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INFRASTRUCTURE AUSTRALIA

Efficiencies in

Major Project Procurement

VOLUME 2

Consultation Outcomes Report

June 2012


Ownership of Intellectual Property Rights in this Publication

Unless otherwise noted, copyright (and any other intellectual property rights, if any) in this publication is owned by the Commonwealth of Australia

(referred to below as the Commonwealth).

Indemnity Statement

Infrastructure Australia has taken due care in preparing this report. However, noting that data used for the analyses have been provided by third

parties, the Commonwealth gives no warranty to the accuracy, reliability, fitness for purpose, or otherwise of the information.

Published by

Infrastructure Australia

GPO Box 594 Canberra ACT 2601 AUSTRALIA

Telephone (international) +61 2 8114 1900

www.infrastructureaustralia.gov.au

ISBN: 978-1-921769-77-1

(C) Commonwealth of Australia June 2012


Contents

1 Executive Summary .............................................................................................................................................................................................5

2 Background ..................................................................................................................................................................................................................... 10

3 Contract Models ......................................................................................................................................................................................................11

4 Consultation ................................................................................................................................................................................................................... 14

5 Efficiency Strategies ........................................................................................................................................................................................ 15

Methodology ..................................................................................................................................................................................................................... 15

Overall Procurement Process Efficiency Strategies ..................................................................................................................... 16

Pre-Procurement Phase Efficiency Strategies ................................................................................................................................... 17

EOI Phase Efficiency Strategies ...................................................................................................................................................................... 18

RFP Phase Efficiency Strategies ....................................................................................................................................................................20

Evaluation/Finalisation Phase Efficiency Strategies .....................................................................................................................23

6 Time Metrics ..................................................................................................................................................................................................................25

Framework ..........................................................................................................................................................................................................................25

Pre-Procurement Phase Time Metrics ......................................................................................................................................................26

EOI Phase Time Metrics ..........................................................................................................................................................................................27

RFP Phase Time Metrics ........................................................................................................................................................................................28

Evaluation/Finalisation Phase Time Metrics .........................................................................................................................................29

7 Review of Contributions ............................................................................................................................................................................30

Pipeline of Projects .....................................................................................................................................................................................................30

Common Views ...............................................................................................................................................................................................................31

Differences in Views ...................................................................................................................................................................................................31

Attachment 1

Terminology ...........................................................................................................................................................................................................................33

Attachment 2

Contract Models ...........................................................................................................................................................................................................36

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Public Private Partnership (PPP) .....................................................................................................................................................................37

Design and Construct (D&C) .............................................................................................................................................................................39

Alliance ...................................................................................................................................................................................................................................40

Consultation Outcomes Report | 3


Attachment 3

Participants in Stakeholder Engagement .........................................................................................................................42

Attachment 4

Schedules of Procurement Objectives, Efficiency Strategies and Efficiency

Factors ...........................................................................................................................................................................................................................................46

Schedule 1 – Efficiency Strategies – Overall Procurement ....................................................................................................47

Schedule 2 – Efficiency Strategies – Pre-Procurement Phase ............................................................................................49

Schedule 3 – Efficiency Strategies – EOI Phase ................................................................................................................................51

Schedule 4 – Efficiency Strategies – RFP Phase ..............................................................................................................................54

Schedule 5 –Efficiency Strategies – Evaluation/Finalisation Phase ................................................................................61

Figure 1: Simplified Typical PPP Structure ..............................................................................................11

Figure 2: Typical D&C Structure ...............................................................................................................12

Figure 3: Typical Alliance Structure .........................................................................................................13

Figure 4: Typical PPP Structure ............................................................................................................... 38

Figure 5: Typical D&C Structure .............................................................................................................. 39

Figure 6: Typical Alliance Structure .........................................................................................................41

4 | Consultation Outcomes Report

VOLUME 2


1 Executive Summary

1. Infrastructure Australia initiated a consultative

study to identify those measures which

contribute to efficiency in procurement of

major infrastructure projects. Infrastructure

Australia engaged Everything Infrastructure (EI)

to develop, facilitate and document the study.

2. This paper documents the outcomes of the

consultative process, including the subsequent

analysis and the review of contributions.

3. For the purpose of this study the term ‘efficiency’

is to be the optimum balance between

the stakeholder inputs and certainty of

delivery of project outcomes, such that human

resource effort and fiscal cost are balanced

against the benefits to the Agency and the

Government.

4. The terms of reference for the study identified

three contract models:

- Public Private Partnership (PPP);

- Design and Construct (D&C); and

- Alliance.

5. Two series of interactive sessions were held

with private and public sector stakeholders.

The interactive stakeholder sessions separately

engaged senior representatives of:

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- Australian based local and international

contractors and constructors;

- Australian based financial advisers,

arrangers and funders;

- Australian State Government infrastructure

procurement and delivery

agencies; and

- State and Commonwealth central

government funding agencies.

6. The discussions within the sessions were

generally related to four Procurement Phases,

namely:

- the Pre-Procurement Phase;

- the Expression of Interest (EOI) Phase;

- the Request for Proposal (RFP) Phase;

and

- the Evaluation / Finalisation Phase.

7. The interactive stakeholder sessions

generated:

- a schedule of features of procurement

which contribute to efficiency (efficiency

factors); and

- a schedule of activity durations which

were considered to be efficient (time

metrics).

