2078 iaq txt lowres by Executive Media

Yearbook

2014

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Contents 40

Chairman's Message

Redevelopment

Infrastructure Association of Queensland Inc (IAQ) GPO Box 2146, Brisbane, QLD 4001 Tel: (07) 3211 4686 Fax: (07) 3211 4900 Email: admin@iaq.com.au Website: www.iaq.com.au Published by

Background

Best Practice

Major Projects

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Contracts

Funding

Infrastructure

Safety

Management

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Infrastructure Association of Queensland Yearbook 2014

AWARDS

Membership Application Form (Please print clearly) Company/Organisation Name:

Postal Address:

Postcode:

Telephone:

Facsimile:

Email:

Industry

Contact Persons Name:

Title:

*You may nominate more than one contact person for each company/organisation and substitutions and additions may be made at any time at the option of the company or organisation. If you would like to nominate further contact persons, please list below.

Name: Email

Name Email:

Name: Email:

Title:

*Membership Fees

Corporate Members – $2420.00 (including GST) Individual Members – $484.00 (including GST)

Note: Individual Members must be from organisations with not more than 5 employees other wise the Corporate Membership rate will apply. * We hereby apply for membership of the Infrastructure Association of Queensland and enclose our cheque (made payable to the Infrastructure Association of Queensland) or credit card details in payment of membership fees to 31 December.

Card Type: Card Number: Cardholder Name: Cardholder Signature: Signature

Mastercard

Visa

Exp Date:

Date:

Please attach a brief company/organisation profile or annual report.

Infrastructure Association of Queensland Yearbook 2014

CHAIRMAN’S MESSAGE

Infrastructure Association of Queensland (IAQ) Inc Chairman Jonathon Williams of Minter Ellison sheds some light on the state’s infrastructure plans, and what is in the organisation’s future. What trends are you seeing in Queensland’s infrastructure and planning programs? We are seeing a tendency for Queensland to undertake mega projects, which, for the organisations that are involved, is a great thing. For the many organisations that are not, it means challenges around holding and keeping teams together, and hard choices often have to be made. For the past three years, many IAQ members have been active in the work done on the disaster recovery and reparation projects around the state. Most of that work has now come to an end and infrastructure specialist organisations are having to refocus on other opportunities and projects to replace that work. What have some of the state’s more prominent projects been over the last 12 months?

Secondly, the IAQ seeks to encourage smooth and efficient process in the development and delivery of infrastructure. Efficient process is a result of improved skills and experience, which themselves are the products of a consistent pipeline of projects. The IAQ supports the concept of red tape reduction and improved efficiency. Process for process’ sake does not easily achieve good value for money.

It is great to see Toowoomba Second Range Crossing Project now officially alive, as it has been talked about for some time. The Brisbane Bus and Train Project is drawing a lot of attention, too, and Gateway Upgrade North is also gaining traction.

Thirdly, the IAQ strongly promotes the exploitation of the private sector by government in the delivery of infrastructure. It is the private sector that is innovative; it is incentivised by on-time and on-budget delivery of projects. Moreover, private sector involvement can be activated early in the project life cycle.

In Brisbane, the next significant project will be the improvement of Kingsford Smith Drive.

How have the Newman Government’s infrastructure plans in this year’s State

What are some key goals for the IAQ in the current climate?

Budget affected your work at IAQ?

The IAQ focuses on three areas, which we believe are keys to delivering best-value infrastructure for the state: Firstly, promoting the concept of a consistent and sustainable pipeline of projects across a range

of project sizes, which enables organisations to build capacity and develop skills with confidence. Building skills and capacity improves the capability of the Queensland infrastructure sector, and this goes towards achieving the best value for money outcomes for projects.

Infrastructure Association of Queensland Yearbook 2014

The IAQ supports the Newman Government’s approach to recycling assets, while being mindful of the need to resettle the state’s balance sheet to achieve a robust financial position for the state. That said, the opportunity to increase the role of the private sector in the Queensland economy is welcome.

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McConnell Dowell is currently delivering track, road, bridge, station and building works for Queensland’s first light rail system, the Gold Coast Rapid Transit. Current contracts including the Brisbane City Council Flood Recovery and Milton Ferry Terminal Construction to the Rolleston Coal Expansion, demonstrates McConnell Dowell’s ability to deliver projects across a variety of sectors. Further north from Chinchilla to Gladstone, McConnell Dowell is working on three major LNG infrastructure projects. The projects represent a number of achievements for McConnell Dowell, including installation of the longest, large diameter onshore pipeline constructed in Australia and the complex twin pipe-pull at Narrows Crossing.

For further information on McConnell Dowell’s capabilities, please call our Queensland office on +61 7 3421 8200, email: qld@macdow.com.au or visit our website for more information.

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Laing Oâ&#x20AC;&#x2122;Rourke Engineering the future With more than half a century of experience in local engineering-led, multi-disciplined and cost effective construction solutions, Laing Oâ&#x20AC;&#x2122;Rourke is currently delivering some of the most exciting and complex infrastructure projects throughout Australia and Asia.

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Northern Water Treatment Plant, Queensland Laing O’Rourke has constructed a series of water treatment plants for QGC as part of the upstream development of the QCLNG project in Queensland.

Ichthys Cryogenic Tanks and Accommodation Village, Northern Territory

Port Hedland Inner Harbour and Jimblebar Project, 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 is delivering a network of four massive cryogenic tanks for the $34 billion Ichthys LNG project at Blaydin Point in Darwin. Laing O’Rourke is also delivering the state-of-the-art Howard Springs Accommodation Village which will accommodate up to 3,500 members of the LNG workforce.

Laing O’Rourke delivered a significant programme of rail infrastructure works for BHP Billiton for more than three years. Work included the delivery of the Mooka Staging Facility, a five road staging area that can store up to 5 loaded trains. It also included the installation of 119km of new track and 85 turnouts as well as the operation and maintenance of a flash butt welding yard.

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.

BACKGROUND

Infrastructure Association of Queensland Background The Infrastructure Association of Queensland (IAQ) Inc was formed in 1994 by a number of interested parties to provide private sector participants involved in the development, ownership or operation of infrastructure projects the opportunity to meet their counterparts and to 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 peak industry body that is representative of private sector participants in the life cycle of public infrastructure, and to provide positive interaction with government in pursuit of these objectives • engage with government and the community on the continuing need for expansion and enhancement of public infrastructure as an essential platform for Queensland’s economic and social development • engage with members, government, industry and the community to promote and maximise private sector involvement in public infrastructure in Queensland • consult with government in relation to its guidelines and policies on private sector involvement in the provision of public infrastructure in Queensland 8

Infrastructure Association of Queensland Yearbook 2014

The IAQ’s membership is sourced from a cross-section of infrastructure-related industries committed to improving the process of infrastructure provision in Queensland • provide a forum for the dissemination and promotion of developments relating to public infrastructure amongst members, government, industry and the community • facilitate networking participants.

amongst

industry

Membership The IAQ’s membership is sourced from a crosssection 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: • Accounting • Architecture • Banking and Finance continued on page 10

BACKGROUND

continued from page 8

• Construction

Events

• Engineering

The IAQ hosts a number of networking events, including the Breakfast Series and smaller events, usually on the basis of the Chatham House rule, with senior figures in government. The IAQ is frequently consulted by government around issues of policy relating to infrastructure.

• Environment • Government-owned Corporations • Health • Human Resources Recruitment • Law • Mining and Resources • Project Management • Public Relations and Communications • Statutory Bodies • Stockbroking • Surveying. Organisations and businesses with a major interest in infrastructure or infrastructure support are invited to become members.

The 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 past year, IAQ members have enjoyed hearing the views of key industry speakers, including: • Graham Quirk, Lord Mayor of Brisbane • Mark Wilde, Director, Calcutta Group • Julieanne Alroe, Managing Director, Brisbane Airport Corporation • The Hon. Scott Emerson MP, Minister for Transport and Main Roads

The IAQ is frequently consulted by government around issues of policy relating to infrastructure Structure A Board, elected by the members, controls the IAQ. The Board meets on a monthly basis, and comprises:

• David Edwards, Director-General, Department of State Development Infrastructure and Planning • Russell Smith, Managing Director of the Port of Brisbane. The IAQ Forum Series has seen guests, including:

• Chair

• Jon Grayson – Director-General, Department of Premier and Cabinet

• Deputy Chair

• Helen Gluer – Under Treasurer

• Immediate Past Chair

• Dave Stewart – Head of Projects Queensland

• Secretary

• David Edwards – Director-General, Department of State Development and Planning

• Treasurer • Committee Members. The Association is represented by an Executive Director, and the Secretariat attends to the administrative needs of the Association.

• The Hon. Jeff Seeney MP, Deputy Premier and Minister for State Development, Infrastructure and Planning

Infrastructure Association of Queensland Yearbook 2014

• Mark Gray – Under Treasurer.

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BEST PRACTICE

Transforming the procurement of professional services By Michael Hassall and Wade Arthur, CGI Consulting

The last decade has seen the introduction and refinement of interactive procurement processes for infrastructure projects. This interaction, which can vary from informal to highly structured and scripted processes, largely seeks to improve proponentsâ&#x20AC;&#x2122; understandings of project requirements and constraints. In return, clients expect that the additional costs of procurement and interaction are offset by the improved outcomes of identifying the best-suited proponent for the project: one that offers the best value measured in terms of cost, non-cost items or, typically, a combination of both.

Overall, it is clear from constructors, designers and clients that this interaction, when used appropriately, offers true value in the development and execution of major infrastructure projects, with competitive interactive design and construct (D&C) procurement processes being used across many industries. As optimism in the national and Queensland infrastructure markets improves in response to the recent Australian Government pro-infrastructure budget, and state government announcements in several states, clients will look to start new projects and re-engage deferred projects. Typically, projects gain momentum through the development of dedicated project teams, with a combination of internal staff and external advisers. For most projects, these are key advisory roles; and with the increased size and complexity of projects, the advisory teams can play a larger role than the clientâ&#x20AC;&#x2122;s internal team. The advisers help to set the direction for the project, and undertake key tasks, including project design, environmental studies and market engagement.

On these major transactions, the consultants and contractors often provide the technical expertise across the professional disciplines, with the clientâ&#x20AC;&#x2122;s team providing peer review, project management and controls functions.

The advisers help to set the direction for the project, and undertake key tasks, including project design, environmental studies and market engagement In delegating such responsibility to their advisers, the project owners also require the advisers to become advocates for their projects in dealings with internal and external stakeholders. Given the important role that advisers fill in project teams, it is understandable and expected that clients should be using every tool at their disposal to get the best team and extract the most value from them.

continued on page 14

Infrastructure Association of Queensland Yearbook 2014

Driving economic development in Queensland by delivering infrastructure that supports growth. Our work in 2014 will include: Strategy and Action Plan

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BEST PRACTICE

continued from page 12

We believe that there is scope for clients to apply the lessons and principles of interactive procurement processes when clients engage professional services for their projects, including engineering and design, traffic forecasting, project management, legal counsel and commercial advisers.

being developed, considering constructability and risks. The interaction occurs through a combination of joint and individual workshops between the client and the tenderers. The increased project knowledge allows tenderers to submit more informed bids with less risk or uncertainty built into the tender price.

Interactive tendering for major projects Almost all major projects include some interaction between the client and proponents in the procurement process. Typically, the interactive processes make use of a two-stage selection process. The first is a short-listing process using predominantly non-price criteria to select the required number of tenderers to enter the competitive tendering phase. The second stage is focused on proponents developing and providing risk-adjusted solutions – in some cases, alternate designs and options with alternative commercial arrangements. Some common examples of interactive competitive D&C procurement processes include: • Early contractor involvement (ECI) – This is, in essence, a negotiated D&C contract with the client team working with one or more (typically less than three) proponents to develop design and construct offers. There is more interaction between the client and the proponents in this phase, as there is more complexity in the project solution than in the ETI model (following), and the interactive process offers the most efficient method of dealing with this. The interaction also allows the client’s team to develop working relationships with the proponent’s team in a collaborative environment, thereby improving the project performance during project initiation and reducing the client’s exposure to variation claims. While the ECI model is ideally suited to procuring a D&C contract, the observation here is that as the complexity of the project task increases, clients can realise substantial benefits from planning more detailed interactions with bidders for professional services.

Interaction between the client and proponents during the procurement process can realise significant benefits The lessons from procuring major projects Every project is different – through our work on clients’ teams, we have learned that every project is unique, and that the procurement process needs to be tailored to meet the objectives and key features of the project. Interaction between the client and proponents during the procurement process can realise significant benefits, including the following: • Clients are able to provide proponents with a more detailed understanding of the project, including the project's objectives, constraints, and key risks and opportunities. • Clients are able to get the proponents’ input on the project at various stages of project development. This also helps to reduce the risk or uncertainty in the project, and improves the competition in tendering. • Client teams are able to develop working relationships with the proponent teams in a collaborative environment. This offers benefits at all subsequent stages of delivering the project. • The interactive sessions allow the client’s team to see the proponent’s team in action, and can be used to help assess any non-price criteria in the evaluation process.

• Early tender involvement (ETI) – This form of the early contractor involvement focuses on contractor input to the client’s design while it is continued on page 16

Infrastructure Association of Queensland Yearbook 2014

Building the Foundations of Queenslandâ&#x20AC;&#x2122;s Infrastructure

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BEST PRACTICE

continued from page 14

How can we apply this to professional services? We believe that project owners and client teams can realise significant benefits in the procurement of professional services by looking to the lessons learned and the advances in interactive procurement processes in major projects. By introducing targeted interaction between clients and advisers during the tendering process, clients can expect to improve the proponent’s understanding of their needs, and to remove or reduce the uncertainty in the tender responses.

