing Queensland’s communities across the state. ‘We responded with emergency assistance and focused on providing immediate, high-level advice to all levels of government through Natural Disaster Relief and Recovery Arrangements (NDRRA),’ said Lloyd Arnott, Technical Director – Business and Infrastructure Advisory. ‘We continue to provide high-level support and assistance to enable our regional and rural clients to access funding for restoration works and to communicate clearly with the community and stakeholders about the status of repairs,’ added Lloyd. Providing world-class services Aurecon’s in-depth understanding of local government infrastructure, including the challenge of maintaining infrastructure in a
constrained budget environment, allowed us to set clear directions for ongoing recovery efforts in the initial stages post disaster. We kept the process simple and used the latest technology where it added benefit. Our industry-leading process, including computerised data collection and standardised restoration treatments, has been considered for adoption more widely across local government. We shared what we have learned with councils and with the Queensland Government to achieve more efficient and effective outcomes. We focused on the quality of our output and refined our internal review and verification processes accordingly. Our established system allowed for pictorial data sets using a ‘linearreferenced’ global information system (GIS) survey platform. Visual information is readily available, and could be uploaded onto council websites, assisting greatly in keeping the community informed on the disaster restoration program. ‘A critical concern for Aurecon is to share our knowledge and build a practical, technical and community legacy. We do this by working collaboratively with local councils and by supporting their teams to deliver outputs such as databases to record damage and allow local engineers, planners, and maintenance teams to forward plan through their road asset management plans,’ said Lloyd. Infrastructure Association of Queensland Yearbook 2013
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A multifaceted approach The work required to rebuild communities after natural disasters is immensely challenging. It involves successfully managing partnerships between multiple stakeholders – federal, state and local governments, industry and the community – to maintain progress and involvement across a vast geographical spread of project locations. Aurecon’s post-disaster reconstruction effort focused on assessing damage and restoring infrastructure and the built environment, as well as on safety and community engagement to assist in building community resilience parallel with ‘hard infrastructure recovery’. ‘Across Queensland, we supported communities and governments by comprehensively assessing the scale and nature of natural disaster damage. We not only designed remediation solutions and managed the critical restoration works, we engaged with communities to bring people into the recovery process and create a genuine understanding of outcomes and timelines,’ said Lloyd. Aurecon delivered this by embedding our community and communications team within our client organisations. We were therefore able to successfully translate detailed engineering information into a language that was easily understood by the wider community. We distributed clear information around project timeframes and the nature of the work being undertaken to repair damage. Our multifaceted approach includes providing a combination of engineering, technical, project management and communication/community liaison services. We focus on linking project outcomes across local councils, the Queensland Government and community groups to provide transparent and holistic solutions. Benefits for our clients Aurecon has successfully tailored our industryleading process to provide tailored solutions for our regional clients. Aurecon’s project teams work with our clients each day to manage flood recovery programs and to prepare our clients to respond to natural disasters that might occur in the future. Improved business systems and 60
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engagement with communities have resulted in the creation and delivery of benefits, including: • a pictorial database of all damaged road sections across road networks, which is invaluable for storing information in a way that is easy to understand and access • technology-based systems to ensure readiness for the next inevitable flood event • user-friendly reporting to the Queensland Reconstruction Authority • the capacity to immediately value-add to asset management plans • streamlined and efficient contract management processes to administer the work required • improved, structured methods to communicate the status of repairs to the community. Preparing for the future We have worked hard to prepare our clients, including local governments, to be able to deal with future disaster events. Queensland is now at the forefront of ensuring that disaster funding through the NDRRA program achieves value for money. Aurecon has played a lead role in taking Queensland to this position. Aurecon will continue to build on its strengths and work closely with its clients to build their knowledge and capacity, and to build community resilience across Queensland.
Urban development
Queensland state schools ‘Aspire’ to learn
Aspire Schools is delivering Queensland’s first public-private partnership (PPP) schools project in south-east Queensland. The first two of seven schools commenced operations for the 2010 school year, with the remaining five schools welcoming their first students progressively up to the beginning of 2012. The second stage of the Aspire Schools PPP Project commenced mid-2012 to provide additional facilities to all seven schools, and will be complete for the 2014 school year.
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The south-east Queensland Aspire Schools PPP Project is a key initiative of the Queensland Department of Education, Training and Employment (DETE), providing first-class public education facilities in the rapidly growing southeast Queensland corridor. The Aspire Schools consortium comprises Leighton Contractors as project sponsor, Aspire company manager and facilities manager, Broad, as design and construction partner, and Commonwealth Bank of Australia (CBA) as financial adviser and investor. Under the PPP framework, Aspire Schools is undertaking the financing, design, construction and maintenance of the schools for approximately 30 years. Aspire Schools PPP Project – Stage one Seven schools were progressively delivered between 2010 and 2013, with more than 3000 Queensland students now being educated within 4 Star Green Star design and as-built rated facilities at Bayview, Peregian Springs, Woodlinks, Coomera Rivers, Augusta, and Brightwater Primary state schools, and Murrumba State Secondary College.
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Aspire Schools have set high benchmarks by providing a blueprint for future schools in Queensland. Their state-of-the art facilities and innovative design features provide a stimulating and conducive environment for learning. Augusta State School Principal Tammy Swane said she was pleased with their new school. ‘The facility provides the platform for us to be the best we can be,’ Ms Swane said. ‘The best part of the school is the sense of pride that the children and the community have at our school, and the opportunities that it presents us with.’ Terry Lalley, Acting Director, SEQ Schools PPP Project – Infrastructure Operations Unit, DETE, said the Aspire Schools PPP was delivering on its objectives. ‘The Project has delivered schools of a high calibre, and the expectations going into the PPP Project are being achieved,’ Mr Lalley said. Bob Hunter, Aspire Schools General Manager, is also pleased with the achievements of the PPP.
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advice and Broad’s specialist skills in the design and construction of education projects, has enabled not only the delivery of state-of-theart education facilities for DETE, but all schools were also delivered within schedule and within budget. Thao Oakey, Leighton Contractors’ General Manager Infrastructure Investment, said her specialist investment team leads PPPs and other privately financed project tenders. ‘By drawing on our experience and expertise in financing and the delivery of major projects, and working closely with other consortium partners, we delivered a fully funded solution using an innovative supported debt model (SDM) to secure project funding,’ Ms Oakey said.
‘All the schools are operating successfully, and the really pleasing thing is that enrolments have been very high in all of the schools,’ Mr Hunter said. Each school continues to be maintained and operated by Leighton Contractors’ Services Division, under an O&M Agreement for 30 years, with an additional contingency period of 25 years. Aspire Schools PPP Project – Stage two Stage two construction of the Project commenced mid-2012, and will be progressively delivered through to the end of 2013. Stage two includes the addition of junior and senior rooms, and a science and technology room at the six primary schools, while Murrumba State Secondary College will receive additional classrooms, a staffroom block and a performing arts centre. Taking an integrated approach The south-east Queensland Schools PPP Project is a shining example of Leighton Contractors’ ability to combine in-house capabilities in construction, investment, operations and maintenance to tailor end-to-end project solutions. Leighton Contractors’ knowledge and skills in the areas of infrastructure investment, special purpose vehicle management and facility management, combined with CBA’s financial
The Project’s SDM funding won the Project Finance magazine – 2009 Asia Pacific PPP Deal of the Year. Leighton Contractors’ Services Division team, with capabilities in asset management, maintenance planning and life cycle analysis, provides the PPP with a complete facility management service, including maintenance, essential services, project management, cleaning and other hard and soft services. The soft services, including cleaning, washroom consumables, periodic deep cleaning of the schools and landscape and grounds maintenance, are overseen by Leighton Contractors’ facilities management specialists, who supervise a team of 39 DETE cleaners and schools officers. Hard services overseen by the facilities management team include airconditioning, fire, hydraulics and electrical systems. Managing the critical enhancing outcomes
interface
and
One of the key strengths of the Aspire Schools PPP Project was the relationship between Leighton Contractors’ facilities management team and the construction partner, Broad. This relationship assisted the mitigation of risk transfer from the handover of construction completion to the operations phase. A strong alignment was built early to manage this very critical interface. During the transition, Leighton Contractors’ facilities management team and Broad worked Infrastructure Association of Queensland Yearbook 2013
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together behind the scenes to resolve any issues, and to develop solutions prior to approaching the client (the schools). This process enabled the schools to mobilise and focus on teaching while any building issues were dealt with seamlessly. John Hesketh, General Manager of Facility Management at Leighton Contractors, said the facilities management team took an active role during the Project’s design phase. ‘The design drawings were reviewed from a maintenance and whole-of-design-life perspective to ensure the schools were built for a low-maintenance outcome,’ Mr Hesketh said. ‘As a result of our facilities team’s involvement during the critical design stage, various building elements were redesigned and changed, improving the asset’s performance by selecting the optimal operations and maintenance solutions, while remaining fit for purpose. ‘The grounds and landscape design was also reviewed to ensure that, from a safety perspective, areas around the school could be maintained with minimal disruption to normal school operations, eliminating safety risks to the children.’ The Aspire Schools PPP Project approach has delivered many benefits to the school staff, including less time spent dealing with facilitiesrelated issues.