8. Following the interactive sessions the identified

efficiency factors were aligned with relevant

efficiency strategies. The efficiency strategies

for each procurement phase are listed

below. Details of the relevant objectives and

efficiency factors are addressed in Section 4

of this Report and detailed in Attachment 4.

Procurement Phase Efficiency Strategies.

Consultation Outcomes Report | 5


Procurement Phase Efficiency Strategies

Overall Procurement Process

Pre-Procurement Phase

EOI Phase

RFP Phase

Develop and implement a procurement strategy and undertake procurement planning for

each procurement stage.

Consult with stakeholders and potential bidders on the proposed procurement strategy,

adjust it if required and implement the resulting strategy.

Identify, engage and maintain an appropriately skilled, resourced, structured and managed

team at all procurement stages.

Provide potential participants with sufficient, accurate and timely information before the

EOI Phase to enable them to:

- understand the project requirements;

- assess their appetite for the project;

- identify and select participants; and

- determine roles and responsibilities for the participants.

Ensure that the project structure, scope and character aligns with market capabilities,

capacity and appetite and is attractive to (and readily able to be delivered by) a number of

potential proponents.

Eliminate potential delay events from approval processes or other government agency

interfaces ahead of procurement commencing.

The expression of interest (EOI) process, including the evaluation methodology provides

alignment between the EOI Response and the project objectives.

The EOI documents contain relevant information to enable potential participants to

understand the project requirements, the Procurement process and the issues affecting

the submission and evaluation of EOI responses.

The EOI Phase is undertaken in accordance with the information advised to potential

participants and the evaluation of EOI responses and the announcement of the selected

proponents is undertaken in the shortest practical time.

The EOI response requires only information which materially differentiates between

proponents and the EOI program is designed to minimise standby time.

Select the minimum number of proponents (from the EOI process) to submit proposals.

Develop the commercial terms with full consideration of the cost / benefits of those terms.

The RFP process is delivered in the manner and to the program advised to Participants,

without causing or exacerbating unplanned delays or wasted effort.

The project and proposal requirements are clearly and unambiguously stated in the RFP

documents and interactive sessions are provided to enable proponents to develop effective

and competitive solutions and optimise their proposals.

The RFP document provides sufficient information to enable Proponents to understand

how proposals will be evaluated, to enable proponents to better understand the Agency’s

view on relative value and, consequently, to enable proponents to optimise their proposals.

The RFP is designed and structured to facilitate proposal evaluation and to incorporate of

particular aspects of the successful proposal into the Contract.

The Agency’s overall approach to the RFP process (including the prescribed proposal

requirements) is reasonable for the project and recognises (and sensibly responds to) the

cost and effort for proponents to submit proposals.

The proposal requirements in respect of design, delivery and services are limited to that

information necessary for delivery of the project objectives and the proposal requirements

recognise (and sensibly respond to) the proponent’s cost and effort to submit proposals.

The proposal requirements, in respect of financial and commercial aspects, recognise

(and sensibly respond to) the cost and effort of proponents to submit proposals.

The Agency resolves all evaluation issues and concluded all evaluation and finalisation

planning.

6 | Consultation Outcomes Report

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Procurement Phase Efficiency Strategies

Evaluation / Finalisation Phase

The Evaluation/Finalisation process enables effective:

- assessment of the relative value of each proposal;

- resolution of material uncertainties in respect of proposals; and

- in the case of the selected proposal, inclusion of the relative value and the resolution of

uncertainty in the Contract.

The Evaluation/Finalisation process is undertaken fairly and in accordance with the

methodology advised to proponents and stakeholders.

The Evaluation/Finalisation process is:

- undertaken in the reasonable minimum time;

- requires the reasonable minimum effort by proponents; and

- releases (or suspends) proponents from further involvement at the earliest practicable

time.

9. The time metrics developed in the interactive sessions are documented in Section 5 of this Report and

are listed below:

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Procurement

Phase

Procurement

Phase

Activity Measure

Initial advance

notice of project

and market

engagement.

Commence the

market interaction

with specific

notice of likely

scope, value,

roles, contract

models and

packaging.

Formal discussions,

specific

project details

advised in

terms of scope,

contract models,

risk, value,

turnover, roles,

timing, Agency

objectives.

EOI Phase EOI preparation

Evaluation of EOI

responses

Months

before issue

of EOI

Months

before issue

of EOI

Months

before issue

of EOI

Weeks from

release of EOI

document to

submission

of EOI

responses.

Weeks

duration

More

Complex

Time Benchmarks (weeks or months)

D&C PPP Alliance

Less

Complex

More

Complex

Less

Complex

More

Complex

Less

Complex

12 6 24 9 12 6

6 2 12 6 6 2

2 2 3 3 2 2

6* 4* 8* 6* 4* 3*

3 3 4 3 3 3

Consultation Outcomes Report | 7


Procurement

Phase

RFP Phase

Evaluation /

Finalisation

Phase

Activity Measure

Alignment

sessions and

evaluation

workshops

Approval of

evaluation

outcomes

Issue of Request

for Price (RFP)

documents.

Duration RFP

period

Duration of interactive

process.

Latest time for

material changes

(time, cost,

risk) issued in

addenda.

Latest time for

minor changes

(clarification

without material

impacts) issued

in addenda.

Latest issue of

marked up project

documents to

proponents following

specific

early proponent

submissions (i.e.