For more complex advisory roles, clients could consider a two-stage process, and holding individual briefings with the shortlisted proponents to allow tenderers to explore alternative solutions When planning to procure their project advisers, we encourage clients to consider adding various levels of client/proponent interaction to their normal tendering processes. As with major projects, the level of interaction in the procurement process will be related to the complexity of the project task to be completed, but could include one or more of the following: • At the start of the procurement process, hold a project briefing to disseminate information and gain important market information on possible bidders. This type of briefing has been held for recent projects, including the Bus and Train project, and provides tenderers with increased clarity of the client’s requirements. • For more complex advisory roles, clients could consider a two-stage process, and holding individual briefings with the shortlisted proponents to allow tenderers to explore alternative solutions, including timing, resource requirements, or fee arrangements as 16

Infrastructure Association of Queensland Yearbook 2014

a means of providing better value for money. These sessions would require specific probity controls; however, the benefits may outweigh the additional time and cost. • Clients can consider how to use interactive sessions as a proxy for interviewing the short -listed advisers. The way that the tenderers behave in these sessions will provide clients with an insight into how bidders’ teams function and how they respond to challenges. This could be used to form part of the nonprice criteria assessment of the final tender submissions for tenders with a heavily weighted non-price assessment criteria. • Commercial alignment on fee structure and alternative commercial arrangements through scenario-based conversations on potential variations that the client foresees would help limit cost overruns and allow better commercial opportunities for clients and proponents alike. After all, it is the front-end of projects that experiences most change and complexity, where project value is likely either created or destroyed. Improving client efforts in engaging with professional service providers may be reflected with better project planning and development as witnessed in the D&C market of recent times. Through CGI’s network of companies – which includes CGI Consulting, Watson-CGI, TCS and CGI Water – we act as professional service providers, civil and building contractors, and as developers of greenfield resource development projects. We are able to draw on this experience to form the views expressed in this paper. In recognition of the importance of procuring professional service providers, CGI has recently established Afeea (a joint venture company with QVM) to assist the procurers of professional services to obtain increased value for money from the provision of these services by aligning the objectives of procurers and suppliers through education and the application of new approaches to procurement.

BEST PRACTICE

Pipeline, process and private sector engagement Queensland’s peak infrastructure body, the Infrastructure Association of Queensland (IAQ), was established in 1994 to ensure the continued focus on Queensland’s important infrastructure industry for the benefit of all those businesses that benefit.

Twenty years later, given the current environment, IAQ provides the best value for these members through a strong and ongoing focus on three aspects – pipeline, process and private sector engagement. Pipeline IAQ’s focus on pipeline acknowledges the need to build strong business confidence around a consistent pipeline of projects. Like many activities in the economy, the pipeline of projects tends to be cyclical in nature, where periods of strong activity are followed by periods of weaker activity. Figure 1 illustrates this. In an economy where the life cycle clock moves in a boom and bust cycle, its characteristics tend to become extreme as the pipeline of projects appears lumpy, and as infrastructure activity fluctuates between frenetic and slow.

Process An efficient and effective process of developing, procuring and delivering infrastructure is essential if best value is to be achieved. Process is strongly linked to the concept of a pipeline, as capability, experience and skills

This typically leads to cost pressures and competitive pressures where capacity building is followed by capacity shedding with subsequent loss of skills Figure 1

A consistent pipeline tends to deliver better value for infrastructure spend because it enables all participants on both the government side and the private sector side to build skills, capacity and capability. In particular, the private sector organisations can invest in building the capacity and capability of their organisations, confident that this will lead to increased utilisation. An inconsistent and unpredictable pipeline results in peaks and troughs in project flow, where quiet periods are followed by frenetic periods. This typically leads to cost pressures and competitive pressures where capacity building is followed by capacity shedding with subsequent loss of skills. 18

Infrastructure Association of Queensland Yearbook 2014

continued on page 20

DELIVERING CERTAINTY FOR QUEENSLAND

From joint venture partner engaged on the International Award Winning Legacy Way Tunnel to preferred contractor for Brisbane Airport Corporation, BMD has grown from a small Queensland business to a $1.17b privately-owned construction, consulting and urban development organisation. Across Queensland, BMDâ&#x20AC;&#x2122;s project experience includes Robinson Road Open Level Crossing, Hay Point Expansion, Cairns Bruce Highway Upgrade and APLNG Material Offloading Facility for a range of clients including Bechtel, Aurizon, Brisbane City Council, Xstrata and the Department of Transport and Main Roads. To discuss our capabilities further, please contact: Russell Redenbach or Colin Mitchell on (07) 3893 7000 or email brisbane@bmd.com.au WE sEE OUr strENGtHs iN tHE qUALity OF OUr PEOPLE ANd OUr GENUiNE rELAtiONsHiPs WitH CLiENts, PARTneRs AnD COMMuniTies. We see OuR suCCess LinkeD TO OuR ABiLiTy TO DeLiveR CeRTAinTy THROugH CONsistENt PErFOrMANCE. WE sEE OUr FUtUrE sHAPEd By ALL tHAt HAs MAdE Us sUCCEssFUL iN tHE PAst.

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BEST PRACTICE

continued from page 18

naturally lead to better process, and these are developed though experience, particularly within the government team delivering infrastructure projects. Many issues arise during the processes that are required to deliver infrastructure projects. Process can be significantly improved in a number of aspects.

Process can be further improved through an increased focus on the outcome that is sought rather than on what is to be delivered. This approach requires more focus on outputs than on the inputs Infrastructure procurement is typically undertaken through an invitation to tender, and documents and briefs are provided to proponents. The concept of interactive tendering is well understood and is applied during the procurement of major infrastructure projects, where the subtleties and requirements are difficult to glean from reading a document; however, the concept could be applied to the procurement of services, including the procurement of advisory services, such as legal, technical and financial services when project teams are established. Such an approach would significantly assist in improving value for money through enabling proponents to better understand the requirements of the engagement. A challenge in adopting interactive processes is the implementation of a practical approach to probity. Probity is too often used as a weapon, rather than as a tool. Process can be further improved through an increased focus on the outcome that is sought rather than on what is to be delivered. This approach requires more focus on outputs than 20

Infrastructure Association of Queensland Yearbook 2014

on the inputs, and can be facilitated by defining the problem, that a project seeks to solve, and then seeking a solution to the problem, rather than simply identifying a solution and procuring it. Process can become an end in itself, and inexperienced project deliverers often rely on process as a means of mitigating risk â&#x20AC;&#x201C; both personal and organisational. This approach can see inferior outcomes being delivered as process is seen as more important than outcome. Private sector engagement The private sector adds value in several areas of infrastructure delivery. These areas include finance, construction, capital recycling and the delivery of services and maintenance. These are all aspects of infrastructure delivery that are increasingly provided by the private sector and are in line with the Queensland Governmentâ&#x20AC;&#x2122;s view that government should be an enabler and facilitator, rather than an owner. This approach is strongly supported by the view that government is best suited to act as a regulator, facilitator and enabler. Government does not have a strong reputation as an innovator, nor does it have a reputation for delivering projects on time and on budget. The best value outcome from infrastructure spending is achieved through a consistent and predictable pipeline of projects, delivered by a process carried out by individuals with experience in the sector, who are seeking the best outcome and who exploit the private sector to their best advantage.

BUILDING A BETTER QUEENSLAND FOR 80 YEARS.

Whether it’s Brisbane’s Airport Link, the Richlands to Springfield rail project,

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or QCLNG’s gas compression facilities in the Surat Basin, Thiess has proven its capability to deliver. Our expertise in delivering complex engineering solutions allows us to integrate earthworks, civil, structural, mechanical, piping, electrical, instrumentation and control works packages in one seamless process.

We’ve been building a better Queensland since 1934 and today we continue to transform communities with projects such as the long-awaited Moreton Bay Rail project. We approach every job, great or small, with a dedication to excellence to enable a more sustainable future.

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The speed and scale of Queensland’s transformation has been quite remarkable. The State is home to some of the largest and most complex infrastructure projects ever seen in Australia – and Thiess is proud to be the name behind many of them.

MAJOR PROJECTS

Transport delivery track record wins new state government work Proven cost-effective delivery of Queensland road and rail infrastructure has won Thiess major new work from the state government, despite international and local competition in lean construction times.

Successful completion of the $300-million Richlands to Springfield road and rail project in May 2014 for the state government has played a key role in winning new transport work, according to General Manager, Thiess Infrastructure – Queensland, Mr Jason Spears. Mr Spears says that the Richlands project was completed on time with $50 million saved on the $350-million budget, and this success and this success assisted with subsequent award the Moreton Bay Rail project. ‘Certainty of delivery on the Richlands project was instrumental in winning the contract to design and construct the Moreton Bay Rail (MBR) project, which was bid in a hard-dollar environment,’ Mr Spears says. Client integral to one-team approach A consistent success factor across both projects has been involvement of the client. The Richlands to Springfield project (Stage 2 of the overall Darra to Springfield Transport Corridor project) was delivered as an alliance with clients, Queensland Rail, and the Department of Transport and Main Roads (TMR); and with design partners Aurecon and AECOM. ‘We achieved a major saving for Richlands to Springfield within what was already a very tightly priced contract, as, together with our alliance partners, we originally tendered the project 22

Infrastructure Association of Queensland Yearbook 2014

through a highly competitive process to offer $171 million of savings on the original reference design,’ says Mr Spears. ‘So, to find additional savings for the state government during construction is testimony to the team’s innovation and focus on finding productivity and cost savings right throughout the delivery and commissioning process,’ he says. The project has delivered region-building infrastructure for the fast-growing western corridor located between Brisbane and Ipswich. It provides a 9.5-kilometre greenfield dual track, two new stations, five new rail bridges and over 1.5 kilometres of elevated structures, including an 815-metre-long viaduct over the Logan Motorway Interchange (LMI), one of Brisbane’s busiest intersections with approximately 60,000 daily vehicle movements. The project also included a 5.5-kilometre upgrade of the Centenary Highway between Springfield and Forest Lake, a densely populated residential area.

MAJOR PROJECTS

Construction innovation at Richlands Springfield Station arches The team delivered a landmark transport interchange station at Springfield Central Station with a high-quality urban design solution and highly developed accessibility and connectivity, while delivering the overall project for a significantly reduced cost.

The arches at Springfield Central

This was achieved through innovations such as a custom-made travelling formwork system, which the team pioneered to construct the arches at Springfield Central, saving time and resources. Originally, the concept was to build conventional false/support work and soffits for each arch; however, this was time-consuming, very costly and had safety implications due to large formwork crews creating congestion on site. The teamâ&#x20AC;&#x2122;s innovative new method included the following:

The rail component of the project, including Springfield Station, was completed three weeks early, in time for first rail services in December 2013

Department of State Development, Infrastructure and Planning

MAJOR PROJECTS CONFERENCE QUEENSLAND 18 September 2014 Brisbane Convention and Exhibition Centre

20/05/14 11:41 AM Infrastructure Association of Queensland Yearbook 2014

MAJOR PROJECTS

• reduced expenditure on materials, as only two arch soffits were required • improved cycle time and reduced labour cost because the soffit form could be moved from one arch to the next within minutes • significantly reduced costs • enabled tight delivery deadlines to be achieved • has already been adopted for use on other projects and is a legacy for the construction industry. LMI viaduct The Richlands team also innovated during construction to tackle one of the most complex aspects of the project, construction of the 15-metre-high rail bridge over the LMI. The highest project risks related to traffic management, lifting operations and working at heights. The innovative headstock formwork system used during construction of the Logan Motorway Interchange viaduct

The team developed a purpose-made formwork box, which was lifted in one piece on to the completed column, with access via an elevated work platform. This reduced lifting operations, saved time, reduced costs, streamlined processes and eliminated a 16- to 26-metre climb for workers. Ultimately, this innovation eliminated 300 manhours working at heights. Stakeholder satisfaction Ipswich City Council has acknowledged the project’s contribution to the local community through dedication of a local road in honour of the alliance team.

'TrackStar Drive’ now takes pride of place as the road into the new Springfield Central Station Councillor David Morrison says that the project team will be remembered for the outstanding delivery of ‘magnificent infrastructure’ to the greater Springfield community. ‘TrackStar Drive’ now takes pride of place as the road into the new Springfield Central Station. More region-building infrastructure delivery underway The Moreton Bay Rail solution is the single biggest investment in this region in over a decade, with an overall project value of $1.15 billion. It comprises 12.6 kilometres of dual passenger rail, six new rail stations, a stabling facility, 22 bridges, 1.2 kilometres of brownfield rail works, as well as rail systems and traction power. ‘Award of MBR in July 2013 to Thiess came at a time when price competition was fierce due to limited available public infrastructure funding and projects,’ says Mr Spears. ‘TMR’s three-stage double early contractor involvement (dECI) process started with an open field of competitors, including consortia comprising large international contractors who partnered with Australian contractors,’ he says. ‘This introduced a sharp edge to the already very competitive market, with the $1.1-billion MBR project a hotly contested prize. ‘We worked hard to be included in the initial short list of four, then progressed to the final short list of two contractors. Through innovative design, a cost-effective solution and the right people, we secured the $643-million contract for this major south-east Queensland transport project.’ continued on page 26

Infrastructure Association of Queensland Yearbook 2014

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MAJOR PROJECTS

continued from page 24

Mr Spears says that the dECI process worked to the team’s advantage, enabling the mature TrackStar partnership to draw on its collective experience on rail and infrastructure projects to bring an innovative design and overall integrated transport solution. ‘This, combined with our multidisciplinary capability, proved to be the difference,’ Mr Spears says. Design innovation at Moreton Bay Rail Innovation during the tender period for MBR included an elegant solution for the grade separation where the new MBR and the existing North Coast Line meet at Petrie. Thiess’s solution was vastly different to the reference design and improved functionality, while saving significant cost and interface with the live operating network. The grade separation would reduce disruption to rail operations and eliminated impact on key bridges and numerous critical services. It also contributed to an overall cost saving of $30 million, and proved dramatically more economical than the competing proponent’s solution. Another innovation focus was the modular design for the six stations developed by architects HASSELL. A ‘kit-of-parts’ approach provided consistent design, in tandem with cost-effective finishes and maximum flexibility. The result is stations that provide platforms for new development hubs, with the rail network becoming an anchor for the Moreton Bay region. Thiess’s Moreton Bay Rail solution

Mango Hill Station is one such example, as it is a commuter station to service the North Lakes community. It features a public plaza and entry in keeping with its neighbourhood presence, and development sites around the precinct will support future transit-oriented development (TOD) outcomes and urban growth. Journey continues Department of Transport and Main Roads’ Mango Murphy has worked on both projects as a member of the Richlands to Springfield Alliance Leadership Team (ALT), and now on the MBR Project Control Group (PCG). Mr Murphy has played a pivotal role in ensuring that the team's behaviours remain aligned to focus on best for project outcomes. Clearly, this was achieved for Richlands to Springfield, and Mr Murphy looks forward to guiding similar outcomes for MBR. Deeply involved in the MBR tender process, Mr Murphy is now taking up the reins of TMR’s Project Director role and is responsible for effective delivery of the project. According to Mr Murphy, success for MBR relies on the good work of the tender process, and in also using the strength and capability of the Thiess team. ‘During the tender, we found Thiess and the team’s design partners to be very focused on understanding our project objectives, and this drove their quest for innovative, cost-effective solutions that met our required functionality,’ Mr Murphy says. ‘This was evident in the team’s continual engagement with us to check that they were on track and in their responsiveness to our feedback, which ultimately led to their very competitive solution being selected,’ he says. ‘Now that the MBR project is underway, the continuation and recognition of Thiess’s capabilities is transitioning into delivery,’ Mr Murphy says. For further details, contact Andrew Chapman, Business Development Manager, Thiess: +61 07 3121 8502

Infrastructure Association of Queensland Yearbook 2014

MAJOR PROJECTS

Flood-proofing Roma After floodwaters devastated the town of Roma in three major flood events over three years, including its largest ever recorded in 2012, Maranoa Regional Council initiated the design and construction of the Roma Flood Levee.