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‘Our team spends a lot of time planning both the day-to-day tasks, such as the cleaning and the groundskeeping, and the longer-term tasks, such as looking at the replacement of assets and major refurbishment work, and then scheduling activities to suit the Principal’s requirements and avoid any disruption to the operation of the school,’ Mr Hesketh said. ‘Green thumb’ initiative – our commitment to the school environment Driven by Leighton Contractors’ commitment to supporting local communities, the facility management team worked with Woodlinks State School to assist them in the delivery of their Stephanie Alexander Kitchen Garden Program. This included an upgrade of the vegetable gardens and chicken coops to enable the school to provide additional learning outcomes for the students. Leighton Contractors’ facilities management team incorporated the works into their maintenance scope to ensure that the school was supported while minimising maintenance impact on the contract. The Aspire Schools PPP Project is a great example of the private and public sector working together with the schools and communities to provide quality education facilities for Queensland students.
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Brisbane's Airport Link
Airport Link – a worldclass engineering feat 2012 was a milestone year for the engineering and construction industry, with the official opening of Brisbane's $4.8-billion Airport Link – one of the most complex engineering infrastructure projects ever undertaken in Australia.
Built by Thiess John Holland (TJH) concurrently with the Northern Busway (Windsor to Kedron) and the Airport Roundabout Upgrade, construction of Airport Link took almost four years to complete. Airport Link is a 6.7-kilometre toll road, which mainly travels underground. It connects the CLEM7, the Inner City Bypass and the local road
network at Bowen Hills to the northern arterials of Gympie Road and Stafford Road at Kedron, as well as Sandgate Road and the East West Arterial leading to Brisbane airport. Airport Link is playing a key role in building a better Brisbane by enhancing choice and reducing congestion. Using Airport Link, motorists can avoid up to 18 sets of traffic lights, providing Infrastructure Association of Queensland Yearbook 2013
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significant travel time savings and a more predictable and reliable journey. It also enhances the liveability of the northern suburbs by freeing up road space for improved public transport and pedestrian and cycling links. Constructing Airport Link’s tunnels Airport Link required twin 5.1-kilometre tunnels, with entry and exit portals at Bowen Hills, Kedron and Toombul. A range of techniques were used to construct the tunnels, including tunnel-boring machines, road headers, and constructing and jacking two concrete boxes. The jacked boxes, measuring the width of a rugby league field, were pushed under the live North Coast Railway line at Toombul – one of Queensland’s busiest railway lines. This would prove to be one of the most complex engineering aspects of the project’s construction. Before jacking could begin, 48 canopy tubes were pushed through the embankment at Kalinga Park to form a platform providing stability to the North Coast Railway Line. The two concrete boxes, 65 metres long and 12.5 metres high, with a combined span of approximately 38 metres, were then constructed beside the railway line, before hydraulic jacks and steel strands were used to push and pull them through the rail embankment. As the boxes progressively moved forward 55 metres into position, 10 excavators sitting inside the boxes removed up to 50,000 tonnes of soil from the embankment. To maintain stability of the rail embankment, this work was done continuously for 864 hours. A real-time sophisticated track monitoring system was installed to monitor the spatial position of each track 24 hours a day, with key data relayed to key personnel via email and text message. The system included more than 200 track measuring points. While the actual jacking only took a couple of months to complete, the operation was nearly three years in the planning, and was the biggest ever undertaken in Australia and one of the largest in the world. The operation was successfully achieved without causing disruption to train services. 66
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Jacked box under construction Innovative construction techniques The jacked box operation provides an example of the on-the-ground innovation implemented by TJH to make the project a reality. A traditional approach to building the tunnel under an established railway would have involved a prolonged, progressive build of walls from the railway above, followed by a series of roof slides. This would have required at least 30 weekend track closures, affecting freight, city network and AirTrain customers. This approach was not viable due to the significant impact on train operations, and was not possible in the few railway possession windows available over the project construction duration. A feature of the Toombul jacked box was a period of concurrent jacking of both boxes sideby-side, even before the second, larger, box was completely built. This was something never before attempted, and proved successful in reducing the overall duration of the box jacking exercise. Noting the boxes were side-by-side and designed to slide against each other, these constraints required innovative formwork systems on the second box to be constructed, so concrete could be poured and set.
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Airport Link aerial
Jacked box operation wins prestigious industry awards
Fast facts about Airport Link construction: • 28.5 million hours worked
The TJH Airport Link Jacked Box team has won a series of prestigious industry awards, recognising the innovation and technical excellence of the operation:
• more than 12,000 direct and indirect Queensland jobs created, with more than 4500 people employed at peak
• 2012 Engineers Australia Queensland Chapter Engineering Excellence Awards – Winner – Research and Development Excellence
• 17 roadheaders – the largest number ever used on an Australian infrastructure project
• 2012 Engineers Australia Queensland Chapter Engineering Excellence Awards – Finalist – Project Infrastructure over $50 Million Excellence • 2012 Ground Engineering Industry Awards United Kingdom – Award for Technical Excellence • 2011 British Geotechnical Association – Fleming Award.
• 34,000 people site inducted
• tunnel-boring machines – the largest to ever operate in Australia, weighing 3000 tonnes each, equivalent to 75 semi-trailers • 25 bridges constructed – tallest bridge stands 25 metres high and longest is 684 metres • seven kilometres of new roadway created • more than 13 kilometres of new cycle and pathways created • 3.5 hectares of new parkland created • 1.15 million cubic metres of concrete poured • two million metres of cable laid • 125,000 tonnes of reinforced steel used • 128 traffic switches undertaken • more than nine million tonnes of spoil removed • 30 cranes and about 25 piling rigs used • more than one million community notifications for local residents and businesses distributed. Infrastructure Association of Queensland Yearbook 2013
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Reconnecting Queensland – Transport Network Reconstruction Program By David Lynn, Project Manager – Sinclair Knight Merz
After flooding and cyclone events in the summers of 2010/2011 and 2011/2012, the Department of Transport and Main Roads (TMR) is delivering the largest program of works in the department’s history, with more than $6 billion budgeted for the reconstruction of Queensland’s state-controlled roads.
Sinclair Knight Merz (SKM) is working with TMR to deliver three of the nine regional programs, managing over $1 billion in capital expenditure. Rebuilding communities Operation Queenslander is the largest reconstruction effort in the state’s history, rebuilding communities, fixing infrastructure and restoring regional economies after flooding and cyclone events in the summers of 2010/2011 and 2011/2012.
TMR is delivering the largest program of works in the department’s history, with more than $6 billion budgeted to reconstruct Queensland’s state-controlled roads. In 2011, 100 per cent of the state was disasterdeclared, with 20,610 kilomertres of roads closed. In 2012, the state-controlled road network was again impacted with 10,680 kilometres of roads closed. These reconstruction works are being carried out in addition to the department’s annual transport and roadworks program, identified through the Queensland Transport and Roads Investment Program 2010–11 to 2013–14. Reconstruction of Queensland’s transport network by 2014 is dependent on the availability of people and companies with the right skills, experience, knowledge and attitude across a wide variety of disciplines. The program, which will be delivered across the state by mid-2014 under Natural Disaster Relief and Recovery Arrangements (NDRRA), is a joint federal and state initiative. Under these arrangements, the Australian Government provides 75 per cent of the funding, with 25 per cent coming from the Queensland Government.
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SKM is working with TMR to deliver three of the nine regional programs, managing over $1 billion in capital expenditure. These regions – Central West, North West and the Far North – make up the three largest and most remote regions under TMR’s statewide Transport Network Reconstruction Program (TRNP), equating to about one million square kilometres in area. SKM has been engaged to partner with TMR to manage the program of reconstruction works, including design, preparation of construction contract documentation and administering the construction contracts within these three regions – essentially an engineering, procurement, construction, management (EPCM) scope of works. Specifically, this includes: • emergency response and inspections, damage assessment, business case for funding approvals, packaging of work, detailed design and contract documentation, procurement, contract administration, and program management • asset management and compliance tracking • environment and cultural heritage assessment • community consultation and stakeholder engagement • coordination of complex development applications for quarries and other gravel sources to secure ongoing supply of compliant materials for maintenance well into the future. Delivering a project of unprecedented scale The events of 2011 have resulted in an unprecedented volume of reconstruction works in order to return Queensland’s state-controlled road network back to standard. With such a large volume of works over some of Queensland’s most remote regions, careful delivery of work packages has been required to ensure all environmental and planning obligations are met. SKM has well over 100 team members either embedded within the three TMR regional offices or working in SKM offices. Works within the regions are either delivered by principal contractors that SKM has commissioned, or, alternatively, by RoadTek or local government.