Deed) during the

RFP preparation.

Earliest technical

submissions

Duration of

evaluation

Weeks

duration

Weeks from

completion of

evaluation to

announcement

of selected

respondents.

Weeks after

announcement

of EOI evaluation

outcomes.

Weeks from

issue of RFP

documents to

submission of

proposals.

Weeks from

issue of RFP.

Weeks before

RFP close.

Weeks before

RFP close.

Weeks before

RFP close.

Weeks before

RFP close.

Weeks from

submission

close to

selection.

More

Complex

Time Benchmarks (weeks or months)

D&C PPP Alliance

Less

Complex

More

Complex

Less

Complex

More

Complex

Less

Complex

N/A N/A N/A N/A 4 3

1 1 2 2 1 1

4 2 4 2 4 2

12 to 16 8 to 12 24** 18** 12 8

8 4 20 10 6 4

6 6 12 12 4 4

4 4 9 8 2 2

6 6 12 12 2 2

4 2 8 4 3 1

6 4 12 8 4 2

8 | Consultation Outcomes Report

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Procurement

Phase

Activity Measure

Duration of

finalisation

Approval

duration

Approval to

financial close

Weeks (selection

to final

documentation)

assuming

all material

issues are

resolved.

Weeks

duration

Weeks

duration

More

Complex

Time Benchmarks (weeks or months)

D&C PPP Alliance

Less

Complex

More

Complex

Less

Complex

More

Complex

Less

Complex

3 3 4 4 3 3

2 2 2 2 2 2

N/A N/A 10 6 N/A N/A

- Note: * assumes effective engagement during Pre-Procurement Phase.

** maximum 34 weeks for unique complex PPP and subject to specific market feedback

at the Pre-Procurement Phase.

10. In addition, the interactive sessions identified:

- the overall efficiency to be gained if a pipeline of PPP projects is developed and committed to;

- the common views of all session participants essentially relating to providing certainty of overall

procurement outcomes; and

- differences in views in respect of:

A. design effort for PPP and D&C Proposals;

B. the extent to which PPP proposals are underwritten; and

C. the resolution of multiple proponents’ evaluation / finalisation.

11. The resolution of these differences is discussed in Section 6 of this paper and the relevant Efficiency

Strategies and Efficiency Factors are incorporated in the Schedules in Attachment 4.

VOLUME 2

Consultation Outcomes Report | 9


2 Background

In December 2011, Infrastructure Australia initiated

a consultative study to identify those measures

which contribute to efficiency in procurement of

major infrastructure projects. Infrastructure Australia

engaged Everything Infrastructure to develop, facilitate

and document the study. The terms of reference

of the study are to:

engage key Australian stakeholders to

contribute to the study;

review the contributions against international

experience;

direct the study at the Public Private

Partnership (PPP), Design and Construct (D&C)

and Alliance contract delivery models;

not specifically address business case, needs

analysis, contract packaging and contract

model selection, on the basis that these

activities are undertaken separately to the

procurement processes which are the subject

of this study; and

identify benchmarks for best practice in major

infrastructure procurement.

This Volume of the Report documents the outcomes

of the consultative process, the subsequent analysis

and the review of contributions. Volume One of this

Report, Benchmarks for Efficient Procurement of

Major Infrastructure identifies the benchmarks for

best practice in efficient procurement.

For the purpose of this study, and in the context of

procurement processes, the term ‘efficiency’ is to

be the optimum balance between the stakeholder

inputs and certainty of delivery of project outcomes,

such that human resource effort and fiscal cost are

balanced against the benefits to the Agency and the

Government.

There is a degree of variety in the use of terminology

in respect of infrastructure procurement across the

various Australian jurisdictions. Particular terminology

used for the purposes of this study is included

in Attachment 1.

10 | Consultation Outcomes Report

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3 Contract Models

The terms of reference for the study identified three

contract models:

Public Private Partnership (PPP);

Design and Construct (D&C); and

Alliance.

The contract models, broadly described below, are

more particularly described in Attachment 2.

Figure 1: Simplified Typical PPP Structure

Debt 1

Debt 2

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Equity 1

Equity 2

Trustee

Guarantees

Side Deeds

Deed of Charge

The Public Private Partnership (PPP) model

involves the engagement of an entity to finance,

design, construct and (for a fixed term), operate and

maintain the relevant infrastructure. A simplified

typical PPP structure, assuming a single Operation

and Maintenance (O&M) Contractor, is illustrated in

Figure 1 below:

Agency

Lease

Project Deed

Special

Purpose

Vehicle

D&C Contract

Guarantees

D&C Contractor

Side Deeds

O&M Contract

Joint Venture Agreement

Subcontracts similar to D&C

Operations and

Maintenance

Contractor

Consultation Outcomes Report | 11


An inherent characteristic of a PPP model is that it

results in a significant transfer of the risk of price certainty

and on time delivery to a third party contractor.

Arguably, the ability to transfer risk under the PPP

model is greater than under other models as the contractor

in the PPP model is also putting its ownership

equity at risk (rather than just capped damages).

The main distinction between the D&C model and

the PPP model is that ownership, operation and

maintenance of the assets will reside with the

Agency under the D&C model and with the contractor

under a PPP model.