Based on flood modelling data, the levee will protect up to 500 residential and commercial properties even when faced with a one-in-1000 -year flood, similar to the 2012 event. After lobbying for state and federal government funding and an extensive tender evaluation process in August 2013, Council awarded the tender for the design and construction of Stage 1 of the project to leading local contractor Ostwald Bros. Sixteen million dollars in local, state and federal government funding was secured for the construction of Stage 1 of the levee, including $1.25 million from Maranoa Regional Council, $12.4 million received from the Queensland Government – including the Royalties for Regions program – and $7 million from the federal government’s National Insurance Affordability Initiative. Stage 1 is part of the overall $30-million flood mitigation project that includes land purchases and easement works.

Safeguarding Roma is a project close to the heart of the Ostwald Bros team, as the family was personally touched by the flood events, seeing firsthand the heartache suffered from personal and property loss. With only a few flood levees ever completed in Australia, the project was quite unique, and it was also the first time Ostwald Bros had worked on the construction of a flood mitigation project. Extensive geotechnical investigation works and design analysis were completed in advance of construction to ensure the best solution for the community and for the 24 affected landholders whose properties the levee would be built on. The Ostwald Bros team also based the construction program on flood modelling data so that, in the event of a major flood hitting the town during construction, residents had some protection. Understanding the community impact of such a major project, Ostwald Bros recognised early in the planning stages the need for extensive community consultation, and engaged a fulltime liaison officer to proactively discuss works Infrastructure Association of Queensland Yearbook 2014

MAJOR PROJECTS

with landholders and keep Council up to date on the project’s progress. The levee alignment runs around the north and eastern sides of town, from Roma airport (northwest) to Bungil Creek at Miscamble Street (southeast) and intersects 24 private properties. Maranoa Regional Council completed a community consultation phase to identify the preferred ‘community’ route and then negotiated access agreements directly with the affected properties. Ostwald Bros sourced earthen construction materials from dam construction on local proprieties and by excavating a future Council refuse site. This created a win-win outcome for all parties. The Council and Ostwald Bros engaged the local Mandandanji people to assist with protecting the cultural heritage of the local area. The cultural heritage monitors completed a pre-clearance survey before work commenced and were on site for any clearing works to make sure their cultural heritage was not impacted upon. Ostwald Bros engaged Australian engineering company SMEC on the project, which had successfully delivered thousands of civil, transport, water, environment and power projects in more than 80 countries. The first sod was turned in September, marking a key milestone in the project. The project has made excellent progress and the achievements have been recognised at all levels of government. Community Recovery and Resilience Minister David Crisafulli, who attended the launch of Stage 1 and returned to inspect progress in March 2014, said the project was a great example of the work he hoped to see replicated around Queensland. The new levee, which is nearly complete, now stretches a remarkable 5.2 kilometres and stands four metres tall in the highest section. It winds from Roma Airport, across the Carnarvon Highway, behind McPhie Street and Edwardes Street, and follows Bungil Creek to Lovell Street. Over the course of construction, 11 scrapers, one D10 dozer, two excavators, two graders, three semi-water tanks and two moxy water trucks were used. Recognising the impact machinery can have on a community during such a large28

Infrastructure Association of Queensland Yearbook 2014

scale project, Ostwald Bros engineered a scraper circuit. This allowed for haul efficiency, kept traffic off the local roads and minimised the impact on residents. The community was provided appropriate notifications of works and engaged in more than 300 face-to-face meetings. Regular material was disseminated via the Maranoa Regional Council website, Facebook pages and monthly Council newsletters. Ostwald Bros also invited affected landholders to tour the site on a community bus and held an afternoon tea and sausage sizzle to discuss the project further. As well as keeping affected landholders informed about land access and trying to keep noise works and vibrations to a minimum, the project required a lot of water for construction to keep dust levels low on site and reduce potential impacts on nearby residential areas. To protect the town’s water supply, Ostwald Bros commissioned and installed a 450-metredeep bore at the Roma Refuse Site, which drew water from a different aquifer to other Council water bores and therefore did not impact on the town’s water resources. The bore produced approximately one megalitre of water per day and was stored in a 1.2-megalitre water storage tank installed at the refuse site. All of these measures resulted in an excellent response to the project from both the community and Council, with an understanding that the levee project was needed for the greater good of the region. Maranoa Regional Council is moving forward with planning for the second stage of the Roma Flood Mitigation Project to improve the region’s flood resilience. Stage 2 involves developing a number of flood mitigation measures that complement Stage 1 of the levee. The proposed Stage 2 mitigations are made up of a number of smaller levees, an extension of the Stage 1 Levee, two floodwater channel diversions, a dam expansion, an upgrade to the stormwater drainage system, Bungil Creek widening, and flow improvement works along the Long Drain and Shady’s Lagoon system. For further media information, contact: Ostwald Bros Senior Marketing Coordinator Caroline Milford on 0429 617 860

INFRASTRUCTURE

John Holland: delivering vital flood infrastructure John Holland is building vital flood recovery and mitigation infrastructure through the delivery of two major projects: the Bruce Highway Yeppen South Project and the New Farm Riverwalk Replacement project.

Both projects highlight John Holland’s expertise in civil infrastructure, which has seen them deliver major road, bridge and tunnel projects over the past 65 years.

John Holland’s $112-million Queensland Government contract involves the construction of an elevated crossing of the Yeppen floodplain directly adjacent to the existing Bruce Highway.

The $296-million Bruce Highway (Benaraby to Rockhampton) Yeppen South Project is a joint federal- and state-funded project, and is the second phase of the overall flood immunity improvements being made to the Bruce Highway on the south side of Rockhampton.

Two major bridges are included in the scope of works: the 1.6-kilometre Yeppen South Bridge will form the two-lane northbound carriageway of the Bruce Highway, and the 540-metre Slip Lane Bridge will form a twolane slip lane connection to the southbound Bruce Highway from Rockhampton, bypassing the Yeppen roundabout.

The project represents significant state and federal investment to improve the Bruce Highway, with the primary objective to minimise isolation due to the flooding of Rockhampton and northern Queensland from southern Queensland during moderate and major floods. Flood immunity will be increased from a one in 15 year flood level to one in 100 years.

John Holland Project Manager Mr Tim Deere says that the project will significantly improve the transport infrastructure for the region. ‘Heavy rainfalls in the area and the close proximity to the Fitzroy River mean that any time there is Infrastructure Association of Queensland Yearbook 2014

INFRASTRUCTURE

Yeppen South Start – December 2013 Completion – 2016 Client – Department of Transport and Main Roads, Queensland Scope of works includes: • upgrading the Burnett Highway/Bruce Highway intersection • 1.6-kilometre bridge structure to the west of the existing Bruce Highway alignment • 800 metres of embankment, including transitions to the roundabout at Capricorn Highway • 540-metre slip-lane bridge structure to connect to the Yeppen North Project currently under construction.

significant flooding in Central Queensland, the Bruce Highway, south of Rockhampton, can be cut for up to two weeks or more, impacting local traffic, freight and tourists travelling. The Yeppen South Project will not only improve flood immunity, but it will also increase the capacity of the Bruce Highway south of Rockhampton.’

New Farm Riverwalk Replacement Start – April 2013 Completion – 2014 Client – Brisbane City Council Features include: • 30 precast concrete box girders • a fixed, more flood-resilient structure, designed to last for 100 years • a rotating opening span to allow for the passage of vessels to and from moorings • a new alignment that will take users further out into the river for the majority of the walkway to improve the river experience • a segregated pedestrian and cycle path, 2.5 metres and 3.5 metres wide respectively. upstream section of the original walkway was also subsequently removed as the piles had suffered damage during the flood event. Delivery of Stressing Bed, Yeppen South

The bridges comprise prestress concrete piles, in-situ concrete substructure, prestressed precast T-Roff bridge girders and in-situ concrete bridge deck slabs. John Holland has constructed a purpose-built precast factory to manufacture the 385 bridge girders – measuring 35 metres in length and weighing 75 tonnes each – on site. ‘The batch plant and precast yard provides certainty of concrete supply and project delivery, ensuring that the program is met through efficient and cost-effective management of materials on site,’ says Mr Deere. Meanwhile, further south, Riverwalk is one of Brisbane City Council’s key river connections between New Farm and the Brisbane city centre. The original floating walkway was constructed in 2003 and was used by over 3000 cyclists, pedestrians and runners daily. The January 2011 floods caused significant damage to the original structure, resulting in a large section of it being washed away. The 30

Infrastructure Association of Queensland Yearbook 2014

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INFRASTRUCTURE

continued from page 30

The New Farm Riverwalk Replacement Project comprises an 800-metre integral walkway structure supported on 37 single piers anchored to the riverbed, making it more resilient in floods. One section near the downstream end includes a swing bridge, which opens to allow private boats to access the Brisbane River. The alignment is similar, though not identical, to that of the original structure. The varying ground conditions of the riverbank meant that two different piling techniques were used. The piling rigs were mounted on a barge on the Brisbane River, and concrete pumped approximately 650 metres via a secure floating pipeline from land. The majority of the piles were constructed using a BG36 rotary drilling rig, driving a steel outer shell into the rock to the required depth, excavating the inner section, then pouring concrete into the shell to construct the pile. Where the rock was on a slope, or where it did not have sufficient alluvium above to keep the pile in position, a 2000-millimetre temporary conductor pile was installed. Five piles were constructed using this technique involving a steel outer shell being driven into the rock, then screwed to the required depth to achieve a seal. The inner section was then excavated, and concrete poured into the shell to construct the pile.

Heavy lifting requirements are a key element of the scope of works, and new lifting technology has been deployed by the project to ensure greater precision and safety when lifting irregular, heavy concrete units into place. The high-precision SyncHoist technology was developed for the project in partnership with Universal Cranes by Enerpac Integrated Solutions to safely control irregularly shaped precast concrete units ranging in weight from 180 tonnes to 240 tonnes, reducing the risk of damage from oscillations while lifting in the marine environment John Holland Construction Manager Sam Freshney says that the wireless system was impressive because it provided greater flexibility than the conventional system, and provided the crane driver with greater control during the lifting process. ‘It’s also a lot safer, as the Programmable Logic Controller controlled system means that there are no wires running on the ground,’ he says. Being fixed rather than floating, the new structure will be more flood-resilient and is designed to last for a minimum of 100 years.

Aerial – northern end of site – Yeppen South 32

Infrastructure Association of Queensland Yearbook 2014

Connecting Queensland trade to the World The closest major container port to Australia’s largest export market, the Port of Brisbane is one of Australia’s fastest growing and most diverse multi-cargo ports. Handling over $50 billion in annual international trade and 20% of Queensland’s State Product, the Port of Brisbane has experienced more than a decade of solid container growth, fuelled by growing global demand for quality agricultural products and natural resources. In order to maintain sustainable growth of the State’s consumer, agriculture and resource sectors, and ensure liveability standards are maintained, it is critical to develop a long-term freight transport solution. This will be achieved through the development of a dedicated freight rail corridor, as part of the Melbourne to Brisbane Inland Rail project, linking the consumer, agricultural and resource sectors west and south-west of Toowoomba to the Port of Brisbane. Inland Rail will reshape road and rail transport by delivering national freight supply chain efficiencies and productivity improvements. The reduction in truck movements will also reduce congestion and substantially improve liveability for all communities. Dedicated freight rail will future-proof the Port of Brisbane’s national road and rail connectivity while enhancing export capacity and reducing logistics chain costs for exporters.

To find out more about how the Port of Brisbane can provide your business with opportunities to grow, visit www.portbris.com.au or contact the Trade Development team on +61 7 3258 4888.

SAFETY

Safety at fore of constructing world-class infrastructure Since July 2012, Leighton Contractors has proudly been delivering two key projects as part of Australia Pacific LNG’s multi-billion dollar coal seam gas (CSG) to liquefied natural gas (LNG) project.

In the delivery of the vital infrastructure, strong health and safety management has been paramount for the Leighton Contractors team to achieve a zero harm workplace, with both projects continuously challenging traditional methods – generating many unique industry initiatives and innovations. Leighton Contractors’ Water Treatment Facilities project’s health and safety management has

Infrastructure Association of Queensland Yearbook 2014

been acknowledged for its pursuit to achieve a zero harm workplace, winning the coveted 2013 Queensland Major Contractors Association Award – one of the industry’s highest safety accolades. Its Heat Stress Management program and hazard identification app (application) are two key initiatives as part of the wider safety program, now recognised as best practice.

SAFETY

Australia Facilities

Leighton Contractors’ General Manager of Northern Infrastructure, John Kirkwood, says: ‘When it comes to safety management, we strongly encourage a culture of innovation – we expect everyone to challenge and re-examine the way things are "typically done" to find new and better ways of achieving more superior results.

Pacific

LNG

Water

Treatment

• Location: Surat Basin/Condabri Central and Reedy Creek • Client: Australia Pacific LNG • Delivery Method: Construct only • Dates: 2012 – late 2014

‘To date, these world-class infrastructure projects are proving [to be] just that – worldclass infrastructure that is fuelling innovation throughout construction and across project disciplines to deliver sustainable outcomes – including, most importantly, zero compromise on safety, without compromise to performance, productivity and quality.’

Leighton Contractors is constructing the water treatment facilities on the Condabri Central and Reedy Creek sites. Scope of works includes: • bulk earthworks • underground services installation • water treatment plants

These brief case studies highlight how safety performance is being achieved in a variety of ways – from the development of an online tool, and reducing the risk of heat-related stress illnesses, to removing workers on the ground to mitigate their exposure to potential hazards.

