IAQ Yearbook 2015

Yearbook

2015

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CRITICAL THINKING AT THE CRITICAL TIME™

Contents 29

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Best Practice

Background

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

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Chairman's Message

Major Projects

Infrastructure

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43

Unsolicited Proposals

Management

Contracts

21

PPPs

26

Logistics

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Environment

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Disclaimer: The editor, publisher, printer and their staff and agents are not responsible for the accuracy or correctness of the text of contributions contained in this publication, or for the consequences of any use made of the products and information referred to in this publication. The editor, publisher, printer and their staff and agents expressly disclaim all liability of whatsoever nature for any consequences arising from any errors or omissions contained within this publication, whether caused to a purchaser of this publication or otherwise. The views expressed in the articles and other material published herein do not necessarily reflect the views of the editor and publisher or their staff or agents. The responsibility for the accuracy of information is that of the individual contributors, and neither the publisher nor editors can accept responsibility for the accuracy of information that is supplied by others. It is impossible for the publisher and editors to ensure that the advertisements and other material herein comply with the Competition and Consumer Act 2010 (Cth).

Readers should make their own inquiries in making any decisions, and, where necessary, seek professional advice. Š 2015 Executive Media Pty Ltd. All rights reserved. Reproduction in whole or part without written permission is strictly prohibited.

Infrastructure Association of Queensland Yearbook 2015

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Contacts Peter Butler Partner, Brisbane T +61 7 3258 6521 peter.g.butler@hsf.com

Michael Back Managing Partner, Brisbane T +61 7 3258 6611 michael.back@hsf.com

BACKGROUND

Infrastructure Association of Queensland Be part of Queensland’s infrastructure influencers

The Infrastructure Association of Queensland (IAQ) is the peak body representing the entire infrastructure sector across Queensland. As a membership organisation, IAQ provides professional representation and value to our members through government engagement, thought leadership and advocacy that supports a sustainable infrastructure industry in Queensland.

IAQ’s members encompass leading construction, professional engineering, architecture, accounting, investment and banking, communication, and legal and advisory firms active in Queensland.

Together, the IAQ board and members engage with all levels of government to promote a comprehensive, compelling case for ensuring infrastructure stays front and centre of the government agenda.

Extensive opportunities for networking and intelligence sharing are provided via an active program of major events and exclusive forums.

IAQ members have access to topical and relevant research and policy papers, while sharing in the latest news and analysis of developments in the Queensland industry sector through a proactive member’s communication program.

All activities support our focus to ensure the best possible management of infrastructure planning and delivery in Queensland by and on behalf of members.

OUR MEMBERS ARE KEEPING QUEENSLAND INFRASTRUCTURE STRONG Advocacy and thought leadership Advocacy on key infrastructure issues is supported by an active communication program built around key thought leadership topics using media relations, twitter posts, LinkedIn and website updates, and the IAQ Yearbook.

The IAQ, through its members, is a thought leader on issues relevant to the infrastructure sector. This

is achieved through ongoing internal and external interaction between members and stakeholders.

The IAQ demonstrates leadership in the infrastructure sector through developing and releasing commentary on infrastructure policy issues faced by government. These issues range from commercial perspectives around infrastructure finance to governance issues faced during procurement of major projects.

The IAQ is focusing on four strategic themes to deliver best-value infrastructure for the state: 1. Process – promoting the opportunities for continuous improvement in government’s policies and processes relating to the development and delivery of infrastructure.

2. Pipeline – promoting the importance and enablement of a clearly identifiable and realistic pipeline for infrastructure projects.

3. Private Sector Engagement – promoting the benefits and opportunities of private sector involvement in the analysis, development, delivery and operation of infrastructure to offer value for money for all Queenslanders.

4. Industry Advocate – establishing IAQ as the leading industry advocate for the provision of infrastructure in Queensland.

IAQ Taskforce Program The IAQ has established a number of taskforces that are focussed on specific topics of interest to the infrastructure sector. A taskforce is established to address areas of particular concern to members. They currently comprise: • Infrastructure Funders Taskforce • Infrastructure Capacity Development Taskforce

and

Economic

• Regional Infrastructure Taskforce.

Infrastructure Association of Queensland Yearbook 2015

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BACKGROUND

Each taskforce has a specific charter to address issues relevant to their area of concern. They research and develop discussion papers for circulation to senior government influencers. The goal is to provide detailed information to inform the IAQ and government.

Major research program

Industry events

Join us in promoting the infrastructure industry in Queensland

Between February and November each year, the IAQ hosts a monthly breakfast function featuring highly influential keynote speakers.

The IAQ also facilitates regular small group conversations between members and senior government leaders. These discussions are specifically designed to promote frank and meaningful interaction between senior government leaders and members.

From time to time, the IAQ commissions special research into topical infrastructure issues. The IAQ acts cooperatively with other industry bodies to develop information and research papers relevant to infrastructure needs.

Maintaining the infrastructure delivery pipeline is vital for promoting strong professional capability, delivering jobs and a strong economy. Be one of the many organisations supporting the IAQ in our work to promote a strong infrastructure industry in Queensland. Stay abreast of local developments and international trends, while strengthening vital relationships at a senior level in all sectors of the industry.

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.

*Membership Fees

1.

Name: Email

2.

Name Email:

3.

Name: Email:

Title:

Title:

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

4

Title:

Mastercard

Visa

Exp Date:

Infrastructure Association of Queensland Yearbook 2015

Date:

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.

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

ADVERTISEMENT FEATURE

BRISBANE AIRPORT REAPS DIVIDENDS FROM PROJECT MANAGEMENT TRAINING As the IT Program Manager at Brisbane Airport Corporation (BAC), Kelly Wilkes is someone accustomed to big projects.

Kelly is part of the BAC Assets Project Delivery Team, which crosses over the functional disciplines of civil, building, services and information technology working on a portfolio worth over $200 million a year. Kelly was one of the BAC staff put through their paces in November last year when the biggest show came to town, the G20 Leaders’ Summit.

On what was the biggest weekend in the airport’s history, BAC successfully managed the movements and logistics of 26 world leaders and their entourage.

On that weekend, Brisbane Airport was able to achieve a 100 per cent safety and security result. This is testament to the project management skills of the core staff entrusted with the planning of G20.

Airports are complex, busy places.

In 2014, some 22 million passengers travelled through Brisbane Airport.

Going forward, BAC has set itself a very ambitious growth and infrastructure investment plan and as part of this plan QUT was commissioned to deliver a customised Stakeholder Management course.

For Kelly Wilkes, the Stakeholder Management course was a key pillar of BAC’s capability improvement program.

“The airport environment involves working in complex, technical, social and environmental conditions, project managers require much more than project process, they must be able to get the best out of their project teams, contractors and community to ensure successful project delivery.

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“In this kind of environment it is not ‘if something happens, but when’”.

Stakeholder management is one of the key skills required.

“As a trusted partner of BAC, it was natural for us to approach QUT to design a course leveraging their experience and expertise in Project Management, combined with the understanding of our business and its context,” said Kelly.

Led by the expertise at QUT, a diverse group of disciplines and experiences was pulled together to guide BAC staff through a tailored program combining academic learning with practical experience and leadership.

“The lasting benefits have improved not only capability but team dynamic, trust and relationships, with many still calling on lessons learned through the program every day,” said Kelly.

BAC, like many organisations, has realised now more than ever the need for project management skills is more critical with projects growing in size, complexity and risk. Globally about 25 per cent of the world’s economy is delivered through projects and in Australia that figure approaches 30 per cent.

Professor Stephen Kajewski, Head of QUT’s School of Civil Engineering and Built Environment has been at the forefront of project management training in Australia and internationally.

QUT was one of first universities to deliver master programs in Project Management and has been delivering award and corporate education for over 25 years.

“We’re known as a ‘university for the real world’ because of our close links with industry and our relevant teaching. My goal from the outset was to have a pool of highly experienced, highly qualified facilitators drawn from industry, project managers and academic experts.

Professor Kajewski stresses that project management is no longer the sole domain of engineering, it is found in many industries from engineering, construction, infrastructure, resources, through to IT, banking and finance, and other government sector services.

“Project managers must now deal with a myriad stakeholders across a number of areas - government, social, community and the environment. Having expertise in project management can give an organisation a competitive advantage – this can be attractive to clients looking for one-stop shop service providers.”

Investing in Project Management training could be one of the best investments your organisation makes this year.

For more information on project management at QUT, please contact the Science and Engineering Faculty Business Development Team at sef. industry@qut.edu.au or +61 7 3138 1191.

www.qut.edu.au

CRICOS No.00213J © QUT 2015 21139

New Generation Rolling Stock Depot, Wulkuraka

APLNG Gas Processing, Western Downs

M&A, Fortitude Valley

Griffith University Health Care Centre, Gold Coast

Engineering the Future Laing O’Rourke has been named Australia’s eighthmost innovative business on the BRW 50 Most Innovative Companies list.

We put our best foot forward through a unique R&D operation, the Engineering Excellence Group, as well as showcasing FreeFABTM Wax – a new 3D-printed concrete formwork technology.

Other innovations being

developed by the company include a worker wellbeing monitoring system installed in hard hats, transportable solar-diesel hybrid generators – in collaboration with the Australian Government – and the unique soil binding polymer Stabilor, which enables the rapid construction of roads, hardstands, embankments and related infrastructure.

The award recognises our investment in leading research and innovation initiatives to challenge and change the face of construction.

The Northern Water Treatment Plant in the Western Downs of Queensland

Cathal O’Rourke Managing Director, Australia Hub

Our Digital Engineering capability and investment in Design for Manufacture and Assembly, combined with our experienced delivery teams, set our exciting projects apart.

“The engineering and construction industry is making great progress, and being recognised as one of the BRW’s top 50 innovators is a testament to this.”

Part of a $7 billion global operation, we are working with Queensland clients across the oil and gas, roads and rail, building construction, airports, mining, marine, civil and social infrastructure sectors.

– Cathal O’Rourke Managing Director, Australia Hub

laingorourke.com

CHAIRMAN’S MESSAGE

The Infrastructure Association of Queensland’s (IAQ) Chairman Stephen Hammer says that 2015 is presenting industry with unique challenges.

The economic environment that we operate in is going through significant change. The end of the development phase of the resources boom has arrived, as demonstrated by significant declines in existing work being delivered and new projects proceeding. Additionally, the traditional infrastructure projects in transport, health and utilities have yet to return to the levels of development experienced in recent times.