The sheer scale of the TNRP project presents many challenges in delivering services; however, with every challenge, a solution can be provided. The table below outlines some key challenges and solutions: Challenge • geographically vast and remote
SKM solution • positive and effective program governance
• small populations • strategic planning for program, procurement, risk and safety management • human resource constraints
• engagement of industry
• lack of access to • combining projects into consolidated environmental construction planning services packages, which has allowed for efficiencies in the tendering and procurement process • introduction of • significant methods to add road distances complementary works and travel to the construction times between packages to obtain communities better value for money
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Keeping our people safe
• pristine and • communication and intact wilderness engagement of public areas with stakeholders during complex the construction frameworks (Wild period to assist Rivers legislation, in travel planning National Parks, and reduction of the Barrier Reef complaints World Heritage Area) • cultural heritage and Native Title
• community engagement
• development of a safety management plan for a consistent management approach to the regions • adoption of a Program Management Support team
• dealing with • web-based systems a variety of for efficiency and program consistency. management and delivery systems • road construction material availability • safety awareness. For the SKM-managed element of the project, TrackRecord™ ensures that the ongoing permitting and inspection requirements of each asset are scheduled, tracked, allocated responsibility and completed. This increases confidence around compliance and allows for critical reconstruction packages to be scheduled and completed in accordance with all relevant permit requirements. 70
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The safety of SKM’s people is held in high regard, and in January 2013, the SKM project team reached a significant milestone: reaching 375,000 work hours without any lost time injuries (LTI). Given the large geographical scope of this project, the sheer number of worksites across the three regions and the number of team members involved, this is an outstanding achievement. SKM’s team is large and includes resources from Queensland, New South Wales, Victoria, South Australia, Western Australia, Tasmania, New Zealand and England. The company has spent considerable time and resources ensuring robust procedures and training are in place to manage remote area works and travel. Risks associated with driving and working in remote areas were identified early on during project inception, and as such, SKM’s risk assessment and controls register for the project was established accordingly. No incidents have occurred to date and the LTI milestone demonstrates SKM’s commitment to safety in this program. Success story: Barcoo River Bridge In September 2012, reconstruction works were completed on the Barcoo River Bridge following significant structural damage. As well as this being an important freight and livestock route, many tourists use this part of the Landsborough Highway for their journey through Central West Queensland. The $6.2-million reconstruction of the Barcoo River Bridge has supported the regional economy by ensuring major industries, including tourism, agriculture, resources and construction, can continue to operate efficiently across the region. Its repair and reopening in October 2012 was a significant milestone for the TNRP. On average, 57 towing light vehicles (such as caravans) use this stretch of road each day. This accounts for approximately 20 per cent of all daily light vehicle movements between the townships of Blackall and Tambo. SKM will continue to work with TMR to reconnect Queensland through 2013 and 2014. For more information about this program of reconstruction works, visit www.tmr.qld.gov.au.
Sustainability
Parsons Brinckerhoff has the experience and expertise required to assist clients in exploring brownfield renewal opportunities.
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Sustainability
There are many challenges facing the built and natural environments as a consequence of population growth and urban development. Brownfield site development provides enormous opportunity to respond to the growing demand for urban infrastructure, and as a result, Parsons Brinckerhoff developed a white paper to explore the considerations of brownfield renewals. The following information is a result of our market and client research process, and represents a diverse group of companies and opinions. It is estimated that there are over 50,000 contaminated sites in Australia, with 4000 brownfield sites estimated in Queensland1. However, the environmental and political considerations of a brownfield site can commonly be underestimated and misunderstood by land owners or potential purchasers. Parsons Brinckerhoff’s study found that given the increasing policy focus in our major cities, especially our capital cities, by all levels of government, integrated strategic thinking and sustainable practices are essential. What is a brownfield site? The term ‘brownfield’ was first used in the United States in the early 1990s. It referred to the legacy of past industrial practices, pinpointing disused industrial land that was not suitable for another purpose without some level of clean-up to remove contamination. Brownfield sites come in different sizes, shapes and locations. The restoration of a brownfield site is driven, in most cases, by its location: they are often located close to existing health, education, recreational and cultural facilities, utilities and transport services. These drivers are also closely linked to housing demand, financial return by the developer and ease of mobility. Understanding the challenges Parsons Brinckerhoff’s study revealed that state planning and environmental agencies, local authorities and the private sector now recognise that the clean-up of contaminated land not only reduces the risks to human 1 Remediation Australasia: www.remediationaustralasia.com.au/?q=node/521
health and the environment, but also opens up previously unusable land for urban renewal and revitalisation at a site or precinct level. The development of new technologies to treat and remove legacy contamination from old sites over the past 15 years, and the introduction of new environmental and planning legislation, has made this possible. Each brownfield site is different. As outlined in our white paper, before a site can be redeveloped, it is necessary to establish its environmental status in relation to the nature, extent and level of contamination, and to understand the feasibility of rehabilitating the site. In early 2011, Parsons Brinckerhoff surveyed a cross-section of public and private companies across Australia that had varying involvement in developing brownfield sites. The common factors identified as essential to know before starting a brownfield development project included: • end-user strategy • its financial viability • the risk involved contamination)
(including
level
of
• community opinion. The ability to carefully plan land uses and redevelopment options for affected properties allows for planning viable risk-based remediation projects while providing liability protection for environmental regulatory requirements. Parsons Brinckerhoff’s study revealed that the main impediments to brownfield development are perceptions about contaminants and the high cost of remediation compared to ‘greenfield’ sites. However, if the broader environmental costs are taken into account, then the viability of brownfield redevelopment becomes more attractive. The white paper explores that the site’s potential and existing environmental liabilities largely depend on a number of different factors, including: • type of property transaction • extent of soil and/or groundwater contamination
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The white paper explores potential and existing environmental liabilities
• cost to remediate contamination (where required and where quantified) • strategic value of the property (where relevant). Brownfield sites can also elicit a number of different reactions within the community and among stakeholders. These sites are often linked to the history of the area (both good and bad), and act as informal recreation areas or plain barren wastelands. Remediation of these areas generally represents the great unknowns that can affect health, social wellbeing and the value of the surrounding area. Transforming brown to green Remediation is generally considered to be a positive step towards attaining sustainable reuse of these sites. The rehabilitation and redevelopment of brownfield sites – the quintessential renewable urban resource – is one of the main objectives in city planning, based upon principles of green urbanism. Green urbanism is a design philosophy that focuses on strategies for creating sustainable communities at the scale of the city, district, precinct and estate. The adaptive reuse of innercity brownfield sites is a highly sustainable way to deal with the growth needs of existing cities, while reducing their carbon footprint and, importantly, keeping space affordable. To obtain a copy of the Brownfields Renewal white paper compiled by Parsons Brinckerhoff, contact Shannon Smith: shsmith@pb.com.au. Case study Identifying risks of a site early on can positively affect the buying price. Ipswich City Properties Pty Ltd, which is owned by Ipswich City Council, proposed acquiring a portion of excess rail land owned by Queensland Rail. Ipswich City Council 74
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wanted to redevelop it for a number of uses, including standard residential and industrial/ commercial. By performing an effective due diligence process, the council got a clear picture of the risks associated with the site. At Stages One and Two, environmental site assessments were undertaken by Parsons Brinckerhoff to identify the risks associated with the site. This consisted of a desktop review of the site history, including relevant searches, enquiries and analysis; a site inspection; and soil and groundwater analysis. Ipswich City Council used the results to reduce the buying price of the site when negotiating the acquisition, which allowed them to effectively manage the risks posed by site contamination. Case study A former 16-hectare gasworks, Newstead Riverpark, is being developed into a residential, business and retail community. Because of the site’s long industrial history, a number of contamination issues had to be tackled before redevelopment works could take place. As the site is situated within existing residential and commercial areas, Parsons Brinckerhoff was appointed to take an early engagement step and build relationships with stakeholders and the community. The brownfield site elicited a number of different reactions within the community and among stakeholders. Consultation involved establishing and meeting with a community liaison group, holding public information sessions, staffing a 24-hour telephone line, and meeting with individual residents and business owners. Support material included a website with up-to-date air quality monitoring results, newsletters and fact sheets. Stakeholder and community concerns were successfully resolved through early engagement, and simply and clearly discussing the science behind the remediation process. Parsons Brinckerhoff provided an avenue for the community and stakeholders to discuss their concerns, making it easier for the client and regulators to remediate and develop the site.