• construction and lining of water storage, feed ponds and associated concrete structures • construction of infrastructure, including roads and drainage • Miles Aerodrome runway reconstruction.

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railway construction 9th investor in projects of

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largest international transport infrastructure contractor

Over € 65 Million invested in s Bicentennial Viaduct. Mexico. t Tunnel Boring Machine under Vistula River. Poland.

t Madrid Underground Line 2. Spain.

R&D and Innovation projects

t Terminal 4 Barajas Airport. Madrid. Spain.

www.ohl.es OHL Construction Pacific - Level 21, 110 Mary Street - Brisbane 4000 QLD T: +61 (0)7 30030335

Infrastructure Association of Queensland Yearbook 2014

SAFETY

Compatible with any web-connected smart device, the app allows users to identify, record, photograph and manage the hazard. Key features include: • in-field recording of a hazard via smart phone to facilitate immediate data capture and notification to the relevant supervisor • the upload of photos providing GPS locations, giving more precise detail to the action owners • improved process efficiency, entirely eliminating manual data collection, entry and analysis • instantaneous data capture and assignment of the risks, providing increased probability that the hazard is rectified and action is taken before accident or injury occurs • comprehensive reporting available at any time

The app was created to efficiently capture and organise information about hazards in the workplace. It facilitates a targeted approach to hazard management through real-time trending. Hazard identification app With over 800 workers and a project footprint stretching two sites and 140 kilometres, effectively mitigating hazards on site is crucial. The team recognised that implementing an effective hazard reporting system, including an efficient means of identifying, recording and addressing hazards, was critical to managing hazards on site and achieving a safer workplace. By utilising cloud computing and smart phone technology, a ‘live’ hazard identification app was designed by Leighton Contractors in consultation with the site project team, and built by Odyssey Risk Solutions. Once the app was developed, it underwent a testing phase over two months, involving a small group of users (comprising the health and safety team, and supervisors) who became ‘champions’ to drive its use. Users embraced the technology, and the testing phase allowed further modifications to be made before it was rolled out across the project. 36

Infrastructure Association of Queensland Yearbook 2014

and

trending

• due to the immediate nature of the data collection, hazard close-out can be improved by facilitating timely follow-ups. The innovative app has improved the project’s hazard management by: • increasing hazard reporting by 250 per cent • increasing immediate action to close-out hazards • reducing the total recordable injury frequency rate (TRIFR). A new version of the app is currently in trial within Leighton Contractors across the country to extend its capability beyond hazard reporting, reflecting the technology’s successful implementation and wider scope of application. Heat stress management At project conception, heat stress was identified as a critical risk due to the project’s geographical location and timing of specific works, exposing workers to high temperatures and the risk of heat stress. The project team specially designed a Heat Stress Management program targeting zero heat stress related incidents. The objective was to have no heat stress related illnesses, such as clinical dehydration, heat syncope (fainting), muscle continued on page 38

Transforming infrastructure through Building Information Modelling Solving complex problems while delivering lower project risk is not a new phenomenon, however innovative approaches to BIM across a range of infrastructure projects is delivering greater certainty and efficiency in the way engineers typically solve project challenges. This then results in a number of benefits which can be seen across the whole life cycle of not just the project but the constructed asset. Arup, as a global engineering and design consultancy renowned for innovation, is at the cutting edge of the delivery of BIM on both buildings and infrastructure projects. We have been at the forefront of developing and delivering collaborative environments, BIM processes and modelling for large infrastructure projects across Queensland and throughout Australia. A collaborative approach to BIM can improve project delivery through the adoption of standard processes and tools. Within the broader industry, there are a number of direct tangible benefits of using BIM, including up to 30% elimination of unbudgeted change, cost estimation accuracy within 3%, up to 80% time reduction to generate a cost estimate, up to 10% savings of contract value from clash detections, and up to 7% reduction in the overall time spent working on the project. Arup has successfully implemented collaborative environments through our preferred Electronic Document Management System (EDMS) solution. Our in-built technical processes and standards have been applied on many joint ventures within Australia and globally, including major projects such as Regional Rail Link in Melbourne, Airport Link and the Transport Network Recovery Program in Queensland. These projects, among others, include hundreds of users comprising clients, contractors, consultants and sub consultants that are located at various geographical locations and organisational networks.

The versatility and accessibility of BIM has also been enhanced by users’ ability to access live BIM models through desktop PCs and portable devices such as iPads, androids and web browsers. This allows interrogation of live design models and the capture of site inspections and records electronically. Additionally, through the use of clever GIS web-based technologies connected to the Common Data Environment (CDE), designers are able to make live project data available during the design phase to engineering teams and site engineers in the field. There are many other benefits of BIM – from interdisciplinary and coordinated design and modelling; accurate and quick takeoff and reporting; to connecting project teams; and creating high quality drive through animations, overviews and immersive real-time models to communicate to stakeholders. From an asset management perspective, going forward BIM will allow better accessibility to asset management information and operation costs, replacing traditional O&M manuals. No infrastructure project is the same and there is no single ‘one fits all’ approach to BIM and the level of sophistication required. For Arup, every project is unique and we draw on our vast experience to define the best approach for the project from our developed ‘tool kit’. This leads to the best possible solutions for clients and their projects, and ultimately the people who use them and live or work in and around them.

Images from top: Complex layers – Airport Link cut and cover structure in a tunnel © Arup A screen shot from an animation of a major rail bridge being modelled for constructability © Arup Seeing is believing – visualisations help convey design outcomes © Arup

SAFETY

continued from page 36

fatigue (spasms, indirect musculoskeletal injuries due to fatigue) or more serious illness such as heat stroke. The Heat Stress Management Program comprises: • heat stress awareness training on how to best manage heat before, during and after work • technical training with selected safety professionals and supervisors on hydration testing, including the use and calibration of refractometers, providing mentorship to workers on hydration levels, how to undertake thermal work limits (TWL) monitoring, and how to effectively implement controls • toolbox talks with supervisory staff, including subcontractors on TWL monitors in order to assess thermal work limits of workers

• hydration testing, including a urine testing protocol and rehydration guidelines • meal break scheduling • on-site health surveillance. The project consulted health professionals, such as 4CRisk and their Remote Area Paramedic, to assist in the development of the overall program. Since the program’s implementation, there has been no heat stress related incidents reported, and the risk of heat stress has significantly reduced despite air temperatures of 45 degrees Celsius and radiating temperatures of 57 degrees Celsius. As a result of the program’s success, it has been rolled out on other Leighton Contractors projects. Australia Pacific LNG – Upstream Project, Phase 1 – Gas Gathering Systems • Location: Miles, Queensland

Individuals working in hot conditions have a substantially elevated sweat rate, increasing the likelihood of dehydration by the end of their shift. By the time the thirst response is stimulated, humans are likely to have lost around two per cent of their total body water, resulting in mild dehydration before project team members are aware of it. Strenuous labour or exercise in a hot environment may escalate sweat losses to several litres per hour. Dehydration also has physiological and psychological effects on performance.

• Client: Australia Pacific LNG • Contract: Design and Construct contractor, Facilities Management contractor, Camp Manager • Duration: 2012 – mid-2015 Leighton Contractors is currently constructing the gas gathering network associated with CSG wells in the Surat Basin. Civil, pipe, mechanical and electrical operations include the installation of high-density polyethylene welded pipe, underground fibre-optic and electrical (high- and low-voltage) cables and well head equipment, as well as testing of all works for commissioning. Driving safety and performance

The introduction of the world’s first MFT-36 Fast Fusion Welding Machine has eliminated excess labour and equipment, and increased quality and safety by eliminating the need for people on the ground.

The installation of 1220 kilometres of poly welded pipe, 1730 kilometres of fibre-optic and electrical (LV and HV) cables and well head equipment presents a number of challenges due to the repeated methodology and the overall size of the project. The project has implemented a number of innovative ‘above the line’ controls – that is, no administrative controls for works identified as critical high risks to undertake – to mitigate or minimise risk, ensuring the safety of the 400-plus workforce, and contributing to the successful delivery of the project.

Infrastructure Association of Queensland Yearbook 2014

SAFETY

By driving a culture of safety first, performance and innovation, the project team implemented a number of unique solutions to prevent the most prevalent project hazards, including people/plant interaction and heavy lifting. • Fast fusion pipe welding machine – the introduction of the world’s first MFT-36 Fast Fusion Welding Machine has the capacity to weld up to one metre (1000 millimetre) diameter pipe. The machine has improved the quality control for welding conditions and improved productivity by 60 per cent for large diameter pipe. • Self-loading cable trailers – the team designed unique cable trailers with hydraulic engines and drive assemblies to self-load and lower cable drums from the ground to the trailer, and remotely control the lift, load and laying functions. This solution eliminated the need to lift 10-tonne equipment and the associated risks of suspended loads, people/plant interaction, manual handling and working within a confined space. The self-

loading cable trailers have reduced loading delays and allowed cable to be automatically laid in the trench at walking speed, improving productivity and safety. • Spindle loaders – the team engineered spindle loaders to fit forklift tynes (for use in the lay-down yard) and excavators (for use on site). This allows the forklift to load the 420-kilogram spindle into the cable drum, eliminating the need for lifting equipment and thereby eliminating the need for people/plant interaction and people working near a suspended load. • Field-fit welds – the team has engineered a measurement process to collect all the necessary dimensions and send pipe spools off site for fabrication, eliminating the risk of performing hot work in a hazardous area, and also achieving a higher-quality product. These solutions have improved project performance by making operations and productivity safer and quicker, improving quality, and saving time and money.

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Infrastructure Association of Queensland Yearbook 2014

REDEVELOPMENT

Wave-damaged jetty conveyor galleries, with remains of transformer bay in foreground

Rehabilitating the Lucinda Bulk Sugar Terminal after Tropical Cyclone Yasi

Infrastructure Association of Queensland Yearbook 2014

REDEVELOPMENT

The Lucinda Bulk Sugar Terminal (LBST) is located on the North Queensland coastline. Its offshore facilities, situated within the Great Barrier Reef World Heritage Area, form a key link in the efficient delivery to market of sugar from the Herbert region, an industry with a direct value in excess of A$300 million per annum. Lucinda Bulk Sugar Terminal offshore jetty and wharf at recommencing operations on 27 August 2012

The 5.76-kilometre-long jetty and offshore wharf suffered significant wave damage following Tropical Cyclone Yasi (TC Yasi) as it crossed the coastline in the early hours of Thursday 3 February 2011. Queensland Sugar Limited (QSL) engaged Aurecon to provide a full suite of services to initially report on the feasibility of repairs to the facility, and then to plan, design and manage the recovery project. The repair and recommissioning of LBST’s offshore facilities was possibly the largest single recovery effort in the wake of the muchpublicised TC Yasi. Reliable return of the facilities to their full operational state on time for export of product from the 2012 sugar season was a primary objective of the project. Damage assessment and design for recovery Aurecon’s assessment of the offshore facilities’ damage was undertaken in a safe, staged and methodical manner. The assessment’s initial focus was on safety, security of infrastructure, and the feasibility of repairs. A key feature of Aurecon’s

detailed assessments was then determination of what was damaged, with a close focus on why they each came to be so. Significant structural damage was sustained by the jetty conveyor gallery cladding and flooring, the wharf deck, and some primary structural components at the wharf. Extensive damage to the offshore mechanical and electrical systems, including destruction of the transformers feeding the entire offshore area, meant that the offshore systems were electrically dead and needed to be largely rebuilt. The severity and characteristics of TC Yasi were initially quickly described by relatively simple numerical methods, correlated with estimation of maximum wave crest levels along the structure from the observed damage. This was complemented by a parallel met-ocean study that established not only that maximum wave heights of nearly 10 metres occurred at the LBST offshore wharf during the event, with an ARI of approximately 200 years, but also defined the wave height and crest level recurrence profile for other extreme events.

Infrastructure Association of Queensland Yearbook 2014

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Within the project brief requiring a like-forlike replacement of damaged components, Aurecon used the thorough understanding of the damage causation to develop cost-effective modifications to the design of the replacement components, which are expected to provide a substantially greater resilience to any future unlikely extreme event. A focus on health and safety A particularly challenging combination of safety hazards included the need to work on a significantly damaged structure, with uncertain stability in certain locations, in a relatively remote part of the Queensland coastline and 5.76 kilometres from the shore. Aurecon and QSL implemented project-specific safety measures that would be considered above and beyond normal requirements for other marine works throughout the recovery program, including the mandatory wearing of self-inflating personal flotation devices by all personnel. Looking out for the community LBST’s 5.76-kilometre jetty, which has been called a paragon of engineering, is a tourist attraction and popular fishing location, being listed under ‘Things to see and do’ when in Queensland. It also lies within the Great Barrier Reef World Heritage Area and is adjacent to the Great Barrier Reef Marine Park. It is very much a part of the region from both a community and

The Lucinda Bulk Sugar Terminal is situated within the Great Barrier Reef World Heritage Area 42

Infrastructure Association of Queensland Yearbook 2014

an economic perspective. These sensitivities were well understood by the project team. Sugar production, centred on the town of Ingham, is the major industry for the Herbert region. The LBST facilitates overseas export of raw sugar from nearly 600 cane-producing farms in the region, processed through two mills, with revenue to the district in excess of A$300 million per annum. LBST is the only significant bulk sugar storage facility for the Herbert region, and is capable of storing approximately half of an annual crop’s production. The terminal’s ongoing receival capability by dedicated rail from the region’s two sugar mills was vital to their continuing efficient production and delivery of product to the industry’s customers. 394,942 tonnes of sugar from the 2011 season needed to be transported from the LBST storage sheds to the Townsville and Mourilyan Bulk Sugar Terminals for export, necessitating 10,970 return truck movements that resulted in more than 2.5 million truck kilometres travelled. The necessary trucking operation highlighted the importance of the LBST offshore facilities to the community and local economy. It was also a visible daily reminder to the project team of the importance of completing the project on schedule so that normal operations could return. continued on page 44

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Infrastructure Association of Queensland Yearbook 2014

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continued from page 42

Wharf roadway damage

All new steelwork was fabricated in Queensland â&#x20AC;&#x201C; the majority in Townsville. The new 60-metrelong fender truss was the largest single component ever fabricated by the steelwork contractor, and was an achievement celebrated in the local Townsville newspaper.

from the Port of Lucinda. On that day, the New Ambition successfully loaded about 27,000 tonnes of raw sugar for transportation to an American refinery, marking the commencement of exports from the 2012 season and a return to normality for the community.