The political landscape in Queensland has also experienced a recent change, with the Labor Government winning the January 2015 election.

The change in government brings changes to the implementation of projects planned for the state.

It is in these times that the strategic focus and purpose of the Infrastructure Association of Queensland is most important. Our members have continued to be part of the dialogue with industry stakeholders and government representatives.

The IAQ’s strategic themes of Process, Project Pipeline, Private Sector Engagement and Industry Advocate have been delivered on throughout the year.

Our members have provided an industry voice for responses to the development of the government’s Project Assurance Framework, the draft Bill for the creation of Building Queensland and the Strategic Vision of Transport and Main Roads. Additionally, we have provided a discussion paper on the governance frameworks for the delivery of projects within the state.

Our members participate in taskforce initiatives to further develop consolidated feedback to enhance the discussion regarding the strategic

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Infrastructure Association of Queensland Yearbook 2015

themes of project pipeline and private sector involvement. In particular, the Regional Infrastructure Taskforce is busily working on bringing together a discussion paper it has produced ahead of the federal government’s Northern Australia White Paper, to ensure that regional Queensland is provided with its share of the infrastructure pipeline.

The Infrastructure Funders’ Taskforce has continued to meet the challenge by government to provide new and innovative funding mechanisms to develop infrastructure.

Finally, as the IAQ is focused on being an industry advocate, we have held many successful networking events throughout the year, including having distinguished speakers from government and industry presenting on topics of interest to our members. I would like to thank the guest speakers for the time they have taken to share the developments they have planned for the industry. I look forward to our members and stakeholders attending future events that the IAQ has planned for the remainder of the year.

The success of the IAQ is dependent on the efforts of each of its members to participate in the dialogue of the industry. The Board members contribute additional effort in this dialogue and are passionate about it, and therefore, I thank all Board members for their efforts over the year.

MAJOR PROJECTS

Constructing Legacy Way with the community in mind The $1.5-billion Legacy Way tunnel is Brisbane City Council’s flagship project. It comprises twin two-lane tunnels, is 4.6 kilometres in length, and connects Brisbane’s western and inner-northern suburbs.

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The project forms part of Brisbane City Council’s TransApex plan, designed to reduce congestion on Brisbane’s road network. Legacy Way is being constructed by Transcity, a joint venture between Brisbane’s local experts BMD Constructions (BMD), Italian tunnelling specialists Ghella, and Spanish tunnelling and civil infrastructure giant Acciona Infrastructure. Transcity is responsible for the design, construction, operation and maintenance of Legacy Way. Construction on the project commenced in 2011 and is on target for completion in mid 2015.

impact to the surrounding community and environment, while being constructed safely.

Legacy Way has been delivered with a strong focus on collaboration between Transcity and Council, and was designed to achieve outcomes that provide optimum benefits with minimal

• Build strong relationships with impacted stakeholders by proactively implementing mitigation measures and providing timely notifications of construction activities.

Infrastructure Association of Queensland Yearbook 2015

From the outset, Council and Transcity were committed to delivering a proactive community and stakeholder relations program, minimising impacts to local communities where possible, and providing fast responsiveness to complaint management, while creating strong relationships with communities.

To respond to these expectations, the team set several key objectives:

continued on page 12

ROADS AND HIGHWAYS URBAN DEVELOPMENT RAIL AIRPORTS OIL AND GAS PORTS RESOURCES AND ENERGY DEFENCE

BMD is a national group of companies delivering a range of services in the civil engineering, construction and urban development industry across Queensland.

Working for a range of clients including Brisbane City Council, Brisbane Airport Corporation, Department of Transport and Main Roads, Aurizon, Bechtel and Santos, BMD delivers certainty for Queensland through consistent performance and collaboration.

We see our strengths in the quality of our people and our genuine relationships with clients, partners and communities. We see our future shaped by all that has made us successful in the past.

07 3893 7000 | www.bmd.com.au BMD has offices located in Cairns, Townsville, Mackay, Gladstone, Emerald, Chinchilla and Brisbane.

MAJOR PROJECTS continued from page 10

• Build support for the project by increasing community understanding of the project’s design and construction progress.

• Monitor and effectively manage issues and incidents.

• Create a strong, high-performing team that understands the importance of community engagement.

These objectives have shaped the implementation of the communications and community engagement on Legacy Way, and were applied within the confines of a construction project needing to maintain set timeframes and create realistic expectations for communities regarding the scope of engagement possible. There were always negotiable and non-negotiable elements with construction activities; therefore, being realistic was important in order to achieve the project’s objective of building strong relationships based on trust and known expectations.

During construction, Transcity sought out impacted communities to involve them in decisions where this was possible, as well as being receptive to suggestions made by impacted communities once the team had informed them of planned activities.

From the start of the project, the community was aware of the big-ticket items such as two mainline tunnel excavations and the locations of tunnel portals. However, the project also encompasses multiple auxiliary and preparation work packages, often not as obviously impactful as the larger-scaled planned activities.

Work packages such as power connections, trenching and installing mitigation tend to create more challenges because these are often unexpected by the community. Transcity and Council, however, have seen these work packages as opportunities to implement the values of public participation.

Legacy Way is being delivered under a design and construct (D&C) contract. While, traditionally, a D&C contract is not considered the most receptive of environments in which to implement community decision-making and changes, Council and Transcity established a working relationship from the outset, which allowed the project team to provide opportunities for impacted communities to make decisions.

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Infrastructure Association of Queensland Yearbook 2015

In practice, it meant that Transcity was not necessarily constrained to rigorous specifications, as with many other construction projects, and Council could benefit from on-the-ground feedback. The relationship facilitated better outcomes that invariably come from technical innovation by inviting participation from impacted residents who knew their community better than the project team did.

Transcity and Council placed a strong focus on the community relations team working with the construction team to ensure that there was no disconnect between stakeholder commitments and construction delivery. This created a sense of ownership among construction teams by building understanding and being an integral part of the community relations process. The community relations team’s early and strong involvement from design to delivery meant the team was able to influence key aspects such as construction mitigation. It effected a change in the construction methodology to achieve more respite during high-impact works.

The relationship with these impacted stakeholders was based on their geographic proximity to construction works, with importance based on their anticipated level of impacts.

To ensure consistency and enable long-term relationships to be built, an area-based strategy was developed with community relations team members allocated stakeholders within geographic areas. The focus on grassroots, face-to-face, transparent and honest communications drove external communications during peak construction.

Transcity’s Community and Stakeholder Relations team has conducted more than 18,500 proactive events since 2011, with only seven per cent of total interactions being complaint driven.

The Community and Stakeholder Relations programs on Legacy Way have been recognised both nationally and internationally through industry award wins, including the 2014 International Road Federation Award – Environmental and Community Mitigation, and the 2014 International Association of Public Participation Award – Community Relations.

In addition to industry award wins, Transcity has aimed to go beyond compliance of project conditions to design and construct Legacy Way in a way that protects and enhances both the surrounding social and natural environments.

MAJOR PROJECTS

Brisbane Airport

By Krishan Tangri, General Manager Assets, Brisbane Airport Corporation

Already Australia’s third-largest capital city airport by passenger numbers, the second-busiest by aircraft movements and the largest by land size, Brisbane Airport (BNE) is in an exciting and unprecedented period of growth, with more than 100 construction projects currently on-site or in planning.

Named Capital City Airport of the Year at the 2014 Australian Airports Association National Airport Industry Awards, and ranked second for Best Airports in the World (Australia/Pacific) in the prestigious 2015 Skytrax Awards, Brisbane Airport Corporation (BAC) is committed to building an even better airport.

The Corporation aims to achieve this over the next decade by investing $3.8 billion in an extensive infrastructure program, improving existing and developing new aeronautical and non-aeronautical assets.

This investment is essential to meet future demand, with passenger numbers expected to increase from 22 million passengers in 2014 to more than 48 million passengers in 2034, and aircraft movements growing from approximately 206,000 currently to more than 350,000 per year in 2034.

All this activity will generate nearly 5000 jobs over the next five years, and will help to contribute $8.4 billion to the Queensland economy and $13.4 billion to the Australian economy annually by 2034.

Major projects at BNE include: New Parallel Runway (completion 2020) Brisbane Airport’s New Parallel Runway (NPR) project reached an important milestone last December when the conclusion of sand pumping signalled the beginning of the end of Phase One of the $1.3-billion project – some two months ahead of schedule.

Phase One began in September 2012 with site clearing and preparation works, which were entrusted to BMD. The work involved clearing the 360-hectare site of vegetation (which was mulched and mixed with topsoil on site Infrastructure Association of Queensland Yearbook 2015

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MAJOR PROJECTS

and stockpiled for later use in airport landscaping), building a network of access roads, installing a drainage system that incorporated a new 1.7-kilometre-long and 70-metre-wide floodway drain, and building a bund around the entire site in readiness for dredging and reclamation.

The site, previously the Brisbane River delta, sat at sea level, and the underlying soils are extremely soft mud and silt down to 35 metres. To floodproof it against a one-in-100-year storm event and mitigate against the effects of any possible climate change, the ground level was required to be raised by three metres.

This will be achieved by the placement of 11 million cubic metres of sand from Moreton Bay on site, in tandem with Australia’s largest ever wick drain project, which has seen 330,000 individual wicks punched into the ground as close as one metre apart in the softest areas. The weight of the sand will compress and consolidate the site, while the wicks hasten the process of extracting water from the underlying soils.

The sand has been placed at different levels across the site (up to eight metres in the softest areas) to ultimately achieve a uniform level. Early geotechnical surveys have proved accurate and the site is consolidating as expected.

Belgian company Jan de Nul was awarded the contract for the reclamation. Their massively powerful dredge Charles Darwin pumped a slurry of sand and water ashore through a pipeline almost nine kilometres long at its furthest point using the ship’s engines alone. This proved to be a highly efficient means of getting the sand ashore, and also provided an environmental benefit by 14

Infrastructure Association of Queensland Yearbook 2015

removing the need for hundreds of thousands of heavy truck movements on Brisbane’s roads.

The settlement process will take up to four years, but the project won’t be idle during this time, with Phase Two – detailed planning of airfield design and layout – already well underway.

Jacobs was appointed design engineer in January this year and, in addition to the design and layout of the runway and taxiways, placement of navigation aids, approach and airfield lighting and other infrastructure, they have been tasked with the realignment of Dryandra Road, the key access route to the airport’s general aviation facilities.