Figure 2: Typical D&C Structure

Design Package

Design &

Construction

Package 1

Design &

Construction

Package 2

Principal

D&C Contract

D&C Contractor

Joint Venture Agreement

(if applicable)

Construction

Package 1

Construction

Package 3

The Design and Construct (D&C) model involves

the engagement of a contractor to design and

construct the project for a lump sum price. In some

cases this is extended to require the contractor to

operate and maintain the project (for a period) on an

agreed remuneration basis.

A typical D&C Structure (excluding operation and

maintenance obligations) is illustrated in Figure 2

below:

Construction

Package 2

Construction

Package 4

In-House

Resources

12 | Consultation Outcomes Report

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An inherent characteristic of a D&C model is that

it results in a significant transfer of the price and

delivery risk to a third party contractor. This in turn

provides a significant incentive for that contractor to

deliver on time and on budget. The main distinction

between the D&C model and the PPP model is that

ownership operation and maintenance of the infrastructure

will reside with the Agency under the D&C

model and with the contractor under a PPP model.

A further characteristic of the D&C model is that it

does not offer the flexibility of the Alliance model for

continued design refinement by the Agency during

development of the project. In addition, the transfer

of risk and liability under the D&C model is less than

under the PPP model (with the contractor’s liability

being inevitably capped as opposed to an equity risk

under a PPP model).

Figure 3: Typical Alliance Structure

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Designer

Agency

(as participant)

Constructor

Agency

(as client)

Alliance

Agreement

The Alliance model is an agreement focussed on

process as much as on outcomes and involves the

engagement of designers, construction contractors

and other service providers to work together with the

principal to deliver the project on a cost reimbursable

basis with some performance incentives. The

Alliance model is generally only used to deliver

larger, more complex and high-risk infrastructure

projects, particularly when the project has risks that

cannot be adequately defined or measured in the

business case or prior to tendering.

A typical Alliance structure is illustrated in Figure 3

below:

System

Provider

Alliance Management Team

Alliance Leadership Team

Operator

Maintainer

Alliance contracts are typified by:

collective governance;

collective responsibility for delivery; and

arguably, the sharing of risks, albeit that the

Principal ultimately carries almost all risks.

The commercial framework for alliance style contracts

are usually cost reimbursable with part (or all)

of the contractor’s margin at risk.

Consultation Outcomes Report | 13


4 Consultation

Two series of interactive sessions were held with

private and public sector stakeholders.

The initial sessions were held on 24 and 25 January

2012 and the subsequent sessions on 20, 21 and 22

February 2012.

The initial sessions were focussed on obtaining the

views of what are the factors that drive efficient procurement.

The subsequent sessions were focussed

on the interpretation and consolidation of those

factors and the development of time metrics.

The interactive stakeholder sessions separately

engaged senior representatives of a range of:

Australian based local and international

contractors and constructors;

Australian based financial advisers, arrangers

and funders;

Australian State Government infrastructure

procurement and delivery agencies; and

State and Commonwealth central government

funding agencies.

Participants in the sessions are listed in Attachment 3.

The discussions within the sessions were generally

related to Procurement Phases, namely:

the Pre-Procurement Phase prior to the formal

engagement of industry participants;

the Expression of Interest (EOI) Phase being

the formal process of selection of entities to

submit a proposal for a project;

the Request for Proposal (RFP) Phase being

the process of preparation of proposals in

response to a formal request; and

the Evaluation / Finalisation Phase being the

process of selecting a proposal and a proponent

to deliver the relevant works and services

and culminating in execution of a Contract.

The Procurement Phases are more particularly

described in the Terminology in Attachment 1.

Particular discussions related to all Procurement

Phases.

The primary outcome of the initial interactive sessions

was the development of a schedule of features

that the participants identified as those which “drive

efficient procurement”. Prior to the subsequent sessions,

these features were reviewed and categorised

in terms of relevance to particular procurement

phases, and issued to participants.

Three subsequent Interactive sessions were held on

20, 21 and 22 February 2012. Participants in these

subsequent sessions are also listed in Attachment 6.

The purposes of these sessions were to:

challenge, modify and better define the

nominated efficiency features;

identify, discuss and test activity durations

which were considered to generate efficiency;

review the contribution against international

experience; and

generally communicate with stakeholders and

to obtain further feedback.

14 | Consultation Outcomes Report

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5 Efficiency Strategies

Methodology

The major outcome of the interactive stakeholder

sessions was a series of extensive schedules of

efficiency features which the stakeholders viewed as

drivers of efficient procurement. These raw schedules

of features were further reviewed, analysed,

improved and incorporated into a schedule of efficiency

factors. This schedule was also categorised

into the particular Procurement Phase (or Phases) to

which the related. Each efficiency factor (within each

Procurement Phase) was then categorised in terms

of the overall efficiency strategy to which it primarily

contributed. Each efficiency strategy is targeted at a

particular procurement objective.

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Details of the objectives, the efficiency strategies

and the list of relevant efficiency factors (for each

Procurement Phase) are included as Schedules 1 to

5 in Attachment 4 and are summarised in the following

sections of this part 4.

Consultation Outcomes Report | 15


Overall Procurement Process Efficiency Strategies

The Efficiency Strategies, the Procurement Objectives and the overview of the Efficiency Factors developed

for the Overall Procurement Process are described below.

Efficiency Strategy

Develop and implement an effective procurement strategy and develop and

continuously improve procurement planning for each Procurement Phase.

Procurement objective The procurement process is effective and is designed to ensure delivery of the Project objectives.