Sustainability
Water solutions for a growing community The multi-award winning Logan Water Alliance is setting the benchmark for planning and delivering Australian water infrastructure. As one of the largest infrastructure delivery programs of its type, the Alliance provides Logan City Council with the capacity to deliver new and improved water, wastewater and recycled water infrastructure in growing communities. Parsons Brinckerhoff, in partnership with Logan City Council, Tenix and Cardno, is demonstrating its expertise by delivering this complex program of works. The high level of involvement by council, as well as a strong community and sustainability focus, has been pivotal to the Alliance’s success. Unique approach Led by its planning function, the Alliance has direct input and influence at all stages of the project life cycle, from concept through to commissioned asset. This unique ‘planningled’ approach unlocks value early, when the opportunity to create value is at its greatest. To date, this has resulted in more than $79 million in capital cost savings, and $45 million in net present cost savings for the Alliance owner, Logan City Council, and the wider Logan community. One of the Alliance’s greatest value creation successes was developed on the Slacks Creek to Loganholme Wastewater Network Upgrade project. By taking the time to consider and challenge a pre-Alliance-designed network augmentation, the team delivered a 63 per cent cost saving – or $83 million – on council’s original $132-million solution. The majority of these savings were achieved through strategic and innovative infrastructure planning. The Alliance’s complex program requires delivery of between 40 and 50 simultaneous planning activities that include regional strategic planning, the development of complex water and wastewater models, and detailed planning. Stringent engineering practices and processes are employed throughout the life cycle of
projects in the program. These are underpinned by a rigorous lessons-learnt process that occurs after a project’s commissioning. Key insights from lessons-learnt activities are used to drive innovation and identify potential improvement opportunities for future capital works. Since the program began in August 2009, the Alliance has delivered 148 planning tasks, 12 design packages, and 34 capital works projects valued at $92.3 million. A further 36 planning tasks, three design packages and seven capital works projects are currently underway. Community and stakeholders Planning decisions directly influence the scope and delivery of projects across Logan City. The Alliance’s planning-led approach has led to the development of annual capital works programs that facilitate growth across Logan – providing infrastructure when and where it is most needed. In some areas, such as Logan Village, this has meant providing reticulated-water services to a community for the first time. In other areas, the priority has been to improve the sustainability of existing infrastructure; reducing life cycle costs, greenhouse gas emissions, potential overflows and odours. A major focus of the Alliance program is to understand and deliver outcomes that are aligned with key stakeholders’ expectations. Since the Alliance commenced, almost 5000 stakeholders have been engaged through 1900 engagement events, including information distribution campaigns and stakeholder meetings. The Alliance’s commitment to community and stakeholder satisfaction is evident in the exceptionally high satisfaction ratings it continually receives. Overall, 92 per cent of stakeholders surveyed about the Alliance have been happy with its delivery and community engagement performance. In addition, the owner’s management personnel have provided a 100 per cent satisfaction rating for the Alliance’s performance. Infrastructure Association of Queensland Yearbook 2013
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As well as facilitating growth within Logan, the Alliance contributes to the local economy by developing the skills of local water industry professionals through comprehensive training and development programs. The Alliance also offers direct and indirect employment opportunities for team members and subcontractors. Environment The Alliance continually seeks to find new ways to reduce its environmental footprint. This is evident in its strategic approach to offsetting the removal of native vegetation across worksites. Over $1 million has been saved by reducing vegetation removal on worksites, and over 4000 trees have been saved in approved construction corridors. To achieve this result, the Alliance uses clever design and construction techniques, such as pipeline alignments that ‘weave’ through trees, use of excavator-mounted boring machines to tunnel under trees when laying pipes, and trenchless construction techniques, such as horizontal directional drilling, in community and environmentally sensitive areas. The team is undertaking a $1.9-million rehabilitation of Greenwood Lakes Reserve in Forestdale to mitigate vegetation removal on Alliance worksites. The rehabilitation project has involved the regeneration of 13.5 hectares of the reserve, including planting more than 92,000 native tube stock and installing 45 nesting boxes. Once completed, these activities will significantly enhance the local amenity of the Forestdale area as well as the regional biodiversity and viability of the Greenbank–Karawatha wildlife corridor. The community has been engaged in two treeplanting days at the reserve. To date there have been no significant environment incidents at any Logan Water Alliance site. Safety The Alliance’s Zero Harm policy and program underpins a strong safety culture. This approach to safety means that, as a team, the Alliance will not accept anything other than zero injuries to its staff, subcontractors or community members living near, or driving through, its worksites.
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In addition to frequent safety and quality audits, there are regular safety training sessions, inductions and awareness campaigns. In early 2013, the Alliance achieved almost 800,000 hours worked with a Lost Time Injury Frequency rate of zero. Some Alliance projects also deliver safety benefits to the community. Wastewater storage facilities have been installed at 20 critical sites around Logan to reduce potential wastewater spills and odours. The Alliance also installed chlorination booster facilities at strategic locations within the water network to improve water quality and overcome ‘low chlorine residual hotspots’ throughout the city. Industry recognition The Alliance’s efforts have not gone unnoticed. The team’s outstanding achievements have been recognised with several industry awards, including: • 2012 Queensland Engineering Excellence Awards – Reports, Procedures and Systems Award • 2012 Institute of Public Works Engineering Australia (Queensland Division) – Water, Wastewater, Sewerage and Drought Management (Projects $1 million to $5 million) Award • 2012 Infrastructure Partnerships Australia – Contractor Excellence Award (Finalist) • 2012 Australian Water Association – National Infrastructure Project Innovation Award (Finalist) • 2011 Australian Water Association (Qld) – Infrastructure Project Innovation Award • 2011 Australian Water Association (Qld) – Water Professional of the Year Award – Ian Cameron (Alliance Design Manager) • 2011 Australian Water Association (Qld) Young Water Professional of the Year (Finalist) – Liliana Castro Araoz (Alliance Planning Project Manager).
Sustainability
Cairns project’s innovations make environmental protection the winner By James Begg, Principal Geo-Environmental Engineer – Golder Associates
What do you do with more than a million cubic metres of waste stored within protected mangrove wetlands and in the midst of the Great Barrier Reef Marine Park and Wet Tropics World Heritage Areas?
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The successful solution to the challenges posed by the Portsmith Landfill Closure Project in Cairns, Queensland, resulted in the project team of Cairns Regional Council (Council), Golder Associates (Golder) and BMD Constructions winning the top 2012 environmental and sustainability awards from Engineers Australia’s Queensland Division. From 1985, the Portsmith Landfill housed waste from the Cairns region and surrounding areas. At the time of its closure in 2005, it contained 1.7 million cubic metres of waste material and covered 20 hectares of land, making it one of the largest regional waste disposal facilities in Queensland.
• improving the stability factor of safety. As expected, with such a massive volume of waste and the environmentally sensitive surrounds, there were a number of challenges. These included the provision of a stable landform comprising waste material with minimal compaction placed on very low-strength estuarine clay soils adjacent to the banks of waterways. There was also a requirement to raise the perimeter bunds to exclude tidal movements and one-in-100-year flood levels, as well as assessing the condition and effectiveness of the existing perimeter leachate collection system infrastructure.
The project area is subject to tropical monsoon rainfall and the landfill was originally constructed without engineered liners or leachate collection systems. Over the years, the Cairns Regional Council implemented a number of improvements, including the installation of a leachate collection system, as well as addressing issues such as landfill gas and stability. In 1999, Council engaged Golder, a global consulting, design and construction services organisation, to advise on environmental and waste management matters. The initial objective was to reduce the risk of impacts to the surrounding environment while the landfill was still in operation. Six years later, Council approached Golder to take this a step further and develop a plan and design for the landfill’s closure. The project required the innovative adoption of best practice planning, design, construction and project management methods to sustainably upgrade environmental protection measures that included: • increasing flood immunity to one-in-100-year average recurrence interval rainfall events • reducing stormwater seepage into the waste by 99 per cent • reducing sediment discharge into adjacent wetlands by 90 per cent • reducing greenhouse gas emissions by 80 per cent 78
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Through innovation and lateral thinking, Golder overcame these challenges and in turn raised the bar with respect to landfill closure practices in regional Australia. Other challenges included achieving a significant reduction in seepage and the generation of leachate by providing a final capping layer in a high-rainfall environment, as well as containing
Sustainability
and managing landfill gas, which was estimated to comprise half of Council’s greenhouse gas emissions. Golder was required to design and construct landfill closure works around critical community waste recovery and railway infrastructure that had been located within the landfill. It was necessary to manage the run-off from 2.2 metres of average annual rainfall (average of 350 megalitres per year) during construction works and the subsequent 30-year closure period within a site where areas located outside the waste footprint could not be disturbed or impacted. Through innovation and lateral thinking, Golder overcame these challenges and in turn raised the bar with respect to landfill closure practices in regional Australia.