An underpass under the taxiways linking the existing airfield to the NPR site represents a significant design challenge, as it will need to be strong enough to accommodate the 590 tonnes of a fully laden Airbus A380 and possibly even bigger aircraft in the future.

The New Parallel Runway is scheduled to open in 2020.

International Terminal retail upgrade (early 2014 – mid 2015) In the planning for the last two and a half years, a $45-million transformation of Brisbane Airport’s International Terminal is the most ambitious redevelopment embarked on since the terminal was first opened in 1995.

When complete in mid 2015, it will establish a global benchmark for airport terminal design and create a truly unique gateway to the city, reflecting the enviable lifestyle and natural assets of Brisbane and Queensland.

MAJOR PROJECTS

The project includes a 7500-square-metre internal refurbishment of the arrivals and departures halls.

The stunning fit-out is the work of Richards and Spence Architects working alongside consultants Arkhefield, GHD, Steele Wrobel, RCP, WSP, Umow Lai, Brown Consulting, Landrum and Brown, Philip Chun, Certis and Cardno.

Features of the redevelopment include locally sourced stone, timbers, fittings and plants, which will define dedicated dwell, work and relaxation areas; walk-through duty-free stores; and a dedicated retail ‘high street’.

The project has been expertly rolled out in stages to ensure continuity of operations in an international terminal that operates 24/7.

International Terminal level 4 airline lounges (March 2014 – October 2015) Forming part of the International Terminal redevelopment, a further $15.3-million investment will deliver over 1300 square metres of up to four new premium airline lounges on level 4, airside of the International Terminal.

From the start of concept design in March 2015, contracting company Lend Lease Building has been working with consultants Arkhefield, Umow Lai, WSP, Brown Consulting, GHD, Steel Wrobel, RCP, McKenzie Group, One Group and Aurecon to deliver the project by October 2015.

Domestic Terminal Northern Satellite (late 2015 – mid 2017)

Regional

Brisbane Airport’s new Domestic Terminal Northern Regional Satellite (DTNRS) is currently out to tender for a principal contractor and awaiting the Minister’s approval.

The concept design commenced in mid 2014, and the consultants BVN, Aurecon and Steel Wrobel will work with the principal contractor to deliver the $42-million investment by the end of 2017.

The new one-storey stand-alone building, which will be constructed approximately 300 metres away from the existing domestic terminal, will provide 2000 square metres of space for passenger departure areas, 16 new boarding gates, food, beverage and retail tenancies, other amenities, service areas and offices.

Shaping Queensland’s future Major infrastructure development will continue to shape Queensland’s future in 2015. 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 © 2015 KPMG, an Australian partnership. All rights reserved. QLDN12603ADV.

Infrastructure Association of Queensland Yearbook 2015

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MAJOR PROJECTS

New aircraft parking bays, aprons and taxiways, will also be constructed, consistent with long-term master planning.

Approximately six months after the DTNRS building is completed, a ground-level walkway will be constructed between the DTNRS and the terminal proper, negating the need for bus services. The delay in the construction of the walkway is due to the staging of the associated apron works that will replace the aircraft parking bays consumed by the walkway construction.

The construction of the DTNRS is required to meet the forecast increase in regional demand, as well as the future plans of low-cost carrier airline operations.

Domestic southern apron and aerobridges BAC initiated a $44-million project to provide seven new aerobridges to the contact gates at the Virgin Australia end of the terminal.

The project also includes two Multiple Aircraft Ramp System (MARS) gates able to service A330 aircraft. The project was delivered in April 2015 by head contractor Hansen Yuncken, working with consultants BCS, Thyssen Krupp, Shell and GHD. Additionally, construction of the domestic southern apron gives Brisbane Airport an extra 50,000 square metres of aircraft pavement, providing seven additional aircraft parking bays and extra space for layover parking, giving airlines the capacity to increase scheduled services.

Domestic self-service check-in (May 2014 – July 2015) As part of the Domestic Common User Terminal upgrade, the $10-million investment sees new airline service desks, eight new and 12 relocated self-service check-in kiosks, along with eight new automatic bag drops, more baggage reclaim facilities, new screening facilities, new offices and queuing space, and new floor finishes. A new visitors’ information counter was also delivered as part of the project.

From concept designs by MODE Architects, which begun in May 2014, the project is being delivered on behalf of BAC by principal contractor Campak Constructions Pty LTD and baggage consultants BCS. The project is due for completion by July 2015.

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Infrastructure Association of Queensland Yearbook 2015

Central parking area (completed October 2017)

developments

A number of developments are underway to increase available parking for staff and the public, including BNE’s first ‘park, ride and save’ public car park, which will be marketed as AIRPARK. Set for completion by July 2016, the $31-million AIRPARK facility will comprise 2600 openair car parking spaces connected to both the International and Domestic Terminals via a free courtesy bus service.

In close proximity to AIRPARK, a new staff car park is currently being developed.

Constructed over three stages and due for completion in October 2017, when complete, the new $26-million facility will provide 1600 car spaces for BNE’s growing workforce and be connected to the terminals via a free courtesy bus service.

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INFRASTRUCTURE

Infrastructure in Queensland

By Roger Black

Queensland’s economy is forecast to be the fastestgrowing state economy in Australia over the next decade. As key enablers of economic growth, infrastructure and productivity are critical to Queensland’s future prosperity.

In this vein, Queensland should be striving to achieve growth and economic prosperity through improvements in the state’s infrastructure – both soft infrastructure such as schools and hospitals, and hard (or economic) infrastructure such as roads, rail, tunnels and ports. This requires improvements in the way that this infrastructure is procured, funded and delivered. In order to be effective, these improvements must include changes that support productivity and the efficiency of infrastructure delivery, both during the planning and procurement phase and in the on-the-ground design, construction and operational phases.

There has been much discussion nationally, and several significant reports produced recently, setting out the need for action on the infrastructure backlog and offering perspectives on approaches that should be taken in the current economic and political circumstances.

The Infrastructure Association Queensland (IAQ) seeks to add to this discussion, and to work with the Queensland Government on behalf of its members. IAQ is looking to support the Queensland Government in improving efficiency and productivity in the design, development and delivery of infrastructure, hence improving the effectiveness and value for money of taxpayer dollars spent on infrastructure. As a major driver of economic growth and prosperity, improvements in infrastructure planning and delivery will help improve the lives of all Queenslanders.

In this context, the IAQ submits that improvements to the infrastructure design, development and 18

Infrastructure Association of Queensland Yearbook 2015

As a major driver of economic growth and prosperity, improvements in infrastructure planning and delivery will help improve the lives of all Queenslanders. delivery process require attention under eight headings, set out below: 1. Infrastructure in the national context There is a need for a national conversation about infrastructure priorities, holistic planning and national stakeholder alignment, and how infrastructure drives total economic growth.

2. The need for integrated planning There is a need for all three levels of government to work together for continuity in planning, and to derive holistic, national solutions that will generate a clear plan for funded infrastructure.

This will allow the private sector to plan ahead and allocate resources more efficiently, reducing overall project costs and creating better value for governments and taxpayers. continued on page 20

INFRASTRUCTURE continued from page 18

3. Procurement efficiencies There is a need to recognise that cost is a major factor in the procurement of infrastructure, and that many of the current practises are inefficient.

Government and industry need to look at what can be done to drive costs down and encourage private-sector involvement to provide infrastructure through asset recycling 4. Effects of the skills gap – industry and government There is a need to recognise that without a clear pipeline of projects, industry will have difficulty in retaining and building its delivery capacity.

The effect is to see industry move resources interstate or offshore, or reduce capacity through downsizing, and skills are not being retained.

As infrastructure project requirements peak, supply and demand forces drive unit costs up.

Coordinated planning can reduce or minimise this problem for both government and the private sector to ensure that Queensland taxpayers get best value for money and access to the best resources for their projects.

Any increase in public private partnerships (PPPs) means up-skilling the government skills base, or a heavy reliance on the private sector, or both.

Skills in managing PPP and services contracts are very different to those needed for traditional forms of procurement. The result could be more expensive projects, loss of efficiency, reduced completion and/or higher bid costs for principals.

5. The 100-year dilemma

7. Increasing productivity and global trading position

There is a need to recognise the natural tension between the long-life nature of infrastructure that is required to support the economy over the next century, and the affordability envelope of what can be funded now and is economically viable during its life.

There is a need to recognise the macro role of infrastructure. Government and industry have to work together to improve Queensland’s infrastructure productivity and Queensland’s position as a global infrastructure and economic leader.

Earlier involvement of the infrastructure sector assists in an informed sharing of cost and risk, and promotes the use of a ‘whole of life’ financial model, rather than just a delivery model. This encourages the adoption of a staged development approach, which will better cover what is possible to deliver now and what is needed to meet the 100-year solution.

8. Social licence to operate

6. Smarter working infrastructure ‘Sweating assets’ and de-bottlenecking are now established approaches to infrastructure 20

management; however, this can only practically be achieved by working smarter than before. The key question is how to drive innovation and work assets smarter and harder to deliver better asset functionality in existing and future assets.

Infrastructure Association of Queensland Yearbook 2015

There is a need to recognise the importance of getting the balance right between the requirements for ongoing development and the expectations of the community. This means that government and industry have to work together to ensure the best community outcomes during and after infrastructure is delivered.

The IAQ seeks to work closely with all levels of government to achieve these objectives and looks forward to adding to the debate.

PPPS

Back to basics – can ‘old school’ PPPs deliver more bang for the public infrastructure buck?

By Peter Schenk and David Warren, Corrs Chambers Westgarth

While in some states of Australia, the sale of public assets to fund the next wave of public infrastructure is now off the agenda, the demand for high-quality public-sector services remains, and it continues to increase.

The community also still expects governments to create new jobs through the development of new public infrastructure – particularly in transport, health and education – all while focusing on lowering debt levels and minimising future borrowing.

A renewed need partnerships (PPPs)?

for

public

private

Many market participants are bearish about the prospect of new projects in the current fiscal and policy climate, but perhaps PPPs, with some ‘old school’ tweaks, are the perfect answer to matching government revenue and spending, and getting infrastructure going.

In recent years, there have been increasing moves toward government making significant capital contributions during construction, or shortly after completion. The drivers were to reduce overall financing costs, and were a response to a fear of liquidity shortages and high borrowing costs in the wake of the global financal crisis (GFC).

