Understanding Public Private Partnerships in Australia

Over the years, Umow Lai, a member of Integral Group, has developed an integrated approach and delivery of Public-Private Partnerships (PPP) in Australia, specializing in healthcare facility projects. Read Elizabeth Coe’s take on the PPP process and why having an experienced team is essential for success.

THE DEVIL IS IN THE DETAILS – UNPACKING PPP CONTRACTS

PPP projects use service contracts between public and private sectors, with a reputation in Australia for on-time delivery and good return on investment for government clients. PPP projects also include construction and operation to agreed standards and hand-back of the facility after 25 or 30 years. Using a rigorous approach in developing contract details ensures the government has correctly designed, fully maintained, and properly operational facilities, whether the project is a hospital, school, or prison, for the duration of the project term.

At handover (also called commercial acceptance), the government pays the project company and provides clinicians or teachers for the day-to-day operation of the facility. As with all healthcare projects, the Model of Care and Functional Brief look forward, while the minimum Infrastructure & Engineering standards and Health Guidelines are founded in good practice and history.

To ensure the correct balance between the future adaptability and adoption of appropriate clinical innovation, it is essential to identify the minimum requirements that the PPP will deliver. The project team uses a performance specification style without specifying outright the engineering capacities or design approaches. This enables designers to meet the minimum standards and key performance indicators (KPIs), ensuring the availability of service, while facilitating innovation and competition.

EXPERIENCE MATTERS FOR PROJECT VIABILITY

As advisors, understanding the knowledge base of the PPP team – including financiers, builders, and facility managers – leads to better team synergy and achieving project KPIs through that shared common knowledge. The team must pinpoint the anticipated life of the plant and identify the hand-back condition so the State can use the facility at the end of the contract. Ensuring the commissioning and trial operation requirements before commercial acceptance is reasonable and rigorous allows the team to monitor and correctly configure KPIs during the project term.

A successful bid team must deliver a complex design in the minimum timeframe because the project company does not receive payment until commercial acceptance is achieved. The clarity of the brief is essential to extract compliant design solutions and require a predicable capital expenditures regime once in operation.

The independent reviewer (IR) is jointly funded by the state and the project company financiers. Checks and balances the IR provides ensure that the contracts are correctly implemented and represent value for money during the ensuing years of the PPP.

OUR TEAM

Over 15 years Principal Elizabeth Coe, together with her team listed below have worked collaboratively on many significant projects as State’s advisors, bid team members, and in IR roles.

Our PPP hospital projects include:

• $400M Royal Women’s Hospital at Royal Melbourne Hospital

• $1.9B new Royal Adelaide Hospital

• Advice to the successful bid team for the $1B Royal Children’s Hospital

• $1.8B QLD Sunshine Coast University Hospital

• $1B NSW Northern Beaches Hospital for Healthscope

• $630M new Bendigo Hospital

• $1B VCCC – new Peter MacCallum Cancer Centre (IR role)

Some of these projects were greenfield sites, others had been previous hospitals, rail yards, office buildings, and even a former ordnance firing range. Our team’s deep experience in this sector has made us a ‘go-to’ firm for PPP projects.

If you would like to understand more about PPP process, please get in touch with one of our experts listed above.