Summary of the efficiency

factors detailed in Attachment 4

Efficiency Strategy

Procurement objective

Summary of the efficiency

factors detailed in Attachment 4

Efficiency Strategy

Development, implementation and improvement of a robust plan throughout all Procurement Phases

is a key element of efficient procurement. The identified efficiency factors relate to:

fully understanding the project;

understanding and responding to the market capability and conditions, including considering

feedback from communications processes;

comprehensively coordinating and managing Government, stakeholder’s issues and interfaces,

including those within the Agency;

managing issues and risks which affect project outcomes, including interfaces, planning and

access;

ensuring the appropriate capability and processes are employed by the Agency; and

providing consistency of approach within jurisdictions and with similar projects.

Communicate with stakeholders in respect of relevant aspects of the procurement

strategy and implement the procurement process in accordance

with the advised information.

All relevant parties (including potential participants and providers, Government agencies and the

sponsor Agency) clearly understand and can rely on the information provided relating to the project

and to the procurement process.

Accurate and reliable communications are necessary to enable potential participants to plan their

involvement in the procurement process and for Government agencies (including the sponsor

Agency) to align in respect of the project issues and processes.

The identified efficiency factors relate to:

developing and implementing an effective communications strategy;

doing all things necessary to undertake the procurement in accordance with the communicated

information; and

providing early and accurate advice in respect of any departures from the advised processes.

Identify, engage and maintain an appropriately skilled, resourced, structured

and managed team at all Procurement Phases.

Procurement objective All parties have confidence in the Procurement team capability and in the procurement process.

Summary of the efficiency

factors detailed in Attachment 4

An effective and experienced procurement team is necessary to ensure certainty of delivery of

procurement outcomes. The identified efficiency factors relate to:

relevant experience, expertise and capacity;

leadership and leadership support;

project management capability;

relationships and process management within Government;

appropriate committed management budgets; and

clear accountabilities and responsibilities.

16 | Consultation Outcomes Report

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Pre-Procurement Phase Efficiency Strategies

The efficiency strategy, the procurement objectives and the overview of the efficiency factors developed

for the pre-procurement process are described below.

Efficiency Strategy

Procurement objective

Summary of the efficiency

factors detailed in Attachment 4

Efficiency Strategy

Procurement objective

Summary of the efficiency

factors detailed in Attachment 4

Efficiency Strategy

Provide potential participants with sufficient, accurate and timely information

before the EOI Phase to enable them to:

understand the project requirements;

assess their appetite for the project;

identify and select participants; and

determine roles and responsibilities for the participants.

Prior to the EOI phase, potential participants are able to make informed decisions and implement

appropriate arrangements to optimise their opportunity to become the successful Proponent.

Potential participants require sufficient, accurate and timely information to effectively plan their

involvement in a project. The identified efficiency factors relate to:

identification of appropriate entities for communication;

the availability of the information; and

the relevancy of the information.

Ensure that the project structure, scope and character aligns with market

capabilities, capacity and appetite and is attractive to (and readily able to be

delivered by) a number of potential proponents.

The project and the procurement process attracts and promotes competition from a number of suitable

capable entities and optimises the ability of proponents to provide comprehensive Proposals.

Competition will be enhanced by designing the procurement process to align with the strengths of

potential participants. The identified efficiency factors relate to:

understanding the character of the potential participants;

understanding and responding to the Project scope and risks; and

designing procurement to align Project requirements with market characteristics.

Resolve known avoidable issues prior to such issues adversely impacting

the pre-procurement program.

Procurement objective Minimise standby costs for potential participants prior to the EOI Phase.

Summary of the efficiency

factors detailed in Attachment 4

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Avoidable delays result in additional holding costs to potential participants. The identified Efficiency

Factors relate to:

effective management and review processes;

delivery of the procurement process in accordance with the program;

resolution of issues within Government; and

resolution of project interfaces.

Consultation Outcomes Report | 17


EOI Phase Efficiency Strategies

The efficiency strategies, the procurement objectives and the overview of the efficiency factors developed

for the EOI phase are described below.

Efficiency Strategy

Procurement objective

Summary of the efficiency

factors detailed in Attachment 4

Efficiency Strategy

Procurement objective

Summary of the efficiency

factors detailed in Attachment 4

Efficiency Strategy

The EOI process, including the evaluation methodology, is designed to

provide alignment between the EOI response and the project objectives.

The selection of those EOI respondents which are most likely to submit proposals which have the

greatest certainty of delivery of the project objectives.

Delivery of the project objectives is likely to be more certain if the selection of proponents is directly

aligned with those objectives. The identified efficiency factors relate to:

alignment between project objectives and EOI evaluation criteria;

alignment between criteria and information required in EOI responses;

alignment of evaluation methodology with criteria measurement method; and

evaluation in accordance with the methodology.

The EOI documents contain relevant information to enable potential participants

to understand the project requirements, the procurement process and

the issues affecting the submission and evaluation of EOI responses.

The potential participants have sufficient relevant information to enable them to effectively develop

their Project strategy and inform the development of EOI responses.

The Agency and the project will benefit if appropriate and accurate details are included in the EOI

documents to enable participants to optimise their proposals. The identified efficiency factors

relate to:

a comprehensive description of the project requirements;

a description of the EOI process including the evaluation methodology; and

clear protocols applicable to the Agency and respondents.