Rarely was the capital contribution needed to bridge a private-sector financing gap, other than for the largest projects.

With financing costs now approaching more normal levels, and the feared liquidity crisis not eventuating, it may be time to wind back the clock to the days where PPPs were fully financed by the private sector.

Infrastructure Association of Queensland Yearbook 2015

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PPPS

The services and infrastructure provided by PPPs ultimately need to be paid for by government, but adapting the model in these ways should enable government to more closely align expenditure with revenue.

This approach involves a PPP model that: • focuses on social infrastructure such as schools and hospitals, but may also be adapted for public transport projects, such as light rail, passenger rail and metro rail • involves new ‘greenfield’ projects • requires minimum or no government capital contribution • involves longer tenure (anywhere from 25 to 50 years), with lower individual service payments • focuses on periodic market testing of reviewable services to ensure value for money over the longer term, and to lower the overall risk, and, therefore, cost of the project 22

Infrastructure Association of Queensland Yearbook 2015

• involves asset renewal obligations and technology upgrade requirements to keep the services and infrastructure modern and relevant.

The extended use of service payments, rather than a significant government capital contribution, mitigates the government’s need to borrow significantly. It also offers increased risk transfer benefits, and long-term employment opportunities for constituents.

In an environment where government-owned corporations will remain in government hands, the lower, longer-term service payments can be matched with the continuing revenue streams that will be provided by these organisations.

While the contingent financial liability of the government is not necessarily reduced by the extended use of service payments, this may be counterbalanced by the benefits arising from the better use of cashflow, and a reduction in the government’s need to borrow a large (upfront) amount.

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PPPS

New thinking needed to bridge the government funding gap

By Gerard Paynter, Executive Director of Initiative Capital

Initiative Capital is leading the way in delivering public private partnerships (PPPs) through unsolicited proposals to government.

Its unique model for projects up to $100 million ensures value for money for governments, high returns for investors and excellent outcomes for communities. Initiative Capital’s Executive Director, Gerard Paynter, explains why such approaches are needed.

The issues The Local Government Association of Queensland’s (LGAQ) federation and taxation discussion paper, released in April, identified that rural and regional councils are spending millions each year on programs outside their usual purview, such as funding local hospitals, student hostels and community housing.

The LGAQ paper highlighted how local governments are being expected to provide more services than ever before, as the federal and state governments face spiralling costs and revenue constraints.

As the three tiers of government struggle with constrained resources and rising community expectations, a new way of thinking is needed in the long term.

It is increasingly evident that a large gap exists between the community’s expectations for services and infrastructure, and the revenues collected by governments.

To address this widening gap, the private sector will need to be more heavily – and cleverly – involved in public infrastructure delivery.

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Infrastructure Association of Queensland Yearbook 2015

These issues have been much spoken about in the context of the federal government’s tax review, and also in framing the 2015–16 budget.

The federal government’s recent 2015 Intergenerational Report also outlined the magnitude of the funding gap and how it will only worsen into the future, as the ratio of working-age people to retirees nearly halves over the next 40 years.

Furthermore, by 2030, the ageing and health portfolios will account for more than two thirds of the Australian federal budget, leaving little to be spent on much-needed infrastructure.

PPPS

It is increasingly evident that a large gap exists between the community’s expectations for services and infrastructure, and the revenues collected by governments.

There is a significant gap in the availability of funding for the services that communities currently require, and will require in the coming years.

A new way of thinking Many of the solutions put forward argue that taxes – such as the goods and services tax (GST) – should be increased. But the idea that government spending and revenue challenges can simply be solved by raising taxes is uninspired, stop-gap thinking.

Likewise, the community’s lack of interest in privatising assets means that generating buckets of money from traditional asset sale regimes will be an increasingly limited option for governments; and such privatisations do not solve a government’s funding gap in the long term.

A new way of thinking is required by governments and the private sector in order to provide a sustainable solution, and to bridge the gap between the community’s expectations and the government’s shrinking coffers.

Innovative approaches should be used in order to fund, build and operate projects, especially to deliver small to medium PPPs up to $100 million.

Initiative Capital’s model Initiative Capital is leading the way in delivering PPPs through unsolicited proposals to government.

Our unique model for projects up to $100 million ensures value for money for governments, high returns for investors and excellent outcomes for communities.

At Initiative Capital, we seek to identify and match project opportunities before progressing through a rigorous process.

Project concepts and potential project partners are originally identified or matched as a result

of market research, government research and business engagement. Once a concept and potential partner have been coupled, they then pass through a number of stages to help build the concept into a valuable project.

The pre-assessment drives partners, government and other stakeholders together to build innovation and to ensure that the focus always remains on effectively solving government problems. Points of innovation can lie in the method used to deliver a project, the funding of the project, or both.

Once true innovation is established, the proposal is developed and progressed through government.

A thorough understanding of how government works is absolutely vital, and this is where Initiative Capital offers a real point of difference.

The final stages of project funding and delivery can also encompass innovation, always keeping in mind the need to ensure that projects are delivered in a way that maximises the benefits to local communities, at the lowest cost to taxpayers, and to yield attractive returns for investors.

The real value in smaller PPPs can be found when parties look to be truly innovative and are prepared to look ‘outside the box’ of traditional thinking.

About the author Gerard Paynter is Executive Director of Initiative Capital, a firm he co-founded with John Cotter in 2014 to address the expectation resources gap. This is the gap that exists between the community’s expectations for services and infrastructure, and the ability of governments to deliver these services into the future.

Gerard is a qualified accountant and experienced business advisor, having spent 25 years in stockbroking, audit, financial management and government relations.

At Initiative Capital, he is responsible for managing relationships with long-term partners and investors, including key government bodies.

As a senior advisor at Ord Minnett for almost a decade, Gerard assisted clients with their domestic and international investments, and led major investment activity across Australia.

Recently, Gerard has worked as Managing Director of Queensland’s most prominent government relations firm, advising clients on how to best position their proposals to government.

Infrastructure Association of Queensland Yearbook 2015

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LOGISTICS

Supporting a solution for balanced modal share

By Emily Griffiths, Port of Brisbane

It is globally recognised that freight movements strongly influence the shape of cities and regions. Queensland’s economic potential is directly linked to an efficient, statewide logistics chain feeding into the state’s international trade hub at the Port of Brisbane.

The Port of Brisbane, and wider South-East Queensland region, however, are burdened by an over-reliance on freight transported by road.

Currently, 95 per cent of port-bound freight is transported by road, while only five per cent is transported by rail. This is down from 18 per cent 10 years ago, and is much less than the global standard for freight transport by rail, which is generally closer to 30 per cent.

Given the critical role that the efficient use of transport infrastructure has in promoting national productivity and economic growth, the current situation is unsustainable. Queensland’s freight logistics system needs a balanced modal 26

Infrastructure Association of Queensland Yearbook 2015

share approach if we are to remain competitive into the future. This means effective integration of planning for freight holistically across modal types, and in conjunction with passenger transport through urban environments.

It is crucial that both industry and government work collaboratively on the long-term planning and the sustainable delivery of a logistics system that addresses Queensland’s freight infrastructure deficit, thereby addressing one of the state’s key threats to productivity performance, and capturing opportunities to support Queensland’s economy long into the future. continued on page 28

Port of Brisbane The Port of Brisbane is one of Australia’s fastest growing multi-cargo ports and an enabler of the Queensland economy.

Managed by the Port of Brisbane Pty Ltd the Port is a multi-billion dollar, world-class infrastructure asset, handling more than $50 billion of trade each year, comprising more than 50 per cent of Queensland’s international freight trade.

Australia is in a unique position to capitalise on the economic shifts occurring in Asia that are increasing demand for agricultural produce. As global demand increases, trade growth is forecast to continue, delivering significant benefits to the Queensland economy and partners all along the supply chain.

This growth in the agricultural sector presents a significant future economic opportunity for eastern Australia provided it can be supported by an efficient, effective export logistics chain.

To find out more about the Port of Brisbane, visit www.portbris.com.au or contact the Trade Development Team on +61 7 3258 4888.

Australia’s freight movements are predicted to double by 2030, with Brisbane’s freight task growing at an even greater rate.

Balancing the transport task across road, rail and coastal shipping modes provides a sustainable way to support industry and projected growth by creating viable modal choices that will guarantee Australia’s global export and import competitiveness, and deliver significant, long-term benefits to industry and the community.

LOGISTICS continued from page 26

The Port of Brisbane is one of Australia’s fastestgrowing multi-cargo ports, and an enabler of the Queensland economy. A multi-billion dollar, world-class infrastructure asset, the Port of Brisbane handles more than $50 billion of trade each year, comprising more than 50 per cent of Queensland’s international freight trade.

The Port of Brisbane currently handles more than one million twenty-foot equivalent units (TEU) each year. By 2040, this figure is expected to reach 4.5 million containers as a minimum. If the current road/rail imbalance is not addressed, this will generate more than 14 million container truck movements travelling to and from the Port each year.

While this outlook is positive for industry, without investment in appropriate transport infrastructure, this expected significant increase in trade volumes will increase pressure on surrounding landside infrastructure, the broader road and rail network and, as a result, the community. Achieving a freight balance through dedicated freight rail infrastructure and improved coastal shipping will deliver liveable, sustainable cities and regions throughout the east coast.

A critical part of the solution is the federal government’s proposed Inland Rail project, designed to provide dedicated freight rail access between Melbourne and the Port of Brisbane that will shift heavy freight traffic off the road network – supporting Queensland’s future growth, productivity and competitiveness, while also delivering liveability outcomes for the community.

Shifting freight onto rail will significantly reduce future freight-related traffic congestion. Doing so will also reduce commuter travel times, and improve road safety for communities all along the 1700-kilometre Inland Rail route – research shows that it is nine times safer to transport freight by rail than by road.

It will also deliver significant environmental benefits. According to the Energy Efficiency Exchange, transporting freight by rail emits 75 per cent fewer greenhouse gases than transporting freight by road. In South-East Queensland alone, a dedicated freight rail connection to the Port of Brisbane would reduce carbon emissions by 460 tonnes annually.

Once complete, Inland Rail – double-stacked and connected 24/7 to the Port of Brisbane and the other major east coast container ports of 28

Infrastructure Association of Queensland Yearbook 2015

Melbourne and Sydney, the latter via existing rail networks – will create a truly national freight rail network, providing greater access and modal choice between Australia’s east, south and west coast ports. It is Australia’s numberone infrastructure project to ensure increased competitiveness and efficiencies along the supply chain, reduced costs to users, and balanced modal options to transport freight to market.

