5 minute read
Delivering Victoria’s record infrastructure pipeline
Delivering Victoria’s
record infrastructure pipeline
An Nguyen | Executive Director and Head of Partnerships Victoria – Infrastructure Delivery Group, Victorian Department of Treasury and Finance
Victoria’s infrastructure pipeline has grown significantly in recent years and continues to play a vital role in driving the state’s economy. To ensure the effective delivery of the Government’s historic pipeline of works, the Victorian Department of Treasury and Finance (DTF) continues to explore opportunities to plan, procure and deliver projects in more innovative and efficient ways.
Creating and capturing value in Victoria’s infrastructure projects
Victoria’s Value Creation and Capture Framework provides guidance to Victorian Government departments, business, industry and community sector partners on maximising the value created by infrastructure projects. Harnessing the value creation and capture opportunities in Victoria’s infrastructure pipeline to improve infrastructure delivery and long-term performance outcomes is important, particularly when it comes to large scale projects like North East Link and the Suburban Rail Loop, as well as regional infrastructure like the Geelong Convention and Exhibition Centre.
The recently established North East Link State Tolling Corporation demonstrates a different way government can leverage value capture to meet the funding task for major infrastructure. A State-owned corporation has been established by DTF to collect tolls for the North East Link road, which is currently under construction. The State Tolling Corporation is a commercial enterprise that utilises the value of the future toll revenue stream, providing funding capacity to deliver the project.
The Suburban Rail Loop comprises a program of investment that will support urban renewal in Melbourne’s middle suburbs. DTF has supported project activities through the development of a funding and financing strategy. This work has used learnings from past investments and explored approaches adopted on large-scale international projects like London’s Crossrail and the Grand Paris Express. These inter-generational projects required a diversified approach that leveraged a range of funding sources and value creation opportunities. Much of the value from the new Suburban Rail Loop will accrue over time, so leveraging a range of funding sources and value creation opportunities will support provision of the upfront finance required to deliver the project.
Value capture and creation is also a key project objective for the Geelong Convention and Exhibition Centre, where value will be created in the surrounding precinct and then reinvested in the project. Reinvesting that value will help deliver an outstanding facility and enhanced precinct outcomes for Geelong. The final form of the Geelong Convention and Exhibition Centre’s value capture opportunities and their delivery method will be determined by the market through the Public Private Partnership (PPP) tender process.
DTF continues to update and expand the Victorian suite of standard form infrastructure contracts to ensure they are responsive and fit for purpose. The enhanced contract suite will provide greater consistency in the State’s procurement processes and increase industry participation by reducing the time and costs associated with legal reviews. Efficiencies will also be realised by reducing duplication during project transactions and ensuring state contracts remain aligned with industry best practice.
Further enhancement of the standard contract suite
Victoria’s Public Construction Procurement Framework requires agencies to use standard form contracts for public construction. As part of an ongoing program of reforms, DTF is developing a range of new standard form contracts, replacing out-of-date contracts and withdrawing and retiring obsolete contracts. New standard form contracts in development include:
• Incentivised Target Cost (ITC)
• Collaborative Design and Construct (D&C)
• Medium Works.
The ITC Deed introduces a Targeted Outturn Cost model. This model involves payment on a cost-reimbursement basis, transparent open-book arrangements, a percentage fee for corporate overheads and profit, and a painshare/gainshare mechanism to incentivise performance.
The new Collaborative D&C Deed will provide a modern contract form based on a fixed-price D&C approach but with targeted risk-sharing elements responding to specific delivery issues and market concerns.
The new Medium Works Contract addresses an existing gap and introduces a modern and user-friendly contract structure, which will be adopted with future contracts in the broader suite of Public Construction Contracts.
DTF has consulted with government stakeholders and expects to release consultation versions of the contracts for industry input. These new contracts, together with comprehensive guidance notes, are expected to be finalised in the coming months and will be published on the Victorian DTF website.
Common PPP Project Deed
Recognising the need for standardisation across Australia’s two most populous states and largest public sector infrastructure markets in the country, DTF and the New South Wales (NSW) Treasury have been developing a common PPP project deed and guidance material for major social infrastructure PPP projects for use in both states.
The Partnerships Victoria Standard Project Deed has been used as the base documentation, but the new deed also adopts key elements from the NSW Toolbox Project Deed. Beyond seeking to harmonise the PPP project deeds, improvements have been made to address common industry ‘pain points’, and incorporate feedback received and learnings from recent PPPs.
Industry and government stakeholders were consulted in the development of this harmonised PPP project deed and a legal peer review has been conducted. It is anticipated final versions of the Common PPP Project Deed and guidance material will be published in the coming months on the DTF and NSW Treasury websites.
Frameworks, policy and guidance
DTF is continuing to progress several important workstreams, including the development of new guidelines to support delivery of projects through collaborative procurement models. The new policy and guidance will outline collaborative models, key principles, approvals, commercial drivers and success factors for all types of collaborative procurement. DTF is also updating its Procurement Strategy Guideline and the Partnerships Victoria Framework, among several others.
These pieces of policy work will play an important role in helping drive improved project outcomes, and DTF looks forward to consulting further with industry and government stakeholders as these important initiatives develop.