Goldset sustainability assessment tool One of the innovations applied to this project was the use of Goldset, which is Golder’s inhouse sustainability assessment tool. This options assessment tool is used by Golder to identify the most sustainable design and construction approach, taking into consideration the likely environmental, community and economic costs and benefits. The Goldset assessment process identified a number of potential environmental issues for which a range of solutions was applied. These included using a composite final capping layer, which comprised a geocomposite gas collection/leachate drainage layer, compacted clay, geosynthetic clay liner, geomembrane, geocomposite drainage layer and cover soils. The design resulted in a considerable reduction of stormwater infiltration by a factor of 100,
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reduction in the volume of soil material required for construction, a significant reduction of construction costs and improvement of landfill gas emission containment. The project team also reduced environmental and cost implications by utilising locally and readily available materials, such as an alternative cover soil. To avoid disruptions to construction due to high rainfall, and to decrease the potential for environmental contamination, the team worked during the dry season: April to December. The resultant longer lead time allowed more time to procure the required materials, such as geosynthetic capping materials, which typically have long manufacturing timeframes. The landfill closure design adopted incorporated the placement of lined sediment basins within the landfill footprint. This enabled the treatment and purification of sediment-laden water within the disturbed footprint prior to discharging it to the adjacent mangrove wetlands and waterways. To avoid the potential for harmful landfill gas leakage between the main landfill mound and adjacent areas, which are used for other community infrastructure, the team designed and constructed a 300-metre long landfill gas barrier wall.
The project was truly multidisciplinary, enlisting a diverse range of skills including project management, sustainability assessment, landfill engineering, geotechnical engineering, contaminated land assessment, environmental assessment, hydrogeology, hydrology, electrical and structural engineering, landfill gas assessment and management, electricity generation, design safety and construction quality assurance. Environment and sustainability are synonymous with Golder’s mantra of ‘Engineering earth’s development, preserving earth’s integrity,’ which in this project was recognised by Engineers Australia’s Environment and Sustainability Awards. Cairns Regional Council’s Acting General Manager Water and Waste, Jon Turner, said the excellent environmental outcomes were the result of good planning and a strong team effort. ‘This project is the culmination of several years of planning and a desire to meet ambitious emissions reduction targets,’ Mr Turner said. ‘We are now looking to take this project to the next level with the potential harvest of energy generated on the landfill site now being investigated.’
Golder and Council recognised the need for a unique approach to managing the significant landfill gas volumes being produced.
Golder Associates Managing Director Australia, Adam Kilsby, said the awards were recognition for the project team’s success in helping protect an area of immense importance to Australia and the world.
The first task was to complete a staged and systematic assessment regarding the removal and possible reuse of greenhouse gas emissions. The assessment involved three stages comprising detailed modelling of waste, field trials and a full-scale pumping trial.
‘This innovative project was delivered by applying our global know-how to achieve a world-class local solution. We’re proud to have shown our commitment to sustainable development and achieved a positive environmental outcome in this highly sensitive area,’ Mr Kilsby said.
The results of capturing the landfill gas have led to Council assessing the feasibility of using greenhouse gases to generate power for the electricity grid. Council is currently considering the economic and environmental viability of the next phase of this aspect of the project.
The results of this project clearly illustrate what can be achieved when innovation meets engineering smarts.
Managing landfill gas
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For further information on this project, contact James Begg, Principal Geo-Environmental Engineer on (07) 4054 8200, or via email at jbegg@golder.com.au.
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Driving success In these days of lower commodity prices and high government debt, infrastructure development for new projects in the ports, airports, water and rail sectors has slowed dramatically. In light of the resulting increase in capacity constraints, asset owners, operators and users are focusing instead on finding new ways of squeezing greater efficiencies and more value out of the assets they already have.
Most infrastructure players have good relationships with a wide range of suppliers and service providers in their industries. Changing your contracting approach to these organisations (even under your existing contractual arrangements) can achieve savings, and help you to squeeze more value out of your business while still retaining those valuable relationships. You might decide to outsource discrete parts of your operation (to help you focus on your core skills), refresh existing outsourced services arrangements, adjust your maintenance and supply agreements, or perhaps even outsource the operation and maintenance of the entire asset. Many businesses are engaging consultants to review their existing operations and see what can be done more efficiently. Whatever type of service agreement you might want to investigate, there are certain things that are common to all, and it is important to get these right. They include: 1. Defining services When you want someone to perform a service for you, you need to agree on exactly what it is they are to do. Failure to define the services accurately means that you may be paying for a service that you do not need, or you may not be getting a service that you need. Problems in this area are common. For example, an operator under an operation and maintenance agreement in respect of a water asset was obliged under the agreement to 82
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Successful projects (construction or operations) are built on successful relationships. rectify defects in that asset. The asset had been built by a third party, and then handed over to the operator. The operation and maintenance contract said that if the contractor failed to rectify a defect within a specific time during the relevant defects liability period, the owner could ask the operator to fix it and the operator would be paid to do so. However, it subsequently became clear that the asset owner expected the operator to actively go out and look for defects in the assets it was responsible for. Given the size of the asset, this was a major additional obligation. The parties resolved the issue through the variations process, but if the issue had been fleshed out before the agreement was signed, a considerable amount of cost and time could have been avoided. 2. Build in communications Successful projects (construction or operations) are built on successful relationships. While many projects go well without documentation because the people on the ground make them work, you can give your project a better chance of success by setting up the right communication forums and lines. It may simply be a case of writing down what you are already doing, or anticipating what a new project might need. For example, a terminal operator at a port wanted to get more information about future
Contracts
volumes that might be coming to the port from a particular customer so that it could decide whether to fund further investment in equipment. The agreement between them included the usual clauses regarding forecast volumes, covered by a fairly standard confidentiality clause, but went no further. Despite the parties’ good relationship, the operator could not persuade the customer to provide more information. However, when the contract came up for renewal, the operator proposed a more detailed communications plan, including regular meetings, a team to oversee day-to-day issues, more frequent reporting by the operator, a more detailed confidentiality clause, and a balanced and commercial disputes process. This gave the customer the comfort it needed to provide the information the operator had been seeking. 3. Manage your deal Services contracts are not like other contracts. They are, in many ways, living documents that have to be managed by both parties, ideally working together. A mining company had previously been running its own rail operations on the basis that this gave it a greater degree of control over this crucial aspect of its business. For many reasons, they decided that this was no longer feasible, and looked for a thirdparty operator. The mining company found a candidate and signed a contract with them. Despite the centrality of the rail operation to the mining company’s business, they got busy with other things, people moved on, and the contract was left to run itself. When the new operator failed to perform, the mining company sought
to impose the penalties it was entitled to impose under the contract. However, the operator argued successfully that it could not do so, as it had altered the contract by its conduct in failing to impose those penalties earlier. If the contract had been managed from the start, the outcome might have been very different. 4. Build in flexibility Services contracts can last for long periods (10 years or more), and, of course, things change. They should always include variation clauses so that additional services within the scope of the original agreement can be carried out, and the payments for them are agreed. In our experience, more balanced variation clauses tend to produce better results in services contracts, especially where long-term relationships are involved. The agreement should be predicated upon payment of a fair price for a reasonable level of service. There was a variation clause in a maintenance agreement for baggage-handling equipment at an airport, but it only allowed the principal to direct variations. There was no process for the service provider to claim certain instructions as variations. As such, the clause was very onesided. After a lengthy period of trying to comply with various instructions from the principal that the service provider regarded as clear variations, the service provider decided to terminate the contract. While there was a clear failure of relationship in this case, a more balanced variation clause may have allowed the parties to continue working together.
Planes, trains and automobiles Put water and ports in place of automobiles and you get the idea. Holding Redlich’s infrastructure and projects lawyers have decades of water, ports, airports and rail industry experience – including working in-house for major owners and operators. We have real-life experience and we deliver solutions that work. www.holdingredlich.com Jeremy Prentice | Partner | Brisbane T: +61 7 3135 0653 E: jeremy.prentice@holdingredlich.com
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Suzy Cairney | Partner | Brisbane T: +61 7 3135 0684 E: suzy.cairney@holdingredlich.com
Melbourne . Sydney . Brisbane
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5. Set standards They say carrots work better than sticks, and sometimes performance can be improved by setting (or resetting) reasonably achievable key performance indicators (KPIs). These, of course, need to be SMART (specific to the job, measureable, achievable, relevant and timebased). Coupled with a reward for meeting or exceeding these KPIs (with or without a penalty for failing to achieve them), this can be a very successful method of improving performance. On the flip side, if a reasonable balance is not struck with these KPIs, a problematic contract may result.
CSQ is ready to service to all members of the Queensland general construction and civil construction industry. We help with information and support on skills development to all types of organisations – whether you are a small, self-employed business owner or a large multi-national company. No matter where you are in Queensland, there’s a CSQ officer close by to discuss your unique requirements and assist with your individual skilling and workforce development needs.