In addition to improved rail infrastructure, the benefits of reviving coastal shipping as an alternative freight transport method are substantial, and would help to ensure that Australia is well-placed to capitalise on future growth opportunities in a sustainable way, while lessening the growing reliance on road transport across the country.

Australia’s freight movements are predicted to double by 2030, with Brisbane’s freight task growing at an even greater rate. Balancing the transport task across road, rail and coastal shipping modes provides a sustainable way to support industry and projected growth by directly connecting ports and regions, creating viable modal choices that will drive down logistics costs, increase liveability and, ultimately, guarantee Australia’s global export and import competitiveness.

BEST PRACTICE

A decade down under

By Darren Weir, Laing O’Rourke

Late last year, Laing O’Rourke marked an impressive and important milestone – an entire decade of operations.

Over our 10 years in Australia, we have steadily built up a diverse portfolio spanning oil and gas, transport, building construction, airports, mining, marine and civil, and social infrastructure sectors – a testament to our dedication to providing the best possible solutions to a varied, but increasingly blue-chip set of clients.

Since the Laing O’Rourke Australia business acquired the respected Barclay Mowlem from Carillion, we have grown to become the largest privately owned engineering and construction business in Australia, with around 5500 people at work across the hub.

We have grown in both size and capability since then, with expansions into Victoria, South Australia, and New Zealand, and a re-established presence in Hong Kong. In the process, we have successfully delivered some of the largest and most technically complex projects in the country. These have been critical in improving services and operations for our customers and local communities.

Our continued focus on being at the forefront of smarter, safer and faster project delivery will further strengthen our position in the market.

Our innovative processes and technologies are being recognised by our clients and the wider business community. Being recognised through programs such as BRW’s 50 Most Innovative Companies will continue to set us apart and is paramount to the company’s long-term success.

Like every other organisation, we have challenges ahead of us. Our agility and responsiveness will be strongly valued in an ever-changing world, and there is no room for complacency. I am confident that we have what it takes to perpetually raise the bar, and grow as a competitive and sustainable business for the years to come.

Top 50 innovators In November last year, Laing O’Rourke was named the eighth most innovative company on BRW’s 50 Most Innovative Companies list in Australia.

The list ranks Australia’s top 50 ideas-driven companies delivering change that adds value.

It recognises great innovation across all areas, including products and services, processes, and communication. To make the cut, BRW evaluates an organisation’s ‘innovativeness’, using both quantitative and qualitative data.

Infrastructure Association of Queensland Yearbook 2015

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BEST PRACTICE

against interactive models – with a number of reference projects currently being tested by state and federal authorities.

It is great to see the construction and engineering industry acknowledged for innovation on a list that is typically dominated by the technology and financial services sectors. The engineering and construction industry is making great progress, and being recognised in the BRW Top 50 Innovators is a testament to this.

While we still have a long way to go on the innovation front, we are incredibly proud of what we have done so far. Laing O’Rourke is absolutely committed to challenging and changing traditional methods of construction, and we believe that bringing together the best people, technology and processes will ultimately enable us to achieve this.

Pacific Complete preferred delivery partner for $4.3-billion Pacific Highway upgrade In April this year, the Pacific Complete consortium – comprising two firms with extensive experience in delivering Australia’s most complex infrastructure, Laing O’Rourke and Parsons Brinckerhoff – was identified as the preferred delivery partner for the New South Wales Government’s Woolgoolga to Ballina Pacific Highway upgrade.

Laing O’Rourke put its best foot forward through its unique research and development (R&D) operation, the Engineering Excellence Group, as well as showcasing FreeFABTM Wax – a new 3D-printed concrete formwork technology.

Other innovations being developed by the company include: • hardhat-installed worker wellbeing monitoring systems • transportable solar-diesel hybrid generators – in collaboration with the Australian Government • the unique soil-binding polymer Stabilor, which enables the rapid construction of roads, hardstands, embankments and related infrastructure.

In addition, Laing O’Rourke is an industry leader in digital engineering – or advanced Building Information Modelling (BIM) using data matched 30

Infrastructure Association of Queensland Yearbook 2015

The $4.3-billion project is Australia’s largest regional infrastructure project. New South Wales Roads and Maritime Services will deliver the project using a delivery partner model similar to the approach used for the construction of the London Olympics infrastructure.

The project involves the duplication of approximately 155 kilometres of road to a four-lane divided road on the Pacific Highway.

The upgrade will begin six kilometres north of Woolgoolga, and end approximately six kilometres south of Ballina.

The consortium is thrilled to work with Roads and Maritime on Australia’s largest regional infrastructure project, bringing together design and delivery experience across complex programs such as the 2012 London Olympic and Paralympic Games.

As Program Manager, the company is uniquely placed to bring key smarts throughout delivery, which is the first contract to be executed in Australia under a delivery partner model.

BEST PRACTICE

Stakeholder engagement: driving value and opportunities

By Phillips Group

Strong stakeholder relationships are recognised as an integral part of any successful business strategy because they provide mutual value for stakeholders and organisations. Effective engagement activities, combined with other communication strategies, are the primary means for achieving those strong relationships.

While the traditional drivers for conducting stakeholder engagement remain, new approaches continue to emerge that present significant opportunities for the infrastructure sector to add value to project and corporate outcomes.

Increasingly, we are seeing positive relationships with government, customers, industry and the community as a key element in the vision and corporate objectives of Queensland’s infrastructure sector. The strategic approach involves establishing engagement frameworks, principles and values to steer organisational vision and business objectives, as well as policies and plans that ensure organisation-wide buy-in, and bring the strategy to life in stakeholder interactions.

Stakeholder engagement has traditionally been driven by a focus on managing project risk and as part of corporate social responsibility programs.

While these approaches remain vital, the desire to extend the typical outcomes of engagement to provide greater strategic value is driving emerging approaches that are focused on customers and innovation. The drivers of stakeholder engagement can be categorised into the following traditional and emerging key focus areas: 1. risk management 2. social responsibility 3. customer focus 4. innovation.

New approaches continue to emerge that present significant opportunities for the infrastructure sector to add value to project and corporate outcomes.

While engagement may be driven by only one of the above focus areas, the greatest value can be derived from strategies and activities that deliver on objectives across all or multiple areas.

Risk management Conducted as part of organisational strategic planning, a full and proper risk assessment will identify significant operational, reputational and social risks associated with key stakeholders and the community. Strategic and meaningful engagement with key stakeholders is, therefore, a critical mitigation measure to address these potential challenges. In addition, stakeholders can be engaged to contribute to Infrastructure Association of Queensland Yearbook 2015

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BEST PRACTICE

Stakeholder Engagement Strategy

Traditional Drivers

Risk management » Identify and mitigate operational, reputational and social risks » Minimise potential costs and delays » Manage project and corporate reputation

Social responsibility » Alignment of social, environmental and economic performance » Enhance social license to operate » Contribute to industry and broader social issues

Emerging Drivers

Customer focus » Acting in the long term interests of customers and consumers » Identify and respond to customer issues

Innovation » Innovative thinking through collaboration » Develop industry-wide solutions » Draw on valuable knowledge and experience within communities © The PHILLIPSGROUP Pty Ltd 2015

the early risk identification and assessment process, to minimise potential costs and delays that may be incurred if these risks are left unidentified or unchecked.

In terms of business development potential, strong stakeholder engagement credentials and resources are a necessary prerequisite for successful project tendering of public sector contracts.

Demonstrating capabilities for managing complex stakeholder interfaces is a critical component of selection for major government projects, and public sector agencies are increasingly conscious of the potential for stakeholder relationships to influence corporate reputation, be it positively or negatively. Having plans in place to manage stakeholder relationships, internal and external communication, community consultation and project risks is essential to managing project-level reputation.

Social responsibility Stakeholder engagement remains a core component of corporate social responsibility programs, which seek to make a positive impact on the communities in which we operate. New forms of stakeholder engagement in this sphere are showing an increasing shift towards social investment and participation strategies that are part of the alignment of social, environmental and economic performance with core strategy.

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Infrastructure Association of Queensland Yearbook 2015

This type of engagement is driven by a desire to protect and enhance the social license to operate, identify and mitigate social risks, and to shape the external environment so that the business will be more likely to achieve corporate objectives. This is done through stakeholders contributing to broader industry discussions, and developing solutions to the broader social issues at play in the business’s operating environment.

For example, some Queensland businesses have established community grants for nonprofit organisations, with eligibility criteria that is defined through achieving outcomes that contribute to the organisation’s overarching strategic objectives, as well as positively benefiting their wider industry.

Customer focus The quality of engagement is being driven increasingly by a greater focus on the customer as a key strategy to deliver on corporate objectives.

In the energy sector, consumer engagement is being used to shape the entire industry, so that energy networks are operated in the longterm interests of consumers and, ultimately, as a mechanism to address the rising energy prices impacting on households throughout Australia.

The Australian Energy Regulator (AER), which regulates energy markets and networks operating

BEST PRACTICE

under national legislation, has released its own stakeholder engagement framework, which sets out expectations for service providers to engage better with consumers and other stakeholders.

While the guideline doesn’t compel any particular form of consumer engagement, the AER expects all gas and electricity network service providers to use the framework to enhance their consumer engagement activities. Most importantly, the quality of consumer engagement is a factor in how the AER assesses ‘expenditure proposals’, with companies reporting to the AER on how they have considered and responded to a broad cross-section of consumer views, and the extent and value of their communication and consumer engagement.

Innovation The debates around the value of infrastructure investment decisions, and how we generate the most social and economic value, aren’t likely to end soon. Nationally, we continue to debate and plan for significant longterm issues regarding mass urbanisation and changing economies, including the value of road infrastructure compared to investment in public transport, and the need to balance environmental protection and economic growth at our ports and regional airports, as well as how future generations can sustain economic growth beyond the resources boom.

331391A_Board of Professional Engineers QLD | 2181.indd 1

The quality of consumer engagement is a factor in how the Australian Energy Regulatior assesses expenditure proposals.

Engagement will increasingly be driven by the need to address these questions with innovative thinking through collaboration. The collaborative approach with key stakeholders will be used to develop solutions or management strategies to address major industry-specific issues or these broader social questions, in recognition of the valuable knowledge and experience that can be utilised within Queensland communities by government and the private sector.