The construction work itself included the employment of almost 100 local residents from the Ingham region, providing a significant boost to the local economy. Additionally, the main construction contractor had the opportunity to significantly grow its capability in executing marine works.

Benchmark of Australian engineering and world best practice

Approximately 100 Aurecon staff were involved in the LBST recovery effort, with design being coordinated from the Brisbane office and undertaken entirely in Queensland (including the Cairns, Townsville and Mackay offices), aside from the cathodic protection systems that were engineered in Aureconâ&#x20AC;&#x2122;s Melbourne office. After being offline since TC Yasi struck in February 2011, QSL achieved a significant milestone when sugar exports resumed on 27 August 2012 44

Infrastructure Association of Queensland Yearbook 2014

The terminal was safely and successfully returned to full operations on time and on budget, to the satisfaction of all stakeholders, and subtly but importantly, the terminal was reconfigured in a way that it will be significantly more resilient in the face of the unlikely occurrence of a similar event in the future. The project has been recognised for its allround engineering excellence and outstanding management of workplace safety and environmental compliance, winning a 2013 Australian Engineering Excellence Award and being highly commended for Best Practice in OH&S at the 2013 Australian Bulk Handling Awards.

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REDEVELOPMENT

Rebuilding communities and economies By Joey Chalk, Senior Inside Sale Coordinator, Jacobs

Following several significant natural disasters in the last three years, Queensland’s premier has called for a common-sense approach to assessing and prioritising reinvestment in infrastructure in an effort to minimise endless rebuilding. Jacobs draws on its experience from around the globe, working with governments to rebuild communities and economies.

After significant flooding and cyclone events over the past few years, Queensland is working to rebuild the state and restore its regional communities. Communities in Far North and western Queensland, in particular, have been isolated, with roads cut and vital infrastructure damaged. Major industry has also been affected, with rail lines running from the Central Queensland coalfields to the port of Gladstone closed. The damage bill for the 2013 natural disasters alone stands at A$2.4 billion, and global reinsurance data indicates that Queensland is not alone when it comes to infrastructure damage resulting from weather extremes. The impact of such disasters on the state’s economy is unprecedented. As a result, the state government is managing some of the largest capital expenditure projects in its history. Jacobs has significant experience working with governments around the world to determine the best response to disaster management, and in Queensland, Jacobs has been working with the state government to quantify the damage of the past three years, and to develop effective responses. As an example, Queensland’s Department of Transport and Main Roads (TMR) is delivering 46

Infrastructure Association of Queensland Yearbook 2014

the largest program of works in its history, with more than A$6 billion budgeted to reconstruct Queensland’s state-controlled roads. Jacobs is working with TMR to deliver a number of regional programs, managing over A$1 billion in capital expenditure. Following the Christchurch earthquake in New Zealand in 2011, Jacobs has played a major role in the government’s structural engineering assessment works, having been a member of the panel to assess building damage caused by the quakes. Jacobs has also been part of the Stronger Christchurch Infrastructure Rebuild Team, which is responsible for rebuilding the city’s horizontal infrastructure, such as water and sewerage pipes.

Damage Assessment

Risk assessments Community liaison

Validation and Qualification

Prioritisation and Delivery

Program and project management

Environmental approvals and

Contract administration

Traffic management, planning and administration

Road, pavement and hydraulic design

Simplified approach to project delivery

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Flood Damage

Tangible

Direct

Difficult to quantify in dollars

Indirect

Physical impacts

Buildings

External Items Contents

Environmental

Emergency repsonse and disruption to normal economic and social activities

Emergency Response

Structural

NCCARF comments that we need to ‘adapt’ to our changing environment.

Less Tangible

Can be estimated in dollars

Clean-up

Community Support

Water Bridges

Disruption to employment, commerce, tourism

Agricultural Enterprises

Infrastructure

Roads

Social

Livestock Other

Fences, etc

Crops and pastures damage/loss

Types of flood damage When responding to major infrastructure projects triggered by extreme climate events, there are three core stages that occur before any redesign and/or rebuild can take place. For Queensland, one of the priorities emphasised by the premier is the challenge of flood-proofing our communities. This will require a holistic and pragmatic approach; and, as the National Climate Change Adaptation Research Facility (NCCARF) highlights, climate change adds significant complexity to the related decisionmaking process. NCCARF’s Dr Sarah Boulter commented that while we would like to think events such as the 2013 floods might occur once in a lifetime, unfortunately, history does repeat itself, and our communities will continue to be at risk of natural disasters. To ensure that a community is ‘disasterproof’ means anticipating the worst possible scenario potentially occurring at any time. NCCARF states that, of all the world’s developed nations, Australia is the most exposed to extreme weather events. The storms and flooding of December 2010–January 2011 caused economic losses of A$8.6 billion, and insured losses of A$4.3 billion. The increasing exposure of Australia to climate events in future is predicted to occur in many different ways, with differing effects across locations, and with varying consequences for businesses, governments and communities.

With repeated disasters, significant investment and ongoing financial loss, new approaches may be needed when looking to rebuild communities. Adapting to future disasters is complicated and expensive; however, if government and community are unwilling to face the same risk again, then an exercise of cost-benefit analysis will be essential. What will adaptation cost, and how does it compare to the potential damage bill? What are the associated risks to life? In 2011, the Department of Climate Change and Energy Efficiency reported that more than A$226 billion of current residential, commercial, industrial, road and rail assets in coastal areas are potentially exposed to inundation and erosion hazards in the event of a sea level rise of 1.1 metres. Irrespective of climate change, trends show that the frequency of extreme weather events worldwide is increasing, and decisions made today lacking suitable foresight in areas such as major infrastructure investment, land use planning and building design, may create greater costs and risks in the future. The case for change Take the state’s road network, for example. The Far North is particularly exposed to flood events and natural disasters resulting from tropical storms, which routinely wash away essential road networks. These flood-damaged roads leave some communities isolated for up to six months of the year, significantly impacting on the social and economic stability of the region. Each year, the Queensland state and federal governments provide for funding under the Natural Disaster Relief and Recovery Arrangements (NDRRA) to restore essential road assets to their pre-disaster state. The federal government provides 75 per cent of the funding, and the states pick up the remaining 25 per cent. One of the federal government’s criteria is that work should only reinstate the asset to its previous condition, resulting in the infrastructure Infrastructure Association of Queensland Yearbook 2014

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often being exposed to the same damage the following year. By conducting a whole-of-life cost analysis, Jacobs has been able to demonstrate that the annual maintenance expenditure currently being disbursed for unsealed roads in Far North Queensland far exceeds the cost to maintain and repair flood damages to a sealed road. In particular, a Jacobs case study conducted on a road in a remote area shows that annual maintenance and flood repair costs significantly outweigh the cost of reconstructing and maintaining a sealed road. Additional economic, social and environmental benefits could also be achieved by sealing this road. Under the 'betterment' clause of the federal government’s NDRRA funding guidelines (3.6.6), a road asset may be restored or replaced to an improved and more disaster-resilient state if it can be established that the proposal is costeffective and will mitigate the impact of future natural disasters. While the federal government has provisions for improvement via a betterment clause, the funding arrangements that mainly fund ‘like for like’ projects, means that flood-prone roads and other infrastructure continue to be rebuilt in the same location. In Monto, for example, a A$7-million bridge that had been rebuilt after damage three years ago was gouged again by floodwaters in January 2014. Under the current NDRRA guidelines, it may be rebuilt to its pre-disaster state.

When assessing and recovering from flood events, distinction is normally made between three groups of damages: 1. Direct (tangible) damages comprise the physical impact of the flood – for example, damage to structure and contents of buildings, agricultural enterprises and regional infrastructure. 2. Indirect (tangible) damages comprise losses from disruption of normal economic and social activities that arise as a consequence of the physical impact of the flood – for example, costs associated with emergency response, clean-up and community support, as well as disruption to transport, employment and commerce. 3. Less tangibles, or ‘non-market’ impacts, comprise losses that are more difficult to quantify in monetary terms (since market prices cannot be used) – for example, loss in biodiversity or increased stress levels. Planning for the future The last several years have devastated Queensland’s communities and economies, and the way in which the state responds to such extreme climate events is changing. With Queensland’s population set to double over the next 50 years, transport infrastructure planning remains critical, with the 2013–14 budget committing A$5.5 billion to deliver Queensland’s integrated transport solutions. Decisions made today that are lacking suitable foresight in areas such as major infrastructure investment, land use planning and building design may create greater costs and risks in the future.

Annual road maintenance and flood repair cost comparison

Infrastructure Association of Queensland Yearbook 2014

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Commercial and industrial opportunities taking off at Brisbane Airport With the release of its 2014 Master Plan, Brisbane Airport is set for huge growth. Australiaâ&#x20AC;&#x2122;s second-busiest airport by aircraft movements has a New Parallel Runway underway and a major International Terminal redevelopment in the pipeline. But the activity doesnâ&#x20AC;&#x2122;t stop there. As a precinct, Brisbane Airport is more than terminals and runways. It is already home to more than 420 business and 21,000 workers across a range of industries, and is expected to rapidly expand to a 50,000-strong workforce in the next 20 years.

Retail, lifestyle and commercial precinct, Skygate 50

Infrastructure Association of Queensland Yearbook 2014

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The new BNE Service Centre

Brisbane Airport’s Property Division, BNE Property, is working to realise the precinct’s potential as a vibrant commercial centre. Newly appointed General Manager Commercial Businesses John Tormey is tasked with leading Brisbane Airport’s property and parking divisions, helping the company to deliver significant growth opportunities for Queensland. ‘Brisbane Airport is continuing to gain momentum as an ideally located commercial centre and sought-after business address,’ says Mr Tormey. ‘This is an exciting time for Brisbane Airport, and businesses continue to be attracted by our growing amenity and unique location.’ Growing amenity A number of developments are currently underway at the precinct. The new BNE Service Centre has just opened on the corner of Nancy Bird Way and Moreton Drive. Home to a 24-hour Shell Coles Express, 24hour McDonald's, a car wash, and a food court including KFC, Hungry Jacks, Subway and The Coffee Club, the BNE Service Centre will be a welcome addition to the airport’s ever-expanding service offer.

Commercial and lifestyle precinct Skygate – with DFO, Queensland’s first 24-hour Woolworths, Novotel Brisbane Airport and the new Golf Central BNE – is also a focus for development interest. The precinct will continue to grow with DFO Stage 4 and a new multi-level car park both commencing this year. As well as an additional 5000 square metres of retail, the expansion will also include alfresco dining and a children’s play area. Unique business address Mr Tormey says that the enhanced amenity is a sign of Skygate’s success, and additional parking will help to accommodate future potential for additional commercial office buildings in the precinct. ‘BNE Property is working to deliver additional commercial office buildings at Skygate in the short term, as the precinct has grown into a location of choice for employees to come to work,’ Mr Tormey says. ‘The 24-hour Woolworths, DFO and lifestyle offer of Golf Central BNE are proving to be great drawcards for staff,’ he says .

Infrastructure Association of Queensland Yearbook 2014

AIRPORTS

Artist's impression of the new Aviation Australia facility

As a whole, the airport’s office market is strong, with the lowest total office vacancy rates in Australia, according to the 2014 Property Council of Australia (PCA) January 2014 Office Market Report. Brisbane Airport total office vacancy sits at just five per cent, compared to 14.2 per cent in the Brisbane CBD and 10.6 per cent for Australian non-CBD as at January 2014. A total of 77,452 square metres of office space across 26 buildings makes the precinct similar in size to the Toowong office precinct. The $1-billion property portfolio includes a diverse range of commercial, retail, industrial and specialised buildings, including the award-winning iseek Data Centre. ‘The site attracts such a wide range of industries because it offers flexible building design and customised premises to suit individual business requirements,’ Mr Tormey says.

of excellent access, guaranteed power supply, security and the provision of whole-of-life building management services.’ The precinct is well positioned to attract additional international, national and regional distributors, who offer sales and technical support, and require speed to market, using transport routes to access their markets the same day. These include wholesale trade, communication services, and transport and storage sectors. Direct access to the AirportLinkM7 ensures transport efficiency for service to the western corridors, and makes Brisbane Airport’s northside location ideal for companies that distribute to these areas. The research shows that the combination of amenity and features, in a location within easy access of the city, will also attract MIBA

Logistically perfect A new EsSCO study into the precinct confirmed that while airline-related businesses are natural tenants for the airport, the precinct is well placed to provide the service and amenity requirements for a wide range of industrial and mixed industry operations: ‘Brisbane Airport is a multifaceted business location with growing industrial and MIBA sectors, and excellent office, retail, hospitality and accommodation, allowing a mix of tenants that are not just ‘air’-related. The level of amenity provided at BAC by this business mix is itself attractive. Added to this are the features 52

continued on page 54 Infrastructure Association of Queensland Yearbook 2014

Shaping Queensland’s future Major infrastructure development will continue to shape Queensland’s future in 2014. 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 or Mitchell Petrie on 07 3233 3164 or mpetrie@kpmg.com.au. kpmg.com.au © 2014 KPMG, an Australian partnership. All rights reserved

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Infrastructure Association of Queensland Yearbook 2014

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AIRPORTS

continued from page 52

Artist's impression of the proposed development at the Domestic Terminal

commercial clients, many of which will be or have been displaced from city fringe locations due to higher rents from an influx of serviceoriented businesses in previously industrial city fringe areas, such as Woolloongabba, West End and Newstead. Current logistics companies on airport include Toll and DHL, who recently developed a new air freight facility in the Airport South precinct. Airport South will also see the construction of a new Aviation Australia corporate and training facility. Due for completion by the end of 2015, the 4450-square-metre facility will comprise a two-level corporate office, 24 lecture rooms and a technical training centre. The new training facility will accommodate an additional 600 students, and the 545-square-metre canteen and outdoor dining area will benefit the wider precinct. A vibrant centre Airport Central – at the heart of the site – will be the critical mass of activity and energy over the coming years. As well as retail precinct Skygate, Airport Central includes the Domestic and International Terminals. The case for additional hotel accommodation identified in the 2012 Property Development Master Plan will soon be realised, with a major hotel development set to commence mid-year next to the Domestic Terminal. It will include a five-star hotel building, as well as a 3.5- to four-

star hotel, offering a total of more than 300 rooms and a state-of-the-art conference centre. The development will greatly enhance the airport’s amenity for travellers, and will complement the current Novotel Brisbane Airport. The new hotels will also help to meet the undersupply of hotel accommodation in Brisbane. The International Terminal precinct has also seen recent growth with the completion of its first commercial office building, Five Lobelia Circle. Community collaboration Mr Tormey says that the huge growth of the precinct has been recognised through the formation of the airport’s new business association, BNE Enterprise. BNE Enterprise is a not-for-profit organisation supporting growth and development for companies and their suppliers at Brisbane Airport. ‘Brisbane Airport is not your average Brisbane suburb – it is a 24-hour global hub, home to an exciting range of businesses,’ Mr Tormey says. ‘As a founding member of BNE Enterprise, BNE Property recognised the huge potential for collaboration and business opportunities within this unique precinct. ‘Encouraging business collaboration on airport will ensure that the precinct continues to flourish, and allows businesses to benefit from BAC’s investment into the growth of the precinct,’ he says. For more information, visit bneproperty.com.au.