To find out more, call Construction Skills Queensland on 1800 798 488 or visit csq.org.au and see how we can help you.
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For example, in wastewater treatment plants and certain recycled water assets, which are located near housing, ensuring that any noxious smells are avoided or dealt with can be fundamental to ensuring that the social licence to operate continues. Operators, of course, should be obliged to abide by the terms of any environmental approvals, but KPIs designed to eliminate smells altogether should be regarded with caution. Of course, implementing some of these measures may come at a cost when you have an established contractual relationship and the other party does not wish to change it. You may need to negotiate or renegotiate with contractors, consultants and suppliers, and perhaps to offer them something extra; however, it is possible that cost savings may be significant, and if productivity is improved, you may win twice. There are other contractual levers that can be pulled to achieve more. A more detailed discussion of these issues will be held during Holding Redlich’s outsourcing seminar series, which will be running during 2013. Please visit our website at www.holdingredlich.com for more information.
Contracts
The standardisation of project alliance agreements: alliancing contracts – past and present By Sergio Capelli, Partner, and Chris Slocombe, Special Counsel – Construction and Major Projects Group, Clayton Utz
Alliancing, as a project delivery model, has come a long way since its beginnings in the North Sea Oil and Gas Industry, and its subsequent uptake in Australia in the mid-1990s.
Now, almost 20 years after the Wandoo Alliance – Australia’s first alliance project – alliancing has created for itself a place in the project delivery model armoury of most procurers of significant works, both public and (to a lesser extent) private. Between 2004 and 2009, the total value of Alliance projects in the road, rail and water sectors in New South Wales, Victoria, Queensland and Western Australia was $32 billion.1 This represented 29 per cent of the total infrastructure spend of $110 billion in the same sectors across the whole of Australia.2 Historically, most project alliance agreements (PAAs) have been bespoke instruments, or have at least (in later years) been based upon documents that were originally bespoke instruments. In his 2007 article,3 Ian Briggs spoke of the 1 ‘In Pursuit of Additional Value – A benchmarking study into alliancing in the Australian Public Sector’, Victorian Department of Treasury and Finance 2009 (http:// dtf.vic.gov.au/CA25713E0002EF43/WebObj/InPursuitofAd ditionalValue/$File/InPursuitofAdditionalValue.pdf ) at 8. 2
Ibid at 9.
3 ‘Alliancing: Reshaping Infrastructure Delivery in Australia’, [2007] AMPLA Yearbook 69.
Sergio Capelli
Chris Slocombe
possibility of an Australian Standard form PAA, and that a number of government agencies were moving to standardise their own PAAs. In its 2009 research study,4 an Inter-Jurisdictional Alliancing Steering Committee (IJASC)5 made a rallying call for the production of a standard PAA:
4
n 1 at 86.
5 with membership from the Department of Treasury and Finance of Victoria, Treasury New South Wales, Treasury Queensland, the Department of Treasury and Finance, Western Australia, and the Commonwealth Department of Infrastructure and Transport. Infrastructure Association of Queensland Yearbook 2013
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While the two PAAs look and feel in many respects like PAAs of the past, a more detailed examination of the two forms reveals significant differences in their approach to certain key principles of alliance contracting. ‘The range of the PAAs in use in Australia is neither efficient nor effective for government or industry. An alliance is a complex commercial transaction. Now that alliancing is a mature delivery method, there is a need for government to establish a standard form of contract that is robust, tested and clearly understood by all parties. This would improve legal certainty and transaction efficiency for government and nonowner participants (NOPs).’ No form of alliance agreement has yet been produced by Standards Australia, but interestingly, the call of the IJASC for standardisation was answered in 2010 twice, with the release of two standard form PAAs: • the Project Alliance Agreement published by the Victorian Department of Treasury and Finance (the Victorian Model PAA) • the Alliance Association of Australiasia Reference Model PAA (the AAA Model PAA). The Victorian Model PAA was subsequently adopted by the Commonwealth Department of Infrastructure and Transport as the ‘National Alliance Contracting Guidelines Template PAA’ (NACG PAA)6. Key differences between the forms While the two PAAs look and feel in many respects like PAAs of the past, a more detailed examination of the two forms reveals significant differences in their approach to certain key principles of alliance contracting. Probably the most significant difference between the two PAAs is the role that the ‘project owner’ 6 http://dtf.vic.gov.au/CA25713E0002EF43/pages/ project-alliancing
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plays in each PAA. While both PAAs create the customary distinction between the project owner in its capacity as ‘client’ and its capacity as participant in the alliance, the NACG PAA empowers the project owner to unilaterally determine: • the impact of its exercise of so-called ‘reserved powers’ on the target outturn cost (TOC), key result areas (KRAs) and date for practical completion when these impacts cannot be agreed at Alliance Leadership Team (ALT) level • the adjustments to be made to the TOC, KRAs and date for practical completion following the occurrence of an adjustment event. In contrast, the AAA PAA adopts a more traditional alliance approach – empowering the ALT to determine the commercial consequences of the exercise of reserved powers and the occurrence of adjustment events. A further, perhaps less obvious (but equally significant), difference is the ability of the project owner to act in its own interests, without reference to the participants' commitments set out in the alliance charter and the alliance objectives, and the general obligation of good faith imposed upon participants (together referred to as the Alliance Commitments). The AAA PAA makes the customary exclusion to the operation of the Alliance Commitments when the Project Owner is exercising one of a limited number of reserved powers. The NACG PAA goes much further, allowing the Project Owner to ignore the Alliance Commitments wherever it exercises a right or undertakes an obligation in this capacity (as opposed to its other capacity as ‘owner participant’: being a participant in the alliance). Additionally, the NACG PAA contains the following provisions, which might be considered unusual in a PAA: • an entitlement of the project owner to suspend the works indefinitely if it considers it likely that the project will be too late or too costly • a requirement for the provision of bank guarantees and parent company guarantees by the NOPs
Contracts
• an entitlement of the project owner to treat losses incurred with respect to delays in the work reaching practical completion as reimbursable costs for the purpose of calculating the actual outturn cost (with a corresponding reduction in the NOPs’ entitlement to gainshare, or an increase in the NOPs’ liability to painshare). Context While these differences are significant, they may be explained by the context in which each PAA was produced. The publication of the National Alliance Contracting Guidelines followed the 2009 research study commissioned by the state treasuries of Victoria, New South Wales, Queensland and Western Australia7, and the findings of that study may not have been wellreceived by the state treasuries. One of the key findings was that, on average, alliance projects experienced an increase from business case cost estimate to actual outturn cost in the order of 45–55 per cent.8 While many factors may have contributed to this statistic, perhaps in response to this finding, the National Alliance Contracting Policy Principles Guide and the NACG PAA appear to be heavily influenced by a desire for the project owner to ultimately have greater control over the commercial outcomes of the alliance. In contrast to the public-policy influenced NACG PAA, the AAA PAA was drafted by a committee 7
n 1.
8
n 1 at xi.
of lawyers and alliance advisers experienced in preparing and negotiating PAAs. The cover page of the AAA PAA states that the document aims to represent ‘a common approach amongst AAA members to the core features and principles of a project alliance agreement’. Conclusions It is too early to assess the degree of uptake of either of the two PAAs, and their relative levels of success (or otherwise) in delivering projects procured under this project delivery model. This is particularly the case given the current slowdown in the construction industry. Notwithstanding this, the standardisation of PAAs represents a positive step towards the continued growth in the use of project alliances as a project delivery model in Australia. While the two PAAs differ in key aspects – most notably the level of control granted to the project owner under the NACG PAA – project owners now have a choice between two considered and well-drafted forms of PAA to use as the starting point for their alliance projects. Authors Sergio Capelli, Partner, and Chris Slocombe, Special Counsel, are members of the Construction and Major Projects Group at Clayton Utz. They have extensive experience advising construction industry participants on various forms of building and construction contracts in use in Australia. Their recent work includes advising on the use of the standard form project alliance agreements referred to in this article, on some of Queensland’s major mining and infrastructure projects.
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Laing O’Rourke engineering the future With four decades of experience in local engineering-led, multi-disciplined and cost effective construction solutions, Laing O’Rourke is currently delivering some of the most exciting and complex infrastructure projects throughout Australia and Asia.
phone: web:
+61 7 3223 2300 laingorourke.com.au
Kenya Water Treatment Plant, Queensland QGC engaged the Laing O’Rourke and GE consortium to engineer, procure and construct the Kenya Water Treatment Plant in order to treat water associated with coal seam gas.
Ichthys Cryogenic Tanks and Accommodation Village, Northern Territory
FMG Train Unloaders, Western Australia
Port Botany Terminal 3 New South Wales
Brisbane Airport Expansion, Queensland
In partnership with global LNG tank specialist Kawasaki Heavy Industries, Laing O’Rourke will engineer, procure and construct a network of four massive cryogenic tanks for the $34 billion Ichthys LNG Project. In addition, Laing O’Rourke is delivering the 3,500-bed Howard Springs Accommodation Village for the LNG workforce.