The ‘Safer Roads, Safer Queensland’ forum, held in April 2015, involved engaging with road safety experts and key stakeholders to discuss ways to address the road toll on the state’s roads.

1/06/15 11:21 AM

Infrastructure Association of Queensland Yearbook 2015

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BEST PRACTICE

The aim of the forum was to use the collective wisdom of a range of stakeholders to develop a plan that could demonstrate broad-based community support, and incorporate a range of views from different stakeholders.

The innovation driver is becoming increasingly important in the Australian infrastructure context, with the resources and energy industry continuing to manage issues such as the cumulative social, environmental and economic impacts of projects and associated infrastructure, and the emergence of new extractive industries.

Equally in the transport sector, questions around the economic and social value of infrastructure will continue to emerge as governments face increasingly challenging investment decisions. As population growth in Queensland puts further pressure on budgets and infrastructure, critical questions around liveability, productivity and efficiency will need to be addressed. Discussions regarding infrastructure funding and delivery will require innovative approaches if they are to provide real value, and will therefore benefit from a collaborative approach between the public, private and community sectors.

We will continue to see stakeholder engagement being driven by the traditional top-down organisational perspectives of strategy, risk management and social responsibility.

Increasingly, however, the drivers for engagement will come from the stakeholder perspective – a desire for a more flat decision-making process

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Infrastructure Association of Queensland Yearbook 2015

As population growth puts further pressure on budgets and infrastructure, critical questions around liveability, productivity and efficiency will need to be addressed. that includes a range of viewpoints. The opportunities for innovation and shaping broader social outcomes will perhaps provide the greatest value for the future of stakeholder engagement in the planning, delivery and operation of Queensland’s infrastructure.

About Phillips Group Phillips Group is a leader in stakeholder engagement and relationship management in Queensland and across Australia.

Our strategic insights and methodologies connect organisations with their key stakeholders through innovative communication and engagement. This approach enables our clients to address and minimise risk, protect and enhance reputation, build and maintain social license to operate and manage relationships to enhance business opportunities and ensure commercial success.

For more information visit www.phillipsgroup.com.au or contact us on (07) 3230 5000.

UNSOLICITED PROPOSALS

Soliciting the unsolicited – stimulating public infrastructure through unsolicited proposals in Queensland

By David Lester, Partner, and Chris Keane, Senior Associate, Clayton Utz

It is timely for Queensland to revisit its approach to, and process for, the treatment of unsolicited proposals.

The global demand for public infrastructure Demand for public infrastructure is continuing to increase at a growing rate. Infrastructure relating to electricity, road and rail transport, telecommunications and water are at the forefront of a sustainable economy, with infrastructure investment needs worldwide set

to exceed US$1800 billion per year over the coming decades.1 With such considerable demand for public infrastructure, policymakers need to be receptive to unique and innovative proposals for the procurement and delivery of public infrastructure from within the private sector.2 Infrastructure Association of Queensland Yearbook 2015

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UNSOLICITED PROPOSALS

The development, stimulation and promotion of unsolicited proposals can act as a catalyst for innovation and improved service delivery, and can help with growing infrastructure needs.

This view resonates with the Australian market, where a recent inquiry revealed that there was no shortage of private sector capital that could be deployed to finance public infrastructure, but it had to be at the ‘right price’.3 The majority of the procurement of public infrastructure has been, and will continue to be, filtered through a competitive tendering process after a need has been identified by government. However, in recent years, governments are increasingly receiving formal proposals from private or non-government sectors to undertake a particular infrastructure project on the basis of an ‘unsolicited proposal’.4 Such unsolicited proposals typically outline basic project specifications and request the support of a government authority, the form of which can be multifaceted, but typically includes financial and/or regulatory support.

The development, stimulation and promotion of unsolicited proposals can act as a catalyst for innovation and improved service delivery, and can help with growing infrastructure needs.

Unsolicited proposals – a workable framework In Australia, most states and territories have published guidelines with respect to the process for dealing with and evaluating unsolicited proposals,5 with the aim of providing a transparent and accountable methodology for the private sector when developing proposals.

While the guidelines for unsolicited proposals differ throughout each jurisdiction, there are certain commonalities.

At a high level, in order to warrant further consideration, each unsolicited proposal must be unique, innovative and demonstrate 36

Infrastructure Association of Queensland Yearbook 2015

‘value for money’ that could not otherwise have been achieved through the more usual government-initiated procurement process based upon competitive tendering. Once the criteria are satisfied, the government authority and private entity may progress the proposal and negotiate terms with a view to entering into a binding agreement.

New South Wales and Victoria have recently updated their guidelines. It may be timely for Queensland to similarly revisit its approach.

The unsolicited proposal guideline Queensland: exclusive mandates

in

The Queensland position in relation to unsolicited proposals was originally published as an Appendix to the 2002 Value for Money Framework6 and reiterated in both the 2008 Value for Money Framework and 2011 National Public Private Partnership Guidelines.7 It utilises the term ‘exclusive mandate’ and sets out particular rules relating to the conduct of both the private sector and the Queensland Government in the consideration of a proposal.

For example, the Queensland Government must abstain from considering another proposal that satisfies the same, or essentially the same, service requirement.8 In submitting an unsolicited proposal, a proponent must, among other things, be able to demonstrate: • genuine existing intellectual property rights • commercial value and utility in the marketplace • significant preliminary investment.

The guidelines are brief, and set a high benchmark, describing a strong preference to maximise competition to gain value for money, with ‘exclusive mandates’ only to be considered in exceptional circumstances.9 Where any unsolicited proposal seeks to place nonindemnified risks or costs on government, then the proposal must be subject to a competitive bidding process to ensure that it represents value for money.10 As such, most proposals are vetted through the Value for Money Framework11 in the same manner as agency-generated outputs, limiting the ability for an unsolicited proposal to progress without some or all of the project being put to competitive tender.

UNSOLICITED PROPOSALS

Case study: NorthConnex project Transurban and the other Westlink M7 shareholders submitted an unsolicited proposal for the design, construction, maintenance and operation of a tolled motorway project worth $2.9 billion called NorthConnex.14 The project will develop nine-kilometre twin tunnels that will link the M1 Pacific Motorway at Wahroonga to the Hills M2 Motorway at West Pennant Hills. As the state’s new major freight route, the motorway is expected to significantly reduce congestion and shorten travel times.

The project reached financial close on 31 January 2015, marking the first time a major transport infrastructure project will be delivered under the New South Wales Government’s unsolicited proposals process.

Clayton Utz has provided strategic legal and commercial advice to the New South Wales Government on all aspects of the NorthConnex project since the unsolicited proposal was submitted by Transurban in 2012. This role has included advising on negotiations with project sponsors at each stage; advising on the design, construction, operation, maintenance and finance of the new project; the highly innovative funding structure; and all relevant property, planning and environmental approvals and related matters.

If the benchmark is set too high for developing unsolicited proposals, it will not encourage the private sector to invest time, money and intellectual rigour, and we will not see the benefit of the innovation and opportunities that unsolicited proposals can present.

The unsolicited proposal guideline in New South Wales In February 2014, the New South Wales Government published new guidelines on the submission and assessment of unsolicited proposals. The guidelines set out a three-stage process, consisting of: • initial submission, preliminary assessment, strategic assessment • detailed proposal • negotiation of a final binding offer.

The New South Wales Government makes provision for a pre-submission review stage,

where private-sector proponents can formally explore, with the New South Wales Department of Premier and Cabinet, whether the proposal is likely to meet stage one assessment criteria, such as ‘uniqueness’.12 The guidelines also outline a regime for the protection of intellectual property, with agreement to be reached with the proponent during stage one.13 The unsolicited Victoria

proposal

guideline

in

Earlier this year, the Victorian Government released new guidelines on ‘market-led proposals’,15 which refer to the former ‘unsolicited proposal’ concept. While the concerns for proponents remain the same (those relating to uniqueness, value for money, intellectual property and timing) the Victorian Government has given real encouragement to the private sector for investment in public infrastructure.

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Infrastructure Association of Queensland Yearbook 2015

37

UNSOLICITED PROPOSALS

The new guidelines implement a five-stage framework, consisting of:

1

• filtering of proposals received by government

2

Ibid.

3

Productivity Commission 2014, Public Infrastructure –

• strategic assessment and recommendation

OECD (2007), OECD Principles for Private Sector

Participation in Infrastructure, OECD Publishing, Paris, 9.

Draft Report, Canberra, 33.

• investment case and procurement preparation

4

• negotiation, development and assessment of final offer

Final Report, Canberra, 799.

• award contract.

Similarly to New South Wales, the guidelines are added in a pre-submission hearing, which will be key for the private sector in gauging how the guideline will apply to their market-led proposal. The Victorian guideline makes it clear that the government can initiate a competitive tender process at either stage two or stage three, and discontinue exclusive negotiations with the proponent.16 Notwithstanding structural differences between New South Wales and Victoria, the counterparts generally cover similar scope and assessment, albeit at different points in time.

The future of unsolicited proposals An ever-increasing need for public infrastructure and a constrained fiscal environment highlights the importance of encouraging private-sector investment in public infrastructure. With a new government in Queensland, and with the benefit of lessons learned in New South Wales and Victoria, it seems timely for Queensland to revisit its approach to, and process for, the treatment of unsolicited proposals.

5

Productivity Commission 2014, Public Infrastructure – NSW, Department of Premier and Cabinet, Unsolicited

Proposals – Guide for Submission and Assessment, February 2014; NT, Department of the Chief Minister, Economic Development Policy, Unsolicited Proposals Policy, October 2013; VIC, Department of Treasury and Finance, Market-led Proposals Interim Guideline, February 2015; QLD, Department of Infrastructure and Planning, National Public Private Partnership Guidelines Annexure 1 – Queensland Departures, 2011.

6

QLD, Department of State Development, Value for

Money Framework, 2002.

7

QLD Department of Infrastructure and Planning,

above n 5.

8

QLD Department of Infrastructure and Planning,

above n 5, 13.

9

QLD Department of Infrastructure and Planning,

above n 5, 14.