The EOI Phase is undertaken in accordance with the information advised

to potential participants and the evaluation of EOI responses and the

announcement of the selected Proponents is undertaken in the shortest

practical time.

Procurement objective The potential participants do not suffer avoidable delays or wasted effort during the EOI Phase.

Summary of the efficiency

factors detailed in Attachment 4

Potential participants are exposed to additional cost and resource inefficiency if processes are

unnecessarily delayed. The identified efficiency factors relate to:

recognition of the effects of delay;

effective planning and management to avoid delay; and

early advice to potential participants if a delay emerges.

18 | Consultation Outcomes Report

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Efficiency Strategy

The EOI Response is required to include only information which materially

differentiates between proponents and the EOI program is designed to

minimise standby time.

Procurement objective The effort and cost of preparing an EOI response is reasonably minimised.

Summary of the efficiency

factors detailed in Attachment 4

Efficiency Strategy

Procurement objective

Summary of the efficiency

factors detailed in Attachment 4

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Participant’s costs are minimised if response information is sensibly minimised and waiting time for

subsequent Agency communication is minimised. The identified efficiency factors relate to:

an effective program incorporating feedback;

sensibly minimising the unique effort required for the response; and

minimising publication and submission costs.

Select the reasonable minimum number of proponents (selected from the

EOI process) to submit proposals.

Minimise the overall total cost of procurement to potential participants and maximise the appetite of

participants.

The overall cost to industry of preparing a proposal is minimised, and a proponent’s appetite (and

willingness to commit effort to the proposal preparation) is encouraged by selection of the reasonable

number of proponents. The identified efficiency factors relate to:

the creation and retention of competition; and

considerations in relation to the selection of more or less than three proponents.

Consultation Outcomes Report | 19


RFP Phase Efficiency Strategies

The efficiency measures, the procurement objectives and the overview of the efficiency factors developed

for the RFP Phase are described below.

Efficiency Strategy

When designing the commercial terms, the Agency has fully considered the

cost consequences against the benefits of those commercial terms.

Procurement objective The commercial terms prescribed in the RFP represent value for money.

Summary of the efficiency

factors detailed in Attachment 4

Efficiency Strategy

To receive proposals which represent value for money (particularly in terms of best satisfying the

project objectives), the Agency must take reasonable steps to ensure that the transfer of risks justifies

the cost of doing so. The identified efficiency factors are related to:

consistency with prior projects and precedent documents;

market capability and appetite for risk;

considerations for risk allocation and the cost of uncertainties;

considerations for commercial terms; and

linking performance with payments in the Contract.

The RFP process is delivered in the manner and to the program advised

to Participants, without causing or exacerbating unplanned delays or

wasted effort.

Procurement objective Proponents are able to effectively plan and manage the development of Proposals.

Summary of the efficiency

factors detailed in Attachment 4

Efficiency Strategy

The proponent’s efforts and expense to submit a proposal is reasonably minimised if the RFP

process is well documented and well executed. The identified efficiency factors relate to:

comprehensive information in the RFP document;

process delivery in accordance with the RFP document; and

any changes are advised as early as practicable.

The project and proposal requirements are clearly and unambiguously

stated in the RFP documents (and, where appropriate, Agency interactive

sessions are provided) to enable proponents to develop effective and

competitive solutions and optimise their proposals.

Procurement objective Complete and competitive proposals are received from each proponent.

Summary of the efficiency

factors detailed in Attachment 4

To receive proposals which represent value for money (particularly in terms of best satisfying the

project objectives), the Agency must take all reasonable steps to ensure that Proponents are able to

clearly understand the project requirements and the proposal requirements. The identified efficiency

factors relate to:

documentation which address material aspects of the project;

clear definition of proposal requirements;

interactive RFP processes; and

preservation of competition.

20 | Consultation Outcomes Report

VOLUME 2


Efficiency Strategy

The RFP document provides sufficient information to enable proponents to

understand how proposals will be evaluated, to enable proponents to better

understand the Agency’s view on relative value and, consequently, to enable

proponents to optimise their proposals.

Procurement objective Proponents are able to fully understand the Proposal evaluation methodology.

Summary of the efficiency

factors detailed in Attachment 4

Efficiency Strategy

Procurement objective

Summary of the efficiency

factors detailed in Attachment 4

Efficiency Strategy

Clarity of the proposal evaluation methodology will assist proponents to make informed value decisions

in the preparation of proposals. The identified efficiency factors relate to providing details of

the evaluation methodology in the RFP document.

The RFP is designed and structured to facilitate proposal evaluation and to

enable the incorporation of particular aspects of the successful proposal

into the Contract.

Proposals are readily able to be evaluated and the Contract is readily able to be finalised with the

selected proponent.

All aspects of a proposal which could represent relative value must be able to be readily recognised

and evaluated, aspects of a proposal which represent uncertainty must be able to be readily

resolved and the resolution of those aspects (of both value and uncertainty relevant to the selected

proposal) must be able to be readily incorporated in the Contract. The identified efficiency factors

relate to:

alignment between the form of RFP returnable schedules and the contract structures (to accommodate

the information in returnable schedules);

clarity of how separate evaluation streams contribute to the evaluation;

alignment between specific evaluation criteria and specific returnable schedules; and

centralised issue management for RFP document preparation.