Laing O’Rourke is delivering two new train unloader plants as part of a major expansion of the FMG port facility in the Pilbara region of Western Australia. The works include new buildings, dust control systems and ducting, two conveyor systems, all pipework systems and the installation and precommissioning of the train unloader systems.
Hutchison Port Holdings, the world’s leading port investor, developer and operator, awarded Laing O’Rourke the civil and rail infrastructure works contract for a new container terminal at Sydney’s Port Botany Terminal 3. Laing O’Rourke will construct a $150 million civil and rail infrastructure project, representing the first phase of the newly reclaimed Botany Bay expansion.
Brisbane Airport Corporation is undertaking major upgrades to its domestic facility to provide a worldclass gateway to Queensland and cater for booming passenger numbers. Laing O’Rourke successfully delivered a series of projects including airside satellites, the terminal access ‘skywalk’ and the largest single-structure carpark in the southern hemisphere.
Funding
The sculpture Rex Futuris is a prominent feature of the Peninsula Link PPP (Picture courtesy of Abigroup and Linking Melbourne Authority)
The GFC and PPPs: times are changing By Bilfinger Project Investments
When examining the changes that have occurred in the Australian public private partnerships (PPP) market in the years leading up to, and in the wake of, the global financial crisis (GFC), the words of singer/songwriter Bob Dylan seem pertinent: ‘Come gather ‘round people, wherever you roam, and admit that the waters around you have grown… you better start swimmin’ or you’ll sink like a stone, for the times they are a-changin’…’
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Acknowledging that the waters have grown in Queensland is an understatement given the two successive years of devastating floods; however, Dylan’s warning remains apt in Australia’s current climate, with increasing demand for both public and private capital to fund future infrastructure and reconstruction efforts, particularly in Queensland.
of this partnership to support the delivery and operations of assets through long concession periods.
PPPs have provided Australia with an innovative and value-for-money delivery model for highquality infrastructure to support public policy objectives.
With significant changes in population growth and geographic spread creating an infrastructure backlog across Australia, and cash-rich investors looking to deploy funds in lower-risk, loweryielding investments, parallel changes to the PPP model are required to address the impact the GFC has had not only on equity and debt availability, but also on the sustainability of PPP projects in the future.
Despite the successful use of PPPs in Queensland and elsewhere, they remain controversial. Ongoing media coverage of the issues relating to the AirportLink and Clem Jones tunnels are testament to this. Both regular users of these pieces of smart infrastructure and the general public have been recipients of the positive benefits each of these roads deliver in relation to reduced travel times and congestion around Brisbane. Consequently, it would be remiss not to recognise the enduring value these PPPs have generated for the public sector and users alike.
It is a worthwhile reminder that PPPs, since their inception in the United Kingdom in the 1990s, have been an evolving platform. Britain’s recent introduction of PF2 is an example of the latest refinements. Australia, Canada and recently New Zealand, similar to their shared historical foundations, have evolved PPP models to suit each country’s domestic situations, and government use of PPPs continues across an expanding array of jurisdictions to deliver valuable dividends to the public by achieving efficient, timely and costeffective completion and operation.
When the GFC occurred, it became a catalyst for major change in the way the public and private sectors approached both economic and social infrastructure PPPs. The pre-GFC days of creditwrapped, multi-tranche capital market funding and long-term bank debt came rapidly to an end, replaced with a bleaker post-GFC environment. Today, monolines have mostly disappeared, the Australian bond market is a nostalgia-evoking, long distant memory and long-dated tenors have been replaced predominantly by shorter-term bank debt and a significant increase in the cost of capital.
The pervasive effects of the GFC not only impacted financial markets – they have impacted the way Australian governments perceive the PPP model’s effectiveness in driving public sector value in infrastructure developments.
The difficulties encountered in delivering a number of projects have heightened bank perceptions on construction risk, further amplifying cost of capital increases. The paradigm shift away from the focus of financial adviser-led consortia and principal contractors conflicted by short-term priorities has resulted in a greater focus on the development of longer-term sustainable partnerships between the private and public sectors. Both sectors are becoming better-equipped to manage the integration
Recognition of the difficulty of implementing demand-driven toll road models is leading to consideration of alternative funding models and alternate structures for major road projects that reduce the impact on government balance sheets. Expanding mandates for private sector services are being given increased consideration to encourage greater efficiency in the delivery of public services. Models to align public infrastructure demands with the vast financial resources of the sleeping giant – the Australian superannuation sector – are being developed. As such, a key challenge for the private sector has been the ability to adapt and evolve with changing times, evidenced by some private sector participants reinventing themselves within larger institutions, or disappearing from the market altogether.
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Scottish Border Schools PPP (Earlston High School) delivered by Bilfinger Project Investments (image courtesy of Alan McAleer). The day has come, post the GFC, for longterm PPP specialists, such as Bilfinger Project Investments, that are less aligned to both shortterm finance-driven targets and construction margins, to deliver a PPP model that encourages long-term behaviour.
group, Bilfinger Project Investments forms and leads consortia in the development, investment and management of PPP projects over the life of concessions. This holistic approach to PPPs allows a greater ability to drive innovation and shape the evolution of new projects from the get-go.
This benefit, however, is a careful balancing act in an environment where the value-formoney threshold is rigorously enforced, and cost pressures associated with declining national productivity and strong competition for labour, skills and materials from the demands of the resource sector remain unabated.
In contrast to the overall sobering effects of the GFC, the role of the financial crisis as a catalyst for change in the PPP model cannot be underestimated.
Since subscribing to an investment in Docklands stadium in 1997, Bilfinger Project Investments has invested over $300 million in equity in Australian PPPs. We too have seen the highs and lows of infrastructure investment and have learned the hard lessons from projects such as Sydney’s Cross City Tunnel and Ararat Prison to prove it. However, Bilfinger’s wider legacy in Australia also includes roles in constructing many infrastructure assets, such as the Graham Farmer Freeway in Perth, the third runway at Kingsford Smith Airport in Sydney, and the Bolte Bridge/WesternLink project in Melbourne. Following the divestment of its construction businesses in 2011, Bilfinger’s activities in Australia continue as Bilfinger Project Investments Australia, a specialist PPP sponsor, long-term investor and asset manager, which provides asset management services for Australian projects with a value of over $2 billion, including the recently completed Peninsula Link freeway in Victoria. Harnessing the benefits of being part of a leading international engineering and services 92
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The GFC highlighted that PPPs are a crucial tool for governments to address the infrastructure funding crisis facing Australia over the next decade. It is recognised that partnering with private sector participants who are wellequipped to manage risk and delivery under incentivised regimes potentially offers a benefit over traditional procurement models where the cost savings achieved by the public sector from more competitive funding rates can be lost to late delivery and budget overruns. Regardless of the difficulties associated with a handful of PPPs in the past, to close the gap on Australia’s infrastructure requirements the continued evolution and use of PPPs is vital. The private sector must embrace these changes and harness the values of efficiency, expertise, operational excellence, and enduring commitments to partner effectively with governments to deliver on the mutual vision for the growth and future development of Australia. As the competitive landscape for PPPs has changed, we are reminded, ‘As the present now will later be past, the order is rapidly fadin' … and the first one now will later be last, for the times they are a-changin'…’
Funding
Greenfield infrastructure funding models – where to from here for economic infrastructure projects? By Reece Edwards, Partner, Corporate Finance – BDO
With the recent experiences of AirportLink, Clem7, Lane Cove Tunnel and Cross City Tunnel providing below-expected revenue results (and thereby being placed under financial pressure), the appetite of both debt and equity capital markets for projects where the private sector bears full demand risk has largely evaporated.
Demand risk under a build, own, operate, transfer (BOOT) arrangement is still being financed only for certain limited forms of transactions, such as hospital car parking, due to the captive nature of the demand (for instance, there is sufficient certainty and low volatility around expected volumes, which can at the very least underpin debt repayments) or projects such as Wiggins Island Coal Export Terminal (WICET) Stage 1, which relied on a package of long-term take-orpay contracts with credit-worthy private sector counterparties and robust security packages (such as bonding/guarantees). Currently, debt financiers generally do not want any repayment of their funding facilities to be dependent upon demand risk (except in certain circumstances as discussed above), and therefore will not fund a BOOT/user-charge model in the current environment. Equity investors have no appetite for greenfield demand risk unless there is some form of support mechanism to underpin a minimum return to equity. With this in mind, governments throughout Australia have been turning to availabilitypayment based models for recent greenfield economic infrastructure projects, such as Gold
Coast Rapid Transit and Peninsula Link, to meet private sector appetite; however, this has shifted the demand risk pendulum to the other end of the spectrum (government takes 100 per cent demand risk, rather than the private sector).