Infrastructure Association of Queensland Yearbook 2014

AIRPORTS

Airport Master Plan reveals massive pipeline of infrastructure delivery Plans for the delivery of a $2.5-billion investment in airport infrastructure over the next 20 years have been revealed in Brisbane Airport Corporationâ&#x20AC;&#x2122;s (BAC) recently released 2014 Preliminary Draft Master Plan, responding to forecast growth in passengers, freight, aircraft movements and on-airport commercial development.

Infrastructure Association of Queensland Yearbook 2014

AIRPORTS

BAC’s Head of Planning, Mark Willey, says that the Master Plan was the airport’s principal forward-planning document; and in addition to its role as a blueprint for development to meet future demand, it was also the platform for BAC’s ongoing contribution to the local, state and national economies. ‘Based on our detailed forecasting and analysis, by 2034, Brisbane Airport is expected to contribute $8.2 billion to the Queensland economy each year, and $13.4 billion to the Australian economy annually,’ Mr Willey says. He says that a new master plan, with a planning horizon of 20 years, is produced every five years in accordance with federal legislation.

‘However, it plays another important role. The performance of the airport is a strong litmus test for the broader economy, so the inclusion of information about forecast passenger growth, priority on-airport development precincts and transport infrastructure can provide useful guidance for business and industry as they also plan for the future.’ Growth forecasts Mr Willey says that passenger numbers have grown by 23 per cent in the past five years, and that by 2034, anticipated passenger numbers would more than double to over 48 million passengers every year – the same number of passengers that use Hong Kong and Singapore airports today. Utility works on the new runway site

Infrastructure Association of Queensland Yearbook 2014

AIRPORTS

‘Of these forecast 48 million passengers, approximately 37 million will be domestic and 11 million will be international, and aircraft movements will increase from 212,000 to around 360,000 in that same 20-year period,’ he says. Future aviation development To manage the predicted aviation-related growth, the Master Plan outlines a number of short-, medium- and long-term projects focused on terminals, airfield development, general aviation and runways. Mr Willey says that short-term plans include the construction of the $1.3-billion New Parallel Runway – which is currently underway – terminal expansions, additional apron space, remote lounge facilities and taxiway development. ‘In the medium to long term, our plans include the provision of remote satellite terminal facilities, a mass transit system linking the domestic and international terminals, additional hangars, and further terminal, apron and taxiway upgrades.’ He says that timing for infrastructure delivery

will be subject to demand and commercial feasibility assessments. Commercial development Mr Willey says that Brisbane Airport occupies 2700 hectares of land, 1000 hectares of which was available for staged, non-airside development, providing a significant opportunity for commercial development. ‘The airport has been identified as a critical employment hub for Brisbane, and by 2034, it is forecast that around 51,000 people will be employed across a range of businesses and industries located in five defined airport precincts – Airport Central, Airport West, Airport North, Airport South and Airport East.’ He says that development within the precincts is carefully controlled under the central themes of diversity, sustainability, consolidation and value-adding. ‘The overall development strategy encourages the clustering of like uses, and through the provision of integrated road, telecommunications and other utilities, connectivity across the airport is achieved,’ Mr Willey says. Infrastructure Association of Queensland Yearbook 2014

AIRPORTS

‘Our aim is to create a diverse and thriving aviation and commercial hub supported by service networks to maximise individual business performance.’ He says that the Master Plan contains a comprehensive list of intended uses for the various airport precincts, offering business and industry a detailed insight into the commercial opportunities that existed at Brisbane Airport. Ground transport One of the aims of the 2014 Master Plan is to increase the use of public transport and reduce reliance on private vehicles as a way of accessing the airport. Mr Willey says that assessments show that private vehicles are used by 59 per cent of domestic passengers and 72 per cent of international passengers. ‘Combining the transport choices of airline passengers and those who work across Brisbane

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Airport, 96 per cent of trips are typically by vehicle, inclusive of taxis, and four per cent are by public transport. ‘In the term of the 2014 Master Plan, we need to secure additional public transport options to cater for the large number of shift-based airport employees, address the significant length of time it takes to get to the airport using public transport, secure better public transport connectivity, and improve the level of information given to passengers and employees about the transport modes available other than the private vehicle,’ he says. Mr Willey says that these are significant challenges that require an integrated approach from BAC, and local and state government. ‘BAC has invested over $600 million in transport infrastructure over the past decade, and we will continue to build on this investment in the future through 10 primary initiatives outlined in the Master Plan.’

28/05/14 9:07 AM

AIRPORTS

He says that the initiatives focus on continued improvement to the on- and off-airport road network, improved rail network and services, the support of freight movement through the airport, the encouragement of passengers and employees to use alternative transport modes, and the improvement of active transport facilities and linkages, particularly for cyclists and pedestrians.’ Airport environment strategy The 2014 Master Plan also contains a detailed environment strategy that underpins BAC’s commitment to world best practice environmental sustainability, and details the measures and actions to be implemented over the next five years. Mr Willey says that BAC’s environment and sustainability policy established measurable targets for environmental outcomes, and monitoring and reporting on key indicators, such as groundwater, air quality, waste and

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recycling, ground running operations, and wildlife management, was central to achieving long-term goals. He says that 285 hectares of airport land, equating to 10 per cent of the airport site, has been devoted to a biodiversity zone, which is home to a range of rare flora and fauna species. ‘Working closely with Brisbane City Council and a number of external environmental groups, our aim is to maintain the diversity of this zone, providing permanent protection for a number of important species,’ he says. Aircraft operations The Master Plan also addresses aircraft operations, with a particular focus on protecting the surrounding airspace from development encroachment. ‘All levels of government understand the importance of safeguarding the airport from

Infrastructure Association of Queensland Yearbook 28/05/142014 9:07 AM 59

AIRPORTS

...the Master Plan highlights the key areas of concern, as well as the development controls that are in place to discourage inappropriate development that could impact on the safe and efficient operation of the airport nearby development that could create physical or light-based obstacles, or in the case of residential development, could lead to community concern about noise impacts,’ Mr Willey says. He says that the Master Plan highlights the key areas of concern, as well as the development controls that are in place to discourage inappropriate development that could impact on the safe and efficient operation of the airport. Conclusion Mr Willey says that the Brisbane Airport Master Plan is essential reading for Brisbane’s business community and those interested in the development of the city. ‘It is more than just a blueprint for on-airport development, and its scope is relevant to many more people and organisations than BAC and government alone.’ He says that after the 2014 Preliminary Draft Master Plan has gone through the public comment and government assessment phase, it is expected to be issued as the final approved Brisbane Airport 2014 Master Plan by the end of 2014. Once approved, the 2014 Master Plan will be available at www.bne.com.au.

Infrastructure Association of Queensland Yearbook 2014

Key features of the Brisbane Airport 2014 Preliminary Draft Master Plan • Growth forecasts: Passengers are expected to more than double to 48 million annually by 2034. • Regional economic benefits: It is expected that Brisbane Airport will contribute $8.2 billion annually to the Queensland economy, and provide around 51,500 full-time jobs within the next two decades. • Airfield and terminal development: Terminal expansions and transport needs feature in growth plans. • Commercial development: The creation of five sub-precincts to maintain business clusters, and to generate a sense of identity and community. • Airspace protection: Ongoing management of safe and efficient movement of aircraft to and from Brisbane Airport adhering to relevant regulations, processes and guidelines. • Aircraft noise management: Updated version of the Current and Future Flight Path and Noise information booklet has been prepared to complement the Master Plan. • Community and stakeholder engagement: Ongoing commitment to supporting and engaging with the local community through a variety of avenues. • A comprehensive Ground Transport Plan: Focusing on stimulating greater use of public transport. • An Airport Environment Strategy: Detailing the management of the surrounding environment to ensure that the impacts of growth are managed.

AIRPORTS

Building Brisbane’s new parallel runway from the ground up Brisbane Airport is Australia’s third-largest airport by passenger numbers, second-busiest by aircraft movements, and largest by land size.

In 2012, more than 21.8 million passengers travelled through Brisbane Airport, with passenger numbers expected to more than double to 48 million by 2034. To cater for the increasing demand, Brisbane Airport Corporation (BAC) is investing $2.5 billion in capacity-related infrastructure over the next 20 years, including the construction of a new parallel runway (NPR), which will deliver the capacity needed to meet the continued growth of flights in and out of Brisbane. Due for completion in 2020, the $1.3-billion NPR is Australia’s first privately funded runway. Located two kilometres west of the existing main runway, the NPR will be 3.3 kilometres long

and 60 metres wide, and will have more than 12 kilometres of taxiways, navigational aids, airfield infrastructure and hundreds of hectares of airfield landscaping. At the peak of construction, it will create 2700 local jobs. When complete, it will allow a range of new operational modes, subject to weather and traffic conditions, that will maximise the number of flights over Moreton Bay, easing noise exposure over the more populated areas, particularly at night. As with any development at Brisbane Airport, a solid base is required before building up, which is achieved through a process of engineered compression. Typically, this involves piling sand (or similar material) on the site, allowing it time Infrastructure Association of Queensland Yearbook 2014

AIRPORTS

to compact the area and squeeze out the water via a complex drainage system called 'wick drains', then pushing off excess sand to allow construction to begin.

Furthermore, as part of the major development plan, the waterways on the NPR site were manually dragged in an attempt to relocate any marine life prior to the waterways being drained.

The NPR site, which is located at sea level on soil that’s both soft and waterlogged, requires the same preparation; construction has therefore been broken up into three stages, spanning eight years, to allow for adequate stabilisation of the foundation of the runway.

2. Current stage: dredging and reclamation works (2014–2018)

NPR’s three stages of construction: 1. Completed (2012–2014)

stage:

site

preparation

The first stage of the project included vegetation clearing, predominantly Casuarina plantation and some mangroves, construction of access roads, significant drainage works and modifications to the cross-runway system that necessitated its temporary closure. All cleared vegetation was mulched, blended with existing topsoil and stored in stockpiles to break down into a rich organic topsoil product to be used to landscape the future airfield. The end result is the beneficial re-use of all vegetative material from the site and the avoidance of thousands of truck movements on local roads.

This involves sand extraction from Middle Banks in Moreton Bay, pumping the sand ashore from a mooring point in the Brisbane River, piling sand on the site, installing more than 350,000 wick drains and up to a four-year ground settlement period. In October 2013, BAC signed a contract with Jan de Nul (Australia) Pty Ltd – one of the world’s largest and most experienced dredging contractors – to undertake the reclamation works at the 360-hectare NPR site. One of Jan de Nul’s most modern trailer suction hopper dredge vessels, the Charles Darwin, is undertaking the works. The ship uses powerful suction tubes, equipped with drag heads, lowered from its sides to draw sand material from the seabed in Middle Banks, Moreton Bay, into its hull storage area (called a ‘hopper’). Middle Banks is the ideal location to source sand for projects such as the NPR, and is a site that has been previously used to provide sand for numerous projects, including the establishment of the airport in its current location in the early 1980s. It is very

continued on page 64 Infrastructure Association of Queensland Yearbook 2014

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AIRPORTS

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clean and contains virtually no silt that can cause cloudiness and disturb the environment. It is away from important seagrass beds and is located to the west of the existing shipping channel so that there are no effects to the marine environment or Moreton Island. As the NPR site is so large, roughly 13 million cubic metres of sand will be transferred from Moreton Bay to the NPR site and allowed to compress the ground until it meets the required firmness. The reclamation works will take around 10 months to complete with the dredge vessel operating on the basis of 24/7. Once the sand has been transported to the site, the settlement process is accelerated by the â&#x20AC;&#x2DC;wick drainsâ&#x20AC;&#x2122;, which are inserted into the ground at the softest parts of the site down to as deep as 35 metres. This will allow the moisture to be drawn from the soil more quickly than it is with the action of gravity alone. The NPR reclamation design involves more than 10,000 kilometres of

wick drains being spaced as close as one-metre centres over the softest areas. 3. Runway (2018â&#x20AC;&#x201C;2020)

pavement

construction

This involves pushing off the excess sand surcharge, constructing pavements and airfield, then commissioning and commencing operations. The NPR is an enormous development that is essential to the future of Brisbane Airport and to managing the over 48 million passengers forecast to travel through the airport by 2034 and beyond. Once complete, not only will the NPR give Brisbane Airport the most advanced runway system in Australia, it will also be fundamental in delivering millions of dollars to the local economy through jobs and boosted tourism. For further information, visit www.bne.com.au/corporate/upgrading-yourairport/brisbane-airports-new-runway.

A waterlogged NPR site ready for sand to stabilise the foundations of the new runway

Infrastructure Association of Queensland Yearbook 2014

CONTRACTS

Consequential loss: The saga continues By Suzy Cairney, Partner, Holding Redlich

The case of Regional Power Corporation v Pacific Hydro Group Two Pty Ltd (No.2) [2013] WASC 356, a decision of the Supreme Court of Western Australia, has added a new layer of complexity to the interpretation of consequential loss clauses.

In a contract that did not define consequential loss, the Court gave priority to finding a commercial interpretation based on the wording of the clause and by reading the contract as a whole, rather than pigeonholing a consequential loss clause with reference to either Hadley v Baxendale or the Peerless Holdings decisions. Facts In 1994, Pacific Hydro Group Two Pty Ltd (Pacific) agreed to construct the Ord Hydro Power Station at Lake Argyle, near Kununurra in northern Western Australia. Pacific also agreed to sell the power station’s electricity to the Regional Power Corporation (the Corporation) pursuant to a power purchase agreement (PPA) between the parties. Following a flooding incident in 2006, the power station was inoperative for two months. The Corporation claimed approximately $4 million in damages for breach of contract for costs that it incurred in hiring diesel generators and purchasing fuel to generate replacement electricity.