The Agency’s overall approach to the RFP process (including the prescribed

Proposal requirements) is reasonable for the project and recognises (and

sensibly responds to) the cost and effort for proponents to submit proposals.

Procurement objective As far as is practicable, the overall proposal effort and costs to proponents are reasonably minimised.

Summary of the efficiency

factors detailed in Attachment 4

VOLUME 2

The proponent’s efforts and expense to submit a proposal is reasonably minimised if the RFP process

is designed to avoid unnecessary, duplicated or immaterial activities. The identified efficiency

factors relate to:

minimising hardcopy publishing and limiting document size;

requirements being material and similar to prior projects;

considerations in respect of bid cost reimbursement; and

the quality and capability of the procurement team.

Consultation Outcomes Report | 21


Efficiency Strategy

Procurement objective

Summary of the efficiency

factors detailed in Attachment 4

Efficiency Strategy

Procurement objective

Summary of the efficiency

factors detailed in Attachment 4

Efficiency Strategy

The proposal requirements in respect of design, delivery and services are

limited to require only that information necessary to ensure delivery of the

project objectives and the proposal requirements recognise (and sensibly

respond to) the proponent’s cost and effort to submit proposals.

As far as is practical, the effort and costs for the technical (design, delivery and service) aspects of

proposals are reasonably minimised.

The proponent’s efforts and expense to submit a proposal is reasonably minimised if the RFP technical

requirements avoid unnecessary or immaterial requirements. The identified efficiency factors

relate to:

alignment of RFP technical requirements with certainty of delivery of the project objectives;

sensibly limiting the technical documentation to that which is material;

sensibly limiting option pricing; and

the potential for technical submissions prior to the proposal closing date.

The proposal requirements, in respect of financial and commercial aspects,

are necessary to deliver the project objectives and recognise (and sensibly

respond to) the cost and effort of proponents to submit proposals.

As far as is practical, the effort and costs for financial and commercial aspects of proposals are

minimised.

The proponent’s efforts and expense to submit a proposal is reasonably minimised if the commercial

and financial requirements avoid unnecessary or immaterial requirements. The identified efficiency

factors relate to:

the necessity for fully documented commercial terms;

mechanisms to minimise the unique effort associated with the suite of commercial and financial

documents for PPP projects;

recognition and response to the uncertainties related to validity periods;

the opportunity for early submissions in relation to commercial terms; and

the issues arising from partial ‘due diligence’ by proponents.

During the RFP Phase, the Agency has resolved all evaluation issues and

concluded all evaluation and finalisation planning.

Procurement objective The Evaluation / Finalisation period is reasonably minimised and not avoidably prolonged.

Summary of the efficiency

factors detailed in Attachment 4

Avoidable delays result in additional holding costs for proponents. the identified efficiency factors

relate to:

effective management and review processes;

delivery of the process in accordance with the program; and

effective issue resolution with proponents and within Government.

22 | Consultation Outcomes Report

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Evaluation/Finalisation Phase Efficiency Strategies

The efficiency strategies, the procurement objectives and the overview of the efficiency factors developed

for the Evaluation/Finalisation Phase are described below.

Efficiency Strategy

Procurement objective

Summary of the efficiency

factors detailed in Attachment 4

Efficiency Strategy

Procurement objective

Summary of the efficiency

factors detailed in Attachment 4

VOLUME 2

The Evaluation/Finalisation process enables effective:

assessment of the relative value of each proposal;

resolution of material uncertainties in respect of proposals; and

in the case of the selected proposal, inclusion of the relative value and

the resolution of uncertainty in the Contract.

The selection of the proposal which best delivers the project objectives and execution of a Contract

which captures the value of that proposal.

All aspects of a proposal which represent relative value must be readily recognised and evaluated,

aspects of a proposal which represent uncertainty must be readily resolved and the resolution of

those aspects (of both value and uncertainty relevant to the selected proposal) must be incorporated

into the Contract. The identified efficiency factors are related to:

effective issue recognition, management and resolution;

validity periods;

preservation of competition;

evaluation in accordance with the RFP; and

option evaluation and proposal consolidation.

The Evaluation/Finalisation process is undertaken fairly, with competence and

in accordance with the methodology advised to proponents and stakeholders.

Government, the Agency, the proponents and other stakeholders have confidence that proposals will

be comprehensively and fairly evaluated.

Stakeholders will have greater appetite for effort and expenditure commitments if there is certainty

that the evaluation of proposals will be effectively planned, managed and delivered in accordance

with the RFP and other advice. The identified efficiency factors are related to:

evaluation planning and communication of evaluation methodology;

funding, management and coordination of evaluation;

the skills and capability within the evaluation team; and

early advice for process or program changes.

Consultation Outcomes Report | 23


Efficiency Strategy

The Evaluation/Finalisation process is:

undertaken in the reasonable minimum time;

requires the reasonable minimum effort by proponents; and

releases (or suspends) proponents from further involvement at the

earliest practicable time.

Procurement objective The effort and cost to proponents during the Evaluation/Finalisation Phase is reasonably minimised.

Summary of the efficiency

factors detailed in Attachment 4

The proponent’s effort and expense to support the evaluation and finalisation of a proposal will be

reasonably minimised if the Evaluation/Finalisation process recognises and, where practicable,

addresses aspects where proponent commitment to effort and expenditure can be reduced. The

identified efficiency factors are related to:

effective evaluation planning, resourcing, management and delivery;

early resolution of potential delay issues;

recognition of issues which incur proponent costs;

the number and character of proponents retained through to finalisation; and

the activities required of proponents through to finalisation.