Reece Edwards
With governments at all levels under increasing financial pressure, the need to transfer part of the funding requirement for greenfield economic infrastructure to the private sector is increasing. Without a demand revenue stream with a historical trend, or revenues underpinned by
This article analyses the merits of two hybrid models – partial demand guarantees; and demand risk transfer and availability payment. Infrastructure Association of Queensland Yearbook 2013
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creditworthy counterparties, how can demand risk for greenfield economic infrastructure projects be transferred (at least in part) in the current financial environment? In lieu of either government developing the project and selling the user charge revenue stream once an operating history has been established (for example, Queensland Motorways, or potentially the Go Between Bridge and Legacy Way), or adapting the availability model to convert to a user-charge payment mechanism once a predefined demand level is achieved (both essentially brownfield infrastructure funding mechanisms), a number of alternative hybrid models are being explored to potentially offset part of the funding task for a greenfield economic infrastructure project through demand risk transfer. Hybrid funding models This article analyses the merits of two hybrid models – partial demand guarantees, and demand risk transfer and availability payment. Partial demand guarantees A partial demand guarantee is similar to a BOOT model, but with one key difference: the public private partnership (PPP) concessionaire limits the downside demand risk through a minimum demand level that must be guaranteed by government. The period of the guarantee can be negotiated with the PPP concessionaire, but would typically cover the ramp-up period as a minimum. It is anticipated that the guarantee would only cover a portion (up to 100 per cent) of the debt obligations of the special purpose vehicle (SPV). An example of a partial demand guarantee is illustrated below:
If user charges do not exceed a minimum threshold level, the government will top up the user charge revenue to the SPV to the minimum threshold level (this effectively underwrites a minimum return for the SPV, usually set at a level to meet debt obligations). However, the drawback with this model is that once the guarantee falls away, debt would still be exposed to demand risk. Hence, the guarantee would need to stay in place for a sufficient length of time until demand levels have reached forecast, or else there would need to be substantial amortisation during the period of any limited term guarantees, with consequent higher costs to government. This requirement by debt financiers effectively converts the funding mechanism similar to brownfield infrastructure as discussed above (for instance an availabilitypayment guaranteed revenue level until a predefined demand level is achieved). Therefore, a partial demand guarantee is unlikely to be a feasible greenfield economic infrastructure funding option in the current financing market. Demand risk payment
transfer
and
availability
An alternative hybrid model involves an availability payment that is structured to meet debt obligations, similar to a long-term demand guarantee level under the partial demand guarantee option. The difference is predominantly the way equity achieves a return. Debt would structure the transaction similar to a social infrastructure deal, including covenant levels for debt service coverage ratios (DSCR) et cetera, where an availability payment is paid subject to abatement to meet debt and operations and maintenance obligations. Equity could then be structured under a cap and collar approach, where the ‘collar’, or minimum equity return (subject to abatement), would be the difference between the DSCR and debt repayments. Under the partial demand guarantee option, if demand does not meet the minimum demand/ threshold guarantee level, equity does not receive a return. However, under this option, the minimum internal rate of return could be structured to achieve the long-term government
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Hybrid funding models have emerged as potential avenues to shift the demand risk pendulum to a more risk-sharing approach bond rate (historically this has been approximately eight per cent). Equity would then take demand risk for the remainder of their return. However, this may be subject to a ‘cap’ determined by government, where returns are shared above certain demand volumes being achieved. With a pure availability payment model, equity returns are effectively capped, with no significant potential for upside. Under this option, equity receives the full benefit of the user charge revenue through an un-leveraged cash flow that may potentially drive additional upside returns. An issue that needs to be considered with this option (and the previous option) is that it has become apparent from general market commentary that traffic forecasters are highly unlikely to provide forecasts that have warranties and reliance statements, given the litigation risks involved. Therefore, equity investors will only be able to use traffic forecasts as a guide. This does not preclude equity investment, but may only attract sophisticated investors for these types of transactions. It is highly unlikely that there would be a listed equity solution involving unsophisticated retail investors.
This hybrid model has some merits of further investigation, but will ultimately depend upon refinement of equity’s return mechanism with infrastructure institutional investors to confirm its viability. Conclusion The funding mechanism for economic infrastructure projects has spanned the spectrum of demand risk transfer over the past five years. Whilst there is clearly appetite for brownfield economic infrastructure transactions (and funding models incorporating elements of that type of infrastructure), governments are increasingly looking to the private sector to provide funding for greenfield economic infrastructure due to current financial pressures. Hybrid funding models have emerged as potential avenues to shift the demand-risk pendulum to a more risk-sharing approach rather than a full risk transfer to either public or private sectors. Whilst these hybrid models require refinement, they are intended to promote discussion about how to appropriately structure demand risk transfer mechanisms. About the author Reece Edwards has more than 16 years' experience within project finance, specialising in infrastructure, natural resources and property. He has been involved in a number of PPP, project and corporate finance transactions, and feasibility studies/business cases across coal, oil and gas (and associated infrastructure), toll roads, public transport, utilities, education facilities, hospitals and major property developments.
Industry insight, local knowledge and expert advice. BDO’s Infrastructure team specialises in providing expert advisory services on major projects to the public and private sectors.
DeDicateD infrAstructure team
Using our in-depth corporate finance and investment banking knowledge, we deliver specialist advice (including finance arranging) across transport, energy and utilities, social infrastructure, mining, oil and gas, property, and water projects. For support with your next project, please contact Reece Edwards, Partner, Infrastructure on + 61 7 3237 5731. Distinctively different – it’s how we see you Audit • tAx • Advisory
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CSQ – helping Queenslanders build success Construction Skills Queensland (CSQ) is responding to new patterns of activity, training and employment in Queensland’s building and construction industry in every Queensland region, with increased funding of upskilling and training initiatives. Each region has a different construction story to tell, with some regions growing as fast as others are contracting. At the same time, the skills mix of many regions is shifting to reflect a new focus on infrastructure and significant engineering construction activity driven by the resources sector. To prepare for these future skills demands, employers and workers are being urged to take advantage of CSQ’s largest investment ever made in the delivery of upskilling and training programs. With courses to suit workers at every level in their careers, now is the time to build success with the help of funded training assistance from CSQ, with programs including: • Civil Construction Training • Skills Assessment and Gap Training • Short Course Program • Higher Level Skills Program. Civil Construction Training Civil contractors and organisations need a competitive edge when it comes to winning tenders. By developing the skills and qualifications of employees, businesses can increase success rates when bidding on construction projects. The Civil Construction Training program provides new entrants and existing workers with a range of entry-level and higher-level civil construction qualifications. The program provides a pathway for new entrants to develop the skills and abilities needed to obtain entry-level qualifications in the civil construction sector. 96
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Skills Assessment and Gap Training Upskilling workers may be a more affordable option than hiring new staff, and it encourages workers to stay within the industry. With funding assistance from CSQ, participants can have their existing skills and abilities assessed by a Registered Training Organisation through a Recognition of Prior Learning (RPL) process and then undertake gap training to develop the remaining skills they need to obtain a full qualification. The Skills Assessment and Gap Training program is for new and existing workers with significant experience in the building and construction industry. Short Course program The Short Course program is available for existing workers only. It covers a wide range of building and construction training, with a focus on the safety requirements of the industry and the associated requirements of licensing and regulatory authorities. There are more than 120 short courses available, including construction machinery operation, electrotechnology, plastic welding, plumbing, drainage, high-risk and construction licences. Higher Level Skills program The Higher Level Skills program is available to existing workers. It provides access to Certificate IV, Diploma and Advanced Diploma training. Upskilling employees into supervisory or management roles means businesses can benefit by retaining workers with experience and understanding of expectations, processes and standards. Contact CSQ For information on CSQ programs and services, and details on how to access funding, visit www.csq.org.au or phone 1800 798 488.
Connecting Queensland trade to the World The closest major container port to Australia’s largest export market, the Port of Brisbane is up to five sailing days closer to Asia than Australia’s southern ports. With international trade worth over $50 billion annually, the Port of Brisbane is one of Australia’s fastest growing and most diverse multi-cargo ports, with world-class cargo handling and warehousing facilities for containers, motor vehicles, and bulk and general cargo. Free from urban encroachment and with ongoing investment in infrastructure, the Port of Brisbane, situated on more than 1,800 hectares of land, has room to grow. With 7,200 meters of quay line accommodating 29 operating berths, and direct connectivity to national road and rail networks, the Port of Brisbane can provide tailored logistics solutions to meet all your cargo needs.
To find out how the Port of Brisbane can provide your business with opportunities to grow, visit www.portbris.com.au or contact Andrew Brinkworth, Trade Development Manager, on +61 7 3258 4888 or andrew.brinkworth@portbris.com.au.