Pacific relied on the case of Environmental Systems Pty Ltd v Peerless Holdings Pty Ltd [2008] VSCA 26 to support its argument that the Corporation’s losses were consequential losses Reasoning Pacific Hydro argued that the Corporation’s loss was consequential loss, and was therefore excluded by clause 26.1 of the PPA, which states that: ‘Neither [party] shall be liable to the other party in contract, tort, warranty, strict liability, or any other legal theory for any indirect, consequential, incidental, punitive or exemplary damages or loss of profits.’ Pacific relied on the case of Environmental Systems Pty Ltd v Peerless Holdings Pty Ltd [2008] VSCA 26 to support its argument that Infrastructure Association of Queensland Yearbook 2014

CONTRACTS

the Corporation’s losses were consequential losses. It submitted that ordinary, reasonable parties in the positions of Pacific and the Corporation would surely have viewed the expenses that the Corporation incurred to obtain replacement generators and fuel to operate them as falling outside a range of any ‘normal measure of damages’.

It is trite law that a commercial instrument should be given a commercial interpretation The Corporation argued that the losses it claimed fell within the first limb of the rule in Hadley v Baxendale (1854) 9 Exch 341, and were therefore recoverable under the PPA as being damages that ‘may fairly and reasonably be considered’ as ‘arising naturally, i.e. according to the usual course of things, from such breach’. In other words, it claimed that they were direct losses. Justice Martin said at the time that, ‘It is trite law that a commercial instrument should be given a commercial interpretation.’ He referred with approval to the view of Professor Carter that approaching the construction of ‘consequential’ or ‘indirect’ loss by reference to the second limb of Hadley v Baxendale, or to the ‘normal measure of damages’ as set out in Peerless, is artificial. Justice Martin said that Professor Carter’s view that both these approaches ‘are wrong because they approach the expression “consequential loss” from particular legal perspectives, rather than a commercial perspective, which will vary from case to case’ was compelling. Instead, Justice Martin approached the construction of clause 26.1 by referring to Darlington Futures Ltd v Delco Australia Pty Ltd [1986] HCA 82. In that case, the High Court established that the meaning of an exclusion or limitation clause was to be ‘determined by construing the clause according to its natural and ordinary meaning, read in light of the contract as a whole’.

Infrastructure Association of Queensland Yearbook 2014

In other words, in the Court’s view, the proper approach to construing clause 26.1 was to start with the words of that clause, rather than with a fettering predisposition to construing ‘consequential’ or ‘indirect’ loss ‘as only embracing a head of loss that falls under the second limb of the rule in Hadley v Baxendale’. His Honour also noted that it was inappropriate to adopt a predisposition to ascertaining the meaning of ‘consequential’ or ‘indirect’ loss by reference to the ‘normal measure of damages’ referred to in Peerless. Decision His Honour concluded that the losses that the Corporation claimed were direct losses, and therefore their recovery was not excluded by clause 26.1. This conclusion was based on several PPA clauses, including: • clause 16, which made it clear that the PPA envisaged a long-term commercial relationship, establishing a take and pay regime for electricity, founded on stated assumptions as to ‘Reliable Operation’ • clause 16.3, which expressly recognised that the Corporation ‘may need to generate its own electricity to make up [a] shortfall or obtain the shortfall from another source’ • clause 16.4, which showed that electricity supply was being provided in circumstances where the Corporation may have to maintain a ‘reliable supply of electricity to its customers during the period that Reliable Operation is lost’. Other provisions in the PPA also recognised the public character of the Corporation’s statutory responsibilities to supply electricity to the community, rather than just making profits. Justice Martin said that the PPA parties were sophisticated commercial entities that, against the background of the well-understood requirement for the Corporation to continue to supply its customers with electricity if the power station failed, could be taken to have likely appreciated that such a failure would require the Corporation to take steps to replace the lost electrical supply.

CONTRACTS

What does it mean in practice? In practice, many contracts already define consequential loss, although they often include ‘catch-all’ wording, such as ‘any other losses that are special, indirect or consequential’. Consequential loss clauses that do not include a carefully drafted definition of what is meant by ‘consequential loss’ are likely to be determined by construing each clause according to its natural and ordinary meaning, read in light of the contract as a whole. Best practice would be to specify which losses are recoverable and which are not, ideally without using terms such as ‘consequential loss’ or ‘indirect loss’. You should therefore consider: • reviewing all of your existing contracts that contain consequential loss clauses to ascertain whether they will operate as intended if challenged • for high-risk or high-value contracts in particular, being specific when drafting clauses

Best practice would be to specify which losses are recoverable and which are not, ideally without using terms such as ‘consequential loss’ or ‘indirect loss’ that limit or exclude liability, so that it is clear what liabilities are being limited or excluded and how, and what is recoverable • specifying the consequences of a particular breach of contract in the contract • expressly recognising the particular nature of a party (for example, a statutory body), or the particular purpose of the parties in entering into a contract (for example, by including an objects clause), to assist in interpreting limitation and exclusion clauses as the parties intend.

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Infrastructure Association of Queensland Yearbook 2014

FUNDING

Superannuation investment in infrastructure: Steps to further efficiency By Mark White, Partner, Infrastructure Advisory, EY Australia

In 2011, Ernst & Young (EY) was engaged by the Financial Services Council (FSC) to look at superannuation investment in infrastructure in Australia. The resulting report, ‘Financing Australia’s Infrastructure Needs: Superannuation Investment in Infrastructure’, concluded that a number of barriers exist to greater superannuation investment in infrastructure.

In late 2013, the FSC once again engaged EY to review the conclusions of the 2011 report against current industry views on the infrastructure investment market.

Table 1: Superannuation investment in PPP projects Year of Financial Close

Asset

2011

The catalyst for this review was the Productivity Commission inquiry into the ‘provision, funding, financing and costs of public infrastructure projects’.

Victorian Comprehensive Cancer Centre Project

As a key investor in both greenfield and brownfield economic projects, the superannuation industry has a strong role to play in responding to elements of the Productivity Commission’s inquiry, and assisting them to understand the elements that form an efficient infrastructure investment market.

New Royal Adelaide Hospital

Table 1: Superannuation investment in PPP projectsTable 1 and Table 2 indicate the extent of investment in Australian infrastructure by superannuation funds, in public-private partnership (PPP) projects and asset sales respectively, since the 2011 report.

Eastern Goldfields Regional Prison

2012

2013

Gold Coast Rapid Transit New Darwin Prison

Single Living and Environment Accommodation Precinct (Phase 2) Mundaring Water Treatment Plant Queen Elizabeth Hospital Carpark

Midland Public Hospital Sunshine Coast University Hospital Bendigo Hospital Sydney International Convention, Exhibition and Entertainment Precinct (SICEEP)

PPP projects with superannuation investment

Infrastructure Association of Queensland Yearbook 2014

PPP projects without superannuation investment Source: EY

FUNDING

Table 2: Superannuation investment in government asset sales Year of Financial Close

Asset

2011

2012

2013

Queensland Motorways Limited Sydney Desalination Plant QR National (Freight) Port Botany and Port Kembla Brisbane’s Legacy Way Tunnel and Go Between Bridge

Privatisations involving superannuation investment

Privatisations without superannuation investment

Source: EY

In preparing this 2013 review, we consulted with a wide range of market players, including superannuation funds (domestic and international), investment advisers and government entities on four of the key questions under the terms of the Productivity Commission’s inquiry:

The market’s view There was a generally clear and consistent response from the market on all four key questions, which we summarise below: Barriers to private-sector involveent and financing The 2011 report specifically addressed the key barriers observed by superannuation. For this report, we tested whether participants had observed significant reduction in any of the barriers, and if any new issues had arisen. There was a clear distinction between those areas where substantial improvements had been made and those where little progress was noted – but an overriding message was that all the barriers identified were still operative and impacting the willingness of the superannuation market to consider further infrastructure investment. Barriers where substantial improvement has been noted:

• What are the barriers to private sector involvement and financing?

• a lack of government commitment

• What is the appropriate distinction between the funding and financing of public infrastructure?

• greenfield project risks

• What is the likely effect of recent changes to the taxation treatment of business losses made by eligible infrastructure project entities? What is the rationale for such concessional tax arrangements?

Barriers where minimal progress has been made:

• What is the scope for further privatisation or ‘capital recycling’ of existing government assets to fund new public infrastructure?

• sovereign and political risks

All of these questions have direct bearing on the level and efficiency of superannuation investment in public infrastructure.

• a lack of suitably structured projects

• lack of specialist expertise.

• inconsistent, complex and expensive bidding processes • regulatory and industry pressures

• unfavourable Australian banking terms. The consultation for this report confirmed that while improvements have been made to some extent, all of the above barriers still exist – with increasing concern over the volatility in taxation legislation and superannuation regulation as an important theme. The key message was that further investment in complex, illiquid long-term assets requires legislative and regulatory stability. Funding versus financing Participants confirmed that there is continuing confusion both in the media and in communication with government agencies over the difference between funding and financing, and that this Infrastructure Association of Queensland Yearbook 2014

FUNDING

difference adds to the complexity in discussing the roles that superannuation funds play in the delivery of infrastructure. Superannuation funds finance infrastructure; they do not fund it. Continued delivery of vital infrastructure largely depends on government identifying and allocating additional funding sources, not on improving the efficiency of current financing techniques. The consensus of the participants was that the overall lack of finance was not a strong barrier to further investment. Taxation incentives Participants were of the strong view that the recent changes in respect of the access to carry forward losses where project interests were sold would not have a material impact on their investment plans. The changes were largely viewed as removing inefficiency in the existing treatment of taxation losses. There was a strong message that, in general, taxation incentives distort investment preferences and are unlikely to create additional long-term investment allocation to infrastructure from the superannuation industry. Capital recycling Participants were enthusiastic in their support for continued government privatisation. The stable long-term cash flow profile of mature port, road, electricity and other infrastructure assets provides a clear match with the investment aims of superannuation funds. The privatisation process creates additional funding certainty for future greenfield developments that can then be considered for future privatisation once they have established stable operating profiles. Recommendations The results of the consultation process can be developed into the following three key recommendations, which are considered to have the most impact in encouraging efficient and value-generating additional superannuation investment in public infrastructure projects: 1. Incentivise states to establish full capital recycling processes for key infrastructure: The largest barrier to further investment was limited certainty over project pipelines. While participants have noticed improvement in the level of state government commitment for new projects, all 70

Infrastructure Association of Queensland Yearbook 2014

noted that there was still substantial uncertainty over the available funding for significant projects. Formal capital recycling structures within each state would send a clear message on the importance of key infrastructure developments. 2. Provide certainty over Commonwealth superannuation regulation and taxation policy: The superannuation sector manages the long-term financial health of most Australian employees. Effective management requires a stable regulatory environment so that the focus can be on world-class investment selection and management. To achieve stability, the Commonwealth and state governments should identify and articulate a range of common, preferred infrastructure procurement approaches, and should commit to maintaining the current regulatory and tax settings for infrastructure projects. 3. Establish a formal â&#x20AC;&#x2DC;early projectâ&#x20AC;&#x2122; consultation process between the states and superannuation investors: As efficient, potential long-term owners of infrastructure, the superannuation industry believes that significant efficiency could be generated from earlier consultation with key state representatives. This process should be formalised as part of the procurement business case requirements whenever private finance options are to be considered. This is an excerpt from the EY report 'Superannuation investment in infrastructure: Steps to further efficiency', which is available online at www.ey.com/au. The 2011 report 'Financing Australiaâ&#x20AC;&#x2122;s Infrastructure Needs: Superannuation Investment in Infrastructure' is also available online. The views expressed in this article are the views of the author, not of Ernst & Young. This article provides general information, and 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.

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FUNDING

Clayton Utz report predicts healthy PPP future Despite its critics, the public-private partnership (PPP) model still has a role to play in delivering Australia’s infrastructure needs if used on the right projects, where the model can deliver best value for money for government. The recently published report ‘Improving the Outcomes of Public Private Partnerships’ (Report) provides an in-depth analysis of Australian PPPs, and provides insights into why PPPs are sometimes unjustly criticised, as well as providing suggestions to improve the PPP model.

The term PPP has been used to describe numerous arrangements in which the public and private sectors work together to achieve an infrastructure outcome. PPPs usually involve: • private sector finance; and • the bundling of design, construction, maintenance and, sometimes, other services into a single long-term ‘whole-of-life’ contract. In Australia, PPPs have been unfairly maligned due to the very public collapse of toll road projects, such as Clem7 and Airport Link. But there are many other examples where the model has worked successfully, and that support the future use of PPPs for the right projects. The PPP model has proven time and again its capacity to deliver greater certainty of cost and time outcomes compared to traditional procurement methods – largely as a consequence of the additional rigour that private-sector finance brings to the management of a project. The benefits of the PPP model The Report describes the various benefits that PPPs may yield when used on suitable projects.