24 | Consultation Outcomes Report

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6 Time Metrics

Framework

The consultation process identified numerous time

related factors which were considered to ‘drive

efficient procurement’. It was unanimously recommended

that the timing of procurement activities

be planned in consultation with potential project

participants. The session participants identified durations

and timing (time metrics) which enable potential

project participants to most effectively and efficiently

participate in the procurement of major projects.

VOLUME 2

The time metrics identified in this section are

expressed as a range in response to the differences

between complex and typical projects. For the

purpose of these time metrics:

more complex means a project value in excess

of $1000M for D&C or over $2000M for PPP,

requiring multiple participants, incorporating

specialist skills and/or involving international

participants; and

less complex means a project value in the

order of $200M for D&C or Alliance or $1000M

for PPP, necessary skills and capability likely

to be within single entity capability for Alliance

and D&C and/or unlikely to involve international

participation.

It was recognised that PPP Projects valued at

$2000M to $5000M are unique and require the

development of specific market engagement and

procurement processes.

Consultation Outcomes Report | 25


Pre-Procurement Phase Time Metrics

The proposed time metrics and the purposes of the Pre-Procurement Phase are as follows.

Activity

Initial advance notice

of project and market

engagement

Commence the market

interaction with specific

Notice of likely scope,

value, roles, contract

models and packaging.

Formal discussions,

specific project details

advised in terms of

scope, contract models,

risk, value, turnover,

roles, timing, Agency

objectives.

Time Metrics

(more complex to less complex)

D&C PPP Alliance

12 to 6 months

before issue of

EOI

6 to 2 months

before issue of

EOI

2 months before

issue of EOI

24 to 9 months

before issue of

EOI

12 to 6 months

before issue of

EOI

3 months before

issue of EOI

12 to 6 months

before issue of

EOI

6 to 2 months

before issue of

EOI

2 months before

issue of EOI

Purposes of Time Metrics

For potential participants to:

plan involvement; and

consider and plan partnerships.

For Agency to:

ensure participant awareness; and

obtain early potential participant feedback.

For potential participants to:

improve understanding of Project;

formulate EOI Respondent participants; and

provide feedback to Agency.

For Agency to:

commence the planned interaction with

potential participants;

obtain confirmation of market appetite; and

consider and respond to participant feedback.

For potential participants to:

confirm Project scope and responsibilities;

finalise participants and participant relationships;

and

confirm appetite and develop strategy.

For Agency to:

formalise the conversation with potential

participants;

respond to market issues and participant

advice; and

monitor market appetite and capability.

26 | Consultation Outcomes Report

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EOI Phase Time Metrics

The proposed time metrics and the purposes of those time metrics for the EOI Phase are as follows.

Activity

EOI preparation

Evaluation of EOI

responses

Alignment sessions and

evaluation workshops

Approval of evaluation

outcomes

Issue of RFP documents

VOLUME 2

Time Metrics

(more complex to less complex)

D&C PPP Alliance

6 to 4 weeks

(from release of

EOI document

to submission of

EOI responses)

assuming

effective Pre-

Procurement

activities

3 weeks

duration

- -

1 week (from

completion of

evaluation to

notice of selectedrespondents)

4 to 2

weeks after

announcement

of EOI evaluation

outcomes

8 to 6 weeks

(from release of

EOI document

to submission of

EOI responses)

assuming

effective Pre-

Procurement

activities

4 to 3 weeks

duration

2 weeks (from

completion

of evaluation

to notice of

selected respondents)

4 to 2

weeks after

announcement

of EOI evaluation

outcomes

4 to 3 weeks

(from release of

EOI document

to submission of

EOI responses)

assuming

effective Pre-

Procurement

activities

3 weeks

duration

4 to 3 weeks

duration

1 week (from

completion

of evaluation

to notice of

selected respondents)

4 to 2

weeks after

announcement

of EOI evaluation

outcomes

Purposes of Time Metrics

For potential participants to:

have sufficient time to effectively respond; and

minimise resources standby

For Agency to:

have sufficient time to assess teams and finalise

evaluation.

For EOI respondents to have:

reasonable minimum time to limit standby of

participants.

For Agency to have:

sufficient time to properly evaluate Response.

For EOI respondents to have:

reasonable minimum time to limit standby of

participants.

For Agency to have:

sufficient time to assess teams and finalise

evaluation.

For EOI respondents to have:

reasonable minimum time to limit standby of

participants.

For Agency to have:

sufficient time to assess teams and finalise

evaluation.

For Selected EOI respondents to have:

sufficient time to organise and commit RFP

resources; and

reasonable minimum time to limit standby of

participants.

Consultation Outcomes Report | 27


RFP Phase Time Metrics

The proposed time metrics and the purposes of those time metrics for the RFP Phase are as follows.

Activity

Duration of RFP period.

Duration of interactive

process.

Latest time for material

changes (time, cost,

risk) issued in Addenda

Latest time for

minor changes

(clarification without

material impacts)

issued in Addenda

Latest issue of marked

up project documents

to proponents following

specific early proponent

submissions (i.e.

Deed) during the RFP

preparation.

Time Metrics

(more complex to less complex)

D&C PPP Alliance

12 to 16 weeks

to 8 to 12 weeks

(