10 QLD Department of Infrastructure and Planning, above n 5, 15.

11 QLD, Department of Infrastructure and Planning, Value for Money Framework, 2008.

12 NSW Department of Premier and Cabinet, above n 5, 12.

13 NSW Department of Premier and Cabinet, above n 5, 4.

14 Formerly known as F3-M2 and then M1-M2.

15 VIC Department of Treasury and Finance, above n 5.

16 Vic Department of Treasury and Finance, above n 5, 3.

Case study: CityLink – Tullamarine Freeway Widening Project The first major project to reach contract close under the new Victorian market-led proposal guidelines is the CityLink – Tullamarine Freeway Widening Project. The $1.3-billion project involves adding extra lanes in each direction on Western Link between the West Gate Freeway and Melbourne Airport, extra lanes on the West Gate Freeway and installation of a state-ofthe-art freeway management system. It will increase the road’s capacity by 30 per cent, boost performance and improve safety.

The project reached contract close on 30 April 2015, and is innovatively funded through changes to the CityLink tolling arrangements, a one-year concession extension and the forecasted incremental revenue to be generated by the corridor upgrade. Clayton Utz advised the Victorian Government on all aspects through to negotiation of detailed documentation with Transurban, including in relation to planning approval pathways, land acquisition and property matters, design, construction, operation, maintenance and finance of the project and the impacts on, and integration with, the existing CityLink concession arrangements.

38

Infrastructure Association of Queensland Yearbook 2015

MANAGEMENT

A legal health check for the construction and infrastructure industry

By Suzy Cairney, Partner, Holding Redlich

While there is cautious optimism in the construction and infrastructure industry in Australia about the market in 2015, factors such as the stubbornly low coal and iron ore prices, and the unprecedented uncertainty at state and federal levels of government are causing some commentators to think that business may continue to be tough for the industry over the next year or two.

Add to the equation the work ahead for the new Queensland Government in preparing its infrastructure plans, and competition for work in Queensland, in particular, seems to be getting tougher than ever.

The resulting stiff competition for the projects that do come to market means that businesses need to be more efficient than ever. Much of the easy cost reduction has already been done, so, how do you get that extra efficiency in your contracting practices that will make you stand out from the crowd?

How about a simple legal health check that could give you the competitive edge you need?

Improvements do not have to be drastic or cost much. Just making a few simple changes can lay

the foundations for a trouble-free year, allowing you to focus on building your business, rather than dealing with problems.

Here are a few simple suggestions: Tendering practices Tendering practices sometimes need a revamp to make sure that they are keeping pace with the market. This is more than just a question of getting the price right. It also includes revisiting questions such as: • Have you got the right people on the right jobs?

• What projects should you tender for (everything going, or just the ones you are really good at)?

Infrastructure Association of Queensland Yearbook 2015

39

MANAGEMENT

• Have the key risks changed (for example, are there legislative changes that need to be managed or priced)?

• Does your system process addenda to the tender effectively and in time?

• Have you done enough appropriate due diligence on the counter party (will they be able to perform their end of the bargain)?

The thrill of winning work can disappear quickly if you end up with a contract that costs you more than you make out of it.

However, an attempt at cutting tendering costs by merely cutting and pasting from previous tenders may be a false economy. You may be repeating things that have caused you not to win tenders in the past, or it could result in your tender not properly responding to the requirements for information set out in the request for tender.

Getting the right people on the right job, with the right systems and processes, can help to avoid this.

Contract terms and conditions Do you have standard terms and conditions? When did you last review them?

Are they still current and effective? Are they being effectively included or incorporated into your contracts? If not, even the best terms and conditions are useless to you.

Businesses should review the content and method of incorporation of their terms and conditions regularly. Those terms must be current, and must deal with any changes in law (for instance, the recent security of payment legislation), case law (for instance, the Regional Power Corporation case) or industry practice. You should also review your statements of incorporation and/or check that copies of standard terms are being sent out and signed or acknowledged. Where they are not, you should know why.

If you have a standard set of exclusions that you normally submit with tenders, they should be reviewed to determine if they still accurately reflect your risk management policies. They should also be reviewed for each tender, to determine how they fit with the tender requirements – particularly in cases where a fully conforming tender is required for a valid tender submission.

40

Infrastructure Association of Queensland Yearbook 2015

Credit risk management The construction and infrastructure industry has had a few tough years recently, and this has resulted in some entities restructuring or merging, and others unfortunately failing.

This can leave their contractual partners with substantial unpaid invoices and claims, and/or with an incomplete project that is not generating revenue. Have you conducted proper due diligence on your primary customers, clients, head contractors, subcontractors and suppliers?

If that due diligence was done some time ago, is it time to revisit it?

To cover any substantial exposure, at a minimum you should review your security arrangements, credit agreements and payment terms, and consider whether additional financial safeguards are necessary (for example, parent company guarantees). If ignored, bad debts usually only become bigger and worse, so businesses need to commence recovery action and consider exercising any security as soon as signs of trouble emerge.

Back-to-back (or better) contracting Most construction and infrastructure projects involve a contractual chain or network. It is a vital risk management tool that your contracts with sub-contractors or suppliers of goods or services are on back-to-back (or better) terms with your contracts with your customer/client/ head contractor wherever this is commercially achievable. If there is any mismatch, you may find yourself liable to your customer/client/head contractor, unable to recover any such liability from those below you in the contract chain.

Back-to-back contractual liability provisions need to be the subject of negotiations from the outset, not left to the last minute, and they should be prepared on a case-by-case basis.

A standard form agreement for subcontractors and suppliers can be a good starting point for managing such risks, and can be ready to roll out when any tender or request for proposal is sought; however, such standard forms should generally only be a starting point for negotiations, and they may need to be amended to reflect any specific risks that may be imposed on your company by the head contract if you wish to pass them down

MANAGEMENT

the contractual chain. These should be drawn to your subcontractor’s/supplier’s attention early, to reduce the risk of a mismatch in risk profiles up and down the contractual chain as far as possible.

Proactive contract management Signing a badly prepared contract can be as bad as not signing a contract at all, and the same applies when it comes to managing contracts. Once the contract is signed, it needs to be managed through until final completion, especially if it is a services contract that may include performance standards. Administering a contract properly can make the job go more smoothly, help to preserve your rights and even head off potential problems (usually through early identification).

Is your team set up to administer the contract properly? Are your team members familiar with the contract? Have you got all the relevant

notices and forms in place, ready to use? Do you have a calendar of dates for this project, ideally mapped across into a central calendar showing critical dates for all of your projects? Is your team appropriately staffed and resourced? Is your IT system still supporting your team efficiently? Can documents such as variation orders or extension of time claims be located when necessary? The best contract in the world is of little use if you do not know what rights you have under it, nor have the ability to rely on those rights when appropriate.

The above matters are each fairly simple to consider and implement, and can help to ensure that you have a more successful 2015.

If you would like further assistance with any of the issues mentioned in this article, we would be happy to help.

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Infrastructure Association of Queensland Yearbook 2015

41

MANAGEMENT

Embracing change with ARCADIS

By Greg Steele, Managing Director, Hyder Australia Pacific

The industry that I chose for myself is one of change. After five years running the Hyder Australia business, I learnt late last year that Hyder had been acquired by Dutch giant ARCADIS, one of the top ten consultancies in the world. After 25 years in the industry, I’ve learnt that change is an integral part of the way we do business, whether that be changes in technology or responding to the changing needs of our clients.

ARCADIS is a leading global design and consultancy firm, with primary market positions in environment, building, infrastructure and water sectors. The firm is focused on delivering exceptional and sustainable outcomes for clients working to improve the quality of life in our natural and built environments. ARCADIS have over 28,000 people in 40 countries; we can now work with our clients wherever they need us.

Building on our own substantial experience, the move to ARCADIS enables us to extend our fullasset lifecycle services even further, supporting clients in the planning, creation, operation and redefinition of assets, in both the built and natural environments. We can also offer a wider range of complementary solutions, such as business advisory services; program, project and cost management; and environmental remediation.

Through Hyder, ARCADIS is now the oldest consulting engineering company on record, with activities dating back 230 years. A number of iconic projects become part of our combined history, including the Tower Bridge in London, the Sydney Harbour Bridge in Australia and the Burj Khalifa in Dubai. ARCADIS has gained a truly global position and is now able to deliver solutions to our clients in six out of the seven continents.

42

Infrastructure Association of Queensland Yearbook 2015

At the time of writing, the Australian Federal Government is focused on infrastructure spend, a resources sector that remains volatile and an Australian dollar that poses a challenge to exporters. Change is all around us, and we continue to evolve, but we remain committed to exceeding our client’s expectations and believe this change will help us to better meet our client’s needs in the future.

CONTRACTS

Standard form construction contracts: an overview of the draft AS 11000

By Nicholas Ng, Partner, Matt Thomas, Senior Associate, and Judith Kelly, Lawyer, Allens

Standard form contracts have been a feature of public and privatesector building, construction and engineering projects in Australia for more than half a century. Standards Australia has recently flagged a significant change to the current standard form contract landscape in Australia through an overhaul of its existing suite of standard contract forms related to AS 4000:1997 and its predecessor AS 2124:1992.

Standards Australia has indicated that those suites of standards will be discontinued and superseded by a single suite of standards related to a new AS 11000 general conditions of contract. A draft of the AS 11000 was released

by Standards Australia for public comment in January 2015.

This article briefly considers the use of standard form contracts in Australia, some of the significant new aspects of the draft AS 11000, and key takeaways for industry.

Standard forms in modern construction contracting

Australian

Targeted surveys and interviews were conducted by the University of Melbourne Law School in 2014 in relation to the use of standard form construction contracts in Australia. They found, among other things, that: • overall, the contracts for 68 per cent of projects reported upon were based on standard forms • the Australian Standard (AS) standard forms are the most commonly used forms (representing close to 70 per cent of the standard forms used)

• the AS major works forms are used across all sectors and contracting values (although no AS 4000 forms were reported as being used on projects with a value of more than $500 million).1 These findings reinforce the continued relevance and value placed by industry participants on standard form contracts (and, in particular, AS standard forms) within the modern Australian construction contracting landscape.

Significantly, however, the same research indicated that although industry participants were supportive of the idea of having standard forms available that are capable of being used without substantial amendment in principle, the majority of those participants did not actually believe that any such form is currently available in the market. This sentiment appears to be supported by the finding that 84 per cent of the standard form contracts reported upon had been amended in one form or another,2 1 Sharkey, J, et at, ‘Standard Forms of Contract in the Australian Construction Industry Research Report’, University of Melbourne, June 2014, 5.

2

Ibid, 17, 35.

Infrastructure Association of Queensland Yearbook 2015

43

CONTRACTS

with industry participants indicating that, in their experience, amendments are commonly made to a range of clauses including, most commonly, extension of time, delay damages, site conditions, and payment and variation clauses, as well as the inclusion of additional clauses dealing with matters not addressed in the standard forms – for example, limits on liability and various relevant statutory requirements (such as goods and services tax (GST) and security of payment).3 These research findings are consistent with our own experience in preparing, negotiating and advising on contracts based on standard forms, and we expect they would have been of interest to the Standards Australia Technical Committee responsible for preparing the draft AS 11000.

Draft AS 11000 Standards Australia has indicated that AS 11000 is intended to reflect ‘a broadly balanced approach to risk allocation, in language that is focused on brevity and certainty’, applying the same core ‘Abrahamson Principles’ of risk allocation upon which the existing AS standards are based.

Structurally, the look and feel of the draft AS 11000 is substantially similar to AS 4000, although it is proposed that the form will be made available in a more user-friendly format. Content-wise, the contract introduces a number of new concepts, as well as amendments to AS 2124 and AS 4000 forms, with reference to recommendations provided by various subcommittees and working groups in regards to risk allocation, good faith, programming, extensions of time, payment provisions (including security of payment) and dispute resolution issues.

The Standards Australia statement and associated explanatory notes in relation to the draft AS 11000 (accessible at http://www.standards.org. au/OurOrganisation/News/Pages/For-PublicComment---AS-11000-General-Conditionsof-Contract.aspx) provide a comprehensive summary of the proposed changes. We have set out below a brief analysis of a selection of some key features.

Overarching requirement of good faith The draft includes a requirement for the principal and the contractor to ‘act reasonably in a spirit of mutual trust and cooperation, and generally in good faith towards the other’. The precise scope 3

44

Ibid, 42-43.

Infrastructure Association of Queensland Yearbook 2015

Standards Australia has indicated that AS 11000 is intended to reflect ‘a broadly balanced approach to risk allocation, in language that is focused on brevity and certainty’ of this requirement is open-ended. Although the drafting states that this requirement will not derogate from each party’s obligations to comply with the contract’s terms, precisely how it will interact with the enforcement of contractual rights (including, for example, the application of time bars and rights to suspend and terminate), remains uncertain. Moreover, the extent to which this requirement might also attach to the superintendent is not clear, although the better view appears to be that the superintendent would be bound by this requirement when acting in his or her capacity as agent for the principal.

Early warning procedure To promote the parties acting in accordance with this overarching obligation of good faith, the draft includes an ‘early warning’ procedure to identify, and ideally resolve, issues arising between the parties at an early stage. Specifically, the procedure requires that, in addition to other notice requirements under the contract, both parties notify the other as soon as they become aware of an event or circumstance that may impact upon time, cost, scope or quality under the contract and may become an ‘issue’.

If the issue cannot be resolved (following a conference between the parties convened by the superintendent), the relevant party must notify the other that they intend to either pursue or not pursue the issue in accordance with the notice and dispute resolution mechanisms under the contract. Coupled with this procedure is a more flexible dispute resolution process that expressly contemplates the use of a wider range of alternative dispute resolution (ADR) processes, including expert determination, facilitation and dispute resolution boards.

CONTRACTS

The draft includes a number of useful updates and amendments that reflect changes in legislation (including clauses dealing with GST and security of payment) and technology The early warning procedure represents a further layer of contract administration for both parties, and questions remain as to how it will operate in practice. For example, what would a ‘resolution’ of an issue involve, given that the impacts of the ‘issue’ may not, at that stage, be known? If a resolution of an issue is reached, how will this be recorded, and by whom? If one party provides the other with a notice that it does not intend to pursue an issue as part of the early warning procedure, does it forfeit all rights (contractual or otherwise) that it may have in relation to the issue?

Programming The draft includes more prescriptive programming-related requirements than its predecessors, in order to align with modern programming capabilities and project-specific complexities, and to promote the associated benefits for the principal and superintendent monitoring and managing the work under the contract with greater precision. Those requirements include that the contractor’s construction program be set out as an activitybased critical path program in a time-linked bar (or Gantt) chart format (rather than a mere ‘statement’), and for additional requirements to be set out in the contract annexure, as well as an obligation on the contractor to revise the program to account for actual progress at the times prescribed in the contract annexure and to provide (at the contractor’s cost) more information about a program where reasonably requested by the superintendent.

Subcontracting The draft provides that for subcontracts over a prescribed monetary threshold, the subcontract

conditions must incorporate AS 11002 – subcontract conditions, with the only changes that can be made being those necessary to reflect the contract between the principal and contractor. A failure to do so would be a substantial breach by the contractor. This represents a significant change to the position under AS 4000 and AS 2124, which is simply that the principal’s approval to subcontract may be conditional upon a subcontract including certain provisions. In practice, we expect that the new requirement will meet significant resistance from head contractors who, for commercial and practical reasons, ordinarily engage subcontractors on their own preferred standard subcontract conditions.

Implications for industry Overall, the draft represents an evolutionary (rather than revolutionary) update to AS 2124 and AS 4000.

The draft includes a number of useful updates and amendments that reflect changes in legislation (including clauses dealing with GST and security of payment) and technology (for example, providing for service by email), and promotes collaborative behaviour and the avoidance or early resolution of disputes. On the other hand, a number of the gaps and drafting difficulties evident in the current AS standards still feature in the draft. That said, it is perhaps overly ambitious to expect any standard form general conditions to go further than providing a baseline position on risk allocation and procedure, which can then be tailored by the parties to reflect the requirements of a particular project.

At a practical level, the release of the draft (and the associated announcement that AS 2124 and AS 4000 will be discontinued) is a signal to government and the private sector that contract suites based on AS 2124 and AS 4000 will soon need to be updated (and eventually replaced).

The period for public submissions on the draft closed on 27 March 2015. Industry stakeholders are no doubt awaiting, with keen interest, further announcements from Standards Australia as to what changes, if any, will be made to the draft in response to those submissions, and when the final version will be made available to the public.

Infrastructure Association of Queensland Yearbook 2015

45

ENVIRONMENT

EIS framework meets challenge of CSG infrastructure assessment

By Rob Storrs, Principal, Environmental Scientist, URS

A pioneering environmental impact framework developed by leading engineering, construction and technical services firm, URS has set a new industry standard in assessing the potential environmental impacts of coal seam gas (CSG) projects in Queensland.

The constraints-based analysis framework has been assessed and accepted by both the Queensland and Commonwealth governments, recognising its best practice processes to identify key environmental risks and management strategies for gas-field infrastructure, such as wells, transmission pipelines, gas compressions and treatment facilities and water management facilities.

Prior to the advancement of Queensland’s CSG industry, the majority of environmental impact statements (EISs) prepared to support development applications were for purposes such as mining developments, industrial facilities or infrastructure projects. These tended to be site-specific projects, with defined locations and relatively small geographical footprints, and with concentrated development compared to the small footprints spread over large areas in CSG projects.

CSG projects are typically geographically widespread – often across thousands of square kilometres – and may involve the development of hundreds, or thousands, of wells and ancillary facilities, spanning across decades, rather than years, in line with production schedules. Given the 46

Infrastructure Association of Queensland Yearbook 2015

vast project areas involved, sites also commonly involve a variety of prior land uses, ranging from agricultural and forestry ventures, to mining, oil and gas projects, as well as multiple landowners.

Given the differences to traditional projects, existing impact assessment processes were inappropriate for development of the CSG industry. In designing a more suitable assessment framework, the key challenge for URS was to achieve best practice environmental management outcomes, without having to undertake detailed site-specific assessments at the project’s outset across thousands of square kilometres, which may later require significant revision, or become irrelevant to the actual project rollout.

ENVIRONMENT

Building on more than 100 years of global oil and gas experience, including projects in the United States, Canada and Japan, URS created a framework that allowed for the assessment of constraints across the whole of the gas fields at the environmental impact statement (EIS) stage, and prior to the locations of wells and other infrastructure being determined.

The steps followed in the field development concept process include:

The process involves identifying the constraints to development that exist within the gas field area, and the environmental management controls that will be applied to the project’s activities in those constrained areas. Using this method, environmental outcomes can be optimised by avoiding sensitive receptors where practicable.

Where avoidance is not practicable, management and mitigation measures can be used.

• amending the conceptual field development schedule by considering which project activities are permitted in each of the constraint areas.

This approach provides a significant reduction in the amount of fieldwork that would otherwise be required, resulting in both time and cost savings at EIS stage. This process is followed by ongoing refinement during the more detailed project development stages, as additional resource data is obtained, and as more detailed information is gathered on the area’s constraints prior to the development of specific project areas.

• identifying the various levels of constraint that exist over the subject area • superimposing the development envisaged for the subject area by applying a conceptual field development schedule

The field development process identifies how wells and other infrastructure might best be located, taking all relevant constraints into account. Based on this, an indicative construction and drilling program can be developed. This process is used as the basis for impact assessment, as it indicates the likely maximum development case in terms of environmental impacts, and the project’s maximum disturbance footprint.

As an example, for one such project, areas classified as having high levels of conservation, or the known presence of endangered species of animals, were classified as no-go areas – to be avoided as unsuitable for development.

Other areas classified as low, moderate or high

Infrastructure Association of Queensland Yearbook 2015

47

ENVIRONMENT

Figure 1 indicates conceptually how the process is to be applied.

constraint, were also identified, along with recommendations on best practice management, such as: • performing underground work with little to no surface impact • developing buffer distances • offsetting/relocating – finding similar habitat elsewhere for the relocation of animals • reducing the footprint of the well by reducing the amount of land cleared • establishing multi-headed wells to minimise areas of surface disturbance.

Once the process framework for the project was developed, URS continued to provide 48

Infrastructure Association of Queensland Yearbook 2015

support throughout its lifecycle, with additional works including approvals finalisation, approval compliance assistance and groundwater monitoring network installation.

Rob Storrs Rob Storrs is a Principal Environmental Scientist with more than 19 years’ experience in the compilation and management of environmental assessment and management studies across the mining, oil and gas and chemical industries. Rob has extensive experience managing projects through the EIA process across both Asia Pacific and the United Kingdom.

URS URS is a leading provider of engineering, construction, and technical services for public agencies and privatesector companies in Australia and around the world. With more than 100 years’ experience in oil and gas globally, URS provides a full range of asset development lifecycle services, from initial land acquisition, planning and permitting to design, construction, operation, maintenance and compliance.

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