Infrastructure Association of Queensland Yearbook 2014

These projects usually: • involve infrastructure and services that are likely to be required for the duration of the contract • involve infrastructure and services that are unlikely to change significantly during the term of the contract, or any changes can be predicted and priced up-front • involve risks that cannot be transferred to the private sector under alternative delivery models (for example, demand risk), but which the private sector is prepared to take at a price lower than it would cost government to manage the risk itself • are complex or unique, and are therefore likely to benefit from the additional due diligence that private sector financiers will perform

FUNDING

• are of sufficient size (for example, the capital cost exceeds $100 million) to justify the transaction costs associated with a PPP. In the absence of these characteristics, traditional delivery models – such as construct only; design and construct; and design, construct and maintain procurement models – seem better suited to delivering superior value for money outcomes. Debunking PPP myths The Report debunks many of the myths and perceived problems pervading PPPs. For example, a common criticism is that risk transfer in PPPs is illusory, and the apparent failure of PPPs, such as the Airport Link project in Brisbane, are used to try to establish a poor track record of PPPs. While the Airport Link and other recent Australian toll roads failed to achieve their revenue forecasts, the consequences of this risk were borne as intended – firstly by the equity investors and then by the lenders. From their perspective, these projects failed; however, the objectives of government were achieved – the roads remained open to traffic, at toll levels no higher than originally contemplated; government did not have to bail out the investors; and significant pieces of infrastructure have been built at a cost to taxpayers far less than what would have been the case had government procured them under traditional delivery models. From the perspectives of government and taxpayers, these projects can be considered successes. Another myth is that government-directed variations are expensive; however, it must be

326211A_Clayton UTZ | 2078.indd 1

acknowledged that the PPP company’s variation costs should encompass the whole-of-life costs up-front. Pricing variations this way is arguably more transparent compared to the separation of costs to government for the relevant construction work (as an immediate cost), and the costs for any additional operating or maintenance costs (payable by government in the future). PPP variation risk can also be mitigated by pre-agreeing margins payable to the PPP company, or if possible, prepricing likely future variations during the project bidding stages. Room for improvement The Report provides insights into overcoming some of the PPP model’s shortcomings, as well as suggestions for improving PPPs. In an effort to avoid a failure to meet project revenue forecasts, it is essential that lessaggressive financing structures are embraced by bidders. This can be done by giving more weight to ‘the robustness of the financing structure’ as one of the evaluation criteria. The cost of private finance for PPPs in the current market is high, making it harder for PPPs to provide better value for money than traditional delivery models. Some recent Australian projects have adopted innovative funding models, which minimise the amount of private finance needed, yet maintain the risk management disciplines that private finance brings. These focus on government providing a portion of its funding earlier, or reducing the period for which it is required, through progress/milestone payments during the construction phase,

Infrastructure Association of Queensland Yearbook 19/02/14 2014 11:31 AM 73

FUNDING

a capital contribution at, or shortly after, the facility commences operations, or a service payment structure that is front-ended (rather than flat). It is recognised that bidding costs for Australian PPPs are significant, and the Report proposes the following strategies for reducing these costs without detracting from an emphasis on value for money: • allowing sufficient time for pre-tender phase preparation • adopting a sensible procurement timetable, and sticking to it • only issuing the request for detailed proposals once all necessary preparatory work has been completed • ensuring that the government project team is resourced with highly capable people • adopting a clear and effective governance structure to facilitate quick decision-making by government • interacting effectively with bidders during the tender process, consistent with appropriate probity arrangements • not asking bidders to provide information that isn’t needed to evaluate their capability, or to achieve certainty on commercial terms prior to the appointment of a sole preferred bidder • reducing the amount of bid phase design work required from bidders, and instead placing greater reliance on the project contract requirements, including fitness for purpose warranties, the requirements of the performance specification and the payment and abatement mechanism • conducting due diligence investigations (for example, geotechnical, contamination, heritage) for the benefit of all bidders, where appropriate. Governments could also structure tender processes to encourage consortia that are led by the long-term owners of the projects (for example, superannuation funds) rather than investment banks and contractors who are interested more in short-term returns. 74

Infrastructure Association of Queensland Yearbook 2014

To ensure that government is obtaining the best service solution possible for each aspect of the project, it could also unbundle the PPP and separately tender one or more of the construction, maintenance or debt financing packages. Certainly, one of the more innovative suggestions is for the adoption of Dispute Resolution Boards (DRBs) in PPP projects. Australian DRBs assist with the resolution of issues that arise during the construction of the project. Although a DRB would need to reflect the more complex contractual structure of a PPP project, there is no reason why the success of DRBs on Australian infrastructure projects cannot be replicated on PPP projects. These potential improvements are, of course, not without their challenges; however, the industry has the ability to innovate when it comes to infrastructure delivery. Ultimately, the Report concludes that PPPs are still capable of delivering a superior value-for-money outcome to any alternative delivery model if adopted for suitable projects. Authors Owen Hayford, Partner, and Andrew Kelly, Senior Lawyer, are members of the national Major Projects team at Clayton Utz. They advise on the development, financing and delivery of major projects and explore innovative ways of structuring projects from a contractual and delivery perspective. The Major Projects team comprises legal advisers on many of the recent road and rail developments in Queensland and in New South Wales. Owen is also the author of the published report 'Improving the Outcomes of Public Private Partnerships', in which he examines ways to improve the PPP model to adapt to current market conditions. A copy of this report is available at www.claytonutz.com/publications

MANAGEMENT

Joining forces in Queensland Flinders Hyder was formed in April 2014, after a merger between Flinders Group and multinational engineering and design consultancy Hyder Consulting.

Flinders Group has a long history as a leading planning and project management firm within the infrastructure and property sectors, with over 70 staff headquartered in Brisbane. Shane McDowall, Business Director for the newly formed Flinders Hyder group, says that the decision to go ahead with the merger wasn’t an easy one. ‘We were pretty confident we had a solid reputation for delivering on projects across each stage of the project life cycle and had a solid client base. For us, the appeal was in the ability to extend our services to our clients, backed by a global team.’

There were a number of synergies between the two businesses, which was pleasing He says that a chance meeting with Hyder Consulting Managing Director Greg Steele in Brisbane triggered some initial discussions, which led to the merger. ‘There were a number of synergies between the two businesses, which was pleasing. It was good to see that we both have a very similar approach

Infrastructure Association of Queensland Yearbook 2014

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It was important to be able to offer our clients some confidence that the level of service they had been receiving wouldn’t change to working with clients. Both organisations are client-centric, and are focused on delivering excellence to our clients. It was important to be able to offer our clients some confidence that the level of service they had been receiving wouldn’t change. ‘The Flinders team is also very strong in planning and project management; working with clients for each stage of the infrastructure life cycle from initiation to planning and delivery – a good fit with Hyder’s strong engineering capability. There is already clear evidence of our strategy working, with the combined Flinders Hyder team this week winning a major project for Queensland Department of Transport and Main Roads,’ Mr McDowall says. The Flinders Hyder team has also recently opened a Darwin office so that the team can extend its work in the Top End.

This is the fourth merger for Hyder’s Australian business in the last two years. It follows mergers with PLD Consulting in September 2013, BCH Engineering in December 2012, and GW Hyder in March 2012.

There is already clear evidence of our strategy working, with the combined Flinders Hyder team this week winning a major project for Queensland Department of Transport and Main Roads

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Greg Steele, Hyder’s Managing Director for Australasia, says this development is an important part of Hyder’s growth strategy. ‘We are thrilled to welcome Flinders Group to the Hyder team. This development allows Hyder’s team to extend its services into the crucial planning phase of projects, and adds to our credentials in the energy, environment, transport and mining sectors,’ he says.

Infrastructure Association of Queensland Yearbook 2014

Town Planning & Property Development

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Five good reasons why no infrastructure project can afford to be without a Dispute Review Board Over the past decade, the use of Dispute Review Boards (DRBs) has become a feature of successful construction projects. In this article, Jennifer McVeigh and Karen Walters of Minter Ellison Lawyers discuss five reasons why no infrastructure project can afford to be without a DRB.

A DRB is a panel of independent experts that is established at the time of contract formation to sit alongside the project and provide immediate, relevant advice when the parties need it. Typically, a DRB will comprise three independent industry experts who are charged with overseeing the operation of the contract and assisting the parties with speedy, efficient resolution of any difficulties that arise. Every project is an exercise in risk allocation, and all projects – particularly complex infrastructure projects – must deal with changing circumstances encountered as the project progresses. Unfortunately, being task-focused and outcomedriven, the practices used in the construction industry to manage risk are typically less than sophisticated when it comes to motivating people to work together to avoid adverse consequences. While the construction industry may be particularly competent at managing physical challenges and providing appropriate engineering solutions, it is not well versed when it comes to managing the impact of unforeseen events on a project or the participants in the most efficient and least costly manner.

Infrastructure Association of Queensland Yearbook 2014

1. A DRB helps to avoid disputes by addressing problems as they arise The fundamental role of the DRB is to provide an objective, independent panel of experts that sits alongside a project. DRBs are premised on the notion of dispute management – or, more particularly, dispute avoidance. A key advantage of a DRB is that, because it is established contemporaneously with a construction contract, the DRB members become intimately familiar with all aspects of the project, such as the contract, project participants, conditions and challenges. This allows the DRB to provide immediate, relevant advice when it is sought.1 The DRB’s level of involvement is achieved through regular access to project reports (generally monthly) and regular site visits (generally quarterly).2 These site visits are coupled with a briefing on the progress of the project and an inspection of the works to allow the DRB 1 Charrett, D. (2010), 'Dispute Boards and Construction Contracts', Australian Construction Law Newsletter, Issue 132, p. 18. 2 Chapman, P. (2009), 'Dispute Boards on Major Infrastructure Project', Proceedings of the Institute of Civil Engineers, Volume 162, Issue 1, p. 7.

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members to gain an in-depth understanding of the project.3 A typical DRB meeting will see the contractor presenting a current status of the work and raising concerns in respect of programming matters. The ownerâ&#x20AC;&#x2122;s representative will comment on any concerns it has arising out of the monthly report. Typically, there is a collective discussion of potential or emerging risk areas for the project and discussions as to how the risk might best be managed.4 The members of the DRB can raise issues that they have identified from the project documents and their site inspection, regardless of whether or not they are flagged by either party. The result is that rather than have issues fester, they are brought into the open. A well-run DRB will not lose sight of issues, but will press the parties to find a resolution themselves, or, failing that, direct the parties to take the steps required to have the dispute resolved more formally by the DRB. 2. A DRB delivers cultural benefits to the project There is a considerable body of research that demonstrates that excellent project outcomes can be achieved when all project participants work within a positive project culture in an environment that encourages proactive issue resolution.5 DRBs have proven themselves to be a very effective means of efficiently resolving difficulties before they become large-scale disputes between the parties. The Cooperative Research Centre (CRC) for Construction Innovation identified clear and strong leadership as essential in minimising the risk of disputation. The CRC research suggests that strategic decisions made early in the life of the project by the owner and other project sponsors can either limit or

There is a considerable body of research that demonstrates that excellent project outcomes can be achieved when all project participants work within a positive project culture in an environment that encourages proactive issue resolution. promote the likelihood that the project will avoid significant disputes.6 Establishing a constructive delivery environment from the outset is vital. The projectâ&#x20AC;&#x2122;s owner has the opportunity, before the contract documents are finalised, to determine how it will create that environment and to reflect it in the contract.7 If an owner includes a DRB on a project, it gives a strong indication to bidders of the culture that it is trying to create: the owner is giving bidders the message that it is seeking to minimise the impact of disputes on the project. The CRC research suggests that the way in which problems are addressed on site is substantially dependent on the way that the contract has been drafted, the skills and experience of the key team project leaders, and their problem-solving capability. A DRB has the ability to motivate individuals, as a matter of professional pride, to resolve issues promptly rather than be seen to require the service of the DRB.8 A culture of dispute avoidance or early resolution is an outcome of using a DRB, and puts a project on the path towards excellence.

3 Charrett, D. (2010), 'Dispute Boards and Construction Contracts', Australian Construction Law Newsletter, Issue 132, p. 18.

6 Cooperative Research Centre for Construction Innovation, (2009), 'Guide to Leading Practice for Dispute Avoidance and Resolution', p. 26.

4 Chapman, P. (2009), 'Dispute Boards on Major Infrastructure Project', Proceedings of the Institute of Civil Engineers, Volume 162, Issue 1, p. 7.

7 Cooperative Research Centre for Construction Innovation, (2009), 'Guide to Leading Practice for Dispute Avoidance and Resolution', p. 20.

5 Cooperative Research Centre for Construction Innovation, (2009), 'Guide to Leading Practice for Dispute Avoidance and Resolution'.

8 Cooperative Research Centre for Construction Innovation, (2009), 'Guide to Leading Practice for Dispute Avoidance and Resolution', p. 26. Infrastructure Association of Queensland Yearbook 2014

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3. Access to the wisdom of experienced industry participants

highly

non-confrontational.12 The DRB will then provide its opinion as to how the issue should be resolved.

Typically, a DRB consists of three members, each independent and impartial.9 Each member will have decades of experience in construction projects and in the resolution of disputes. A DRB member will typically have occupied a senior position in the construction industry, some as senior executives in construction companies, or as leaders of engineering firms, and others as senior government officers, and some lawyers with decades of experience in the construction industry.10

Whether or not the parties are bound by that opinion is a matter for the contract; however, even in cases where the contract provides for non-binding DRB decisions, it is common that the parties accept the opinion of the DRB and move on.

As a result of their decades of experience, each DRB member will have the ability to review documents, consider progress and listen to the site team in order to identify problems and suggest potential solutions on a best-forproject basis. Because each DRB member is independent and impartial, the project gets the benefit of their wisdom, rather than it being captured for tactical advantage by one party or the other. 4. A DRB resolves disputes more quickly and at less cost than litigation If the parties cannot resolve a dispute informally, then either party may refer a dispute to the DRB. In those circumstances, the DRB will hold a conference to decide a timetable, which may or may not lead to a hearing in weeks, not months or years, as is the case with litigation.11

5. DRBs are flexible enough for any project DRBs have been used on both large and small projects. The London Olympics – which involved 55 major construction projects – used a pool of 11 senior construction professionals to provide independent dispute avoidance services.13 The Desalination Plants in Sydney and Adelaide have also used DRBs.14 There is a growing list of road and port projects in Queensland, ranging in value from $1680 million to $75 million, that have benefited from the use of a DRB.15 While the expense associated with maintaining a DRB has acted as a deterrent on smaller-value projects, in Queensland, a practice has emerged of using a one-person DRB, effectively reducing the cost by two-thirds. International and Australian experience continues to make the argument loud and clear: no infrastructure project can really afford not to have a DRB.

Typically, each party submits a position paper to the DRB and to the other party prior to any hearing. The position paper contains a short overview of the party’s position. At the hearing, the parties are not legally represented. The DRB may raise questions and seek responses, but will ensure that the proceedings are 9 Gerber, P. (2001), 'Dispute Avoidance Procedures (DAPs) – The Changing Face of Construction Dispute Management', Australian Construction Law Newsletter, Issue 73, p. 5. 10 Dispute Resolution Board Foundation, (2007), 'Practices and Procedures Manual', Section 2, Chapter 2, p. 4, available at: www.drb.org/manual_access.htm. 11 Chapman, P. (2009), 'Dispute Boards on Major Infrastructure Project', Proceedings of the Institute of Civil Engineers, Volume 162, Issue 1, p. 18.

Infrastructure Association of Queensland Yearbook 2014

12 Chapman, P. (2009), 'Dispute Boards on Major Infrastructure Project', Proceedings of the Institute of Civil Engineers, Volume 162, Issue 1, p. 14. 13 Gerber, P. (2013), 'Best Practice in Construction Disputes', LexisNexis Butterworths, p. 197. 14 Golvan, G. (2010), 'Practical issues in the establishment and operation of a dispute review board', Australian Construction Law Newsletter, Issue 132, p. 30. 15 See the Dispute Review Board Foundation’s website, available at: drb.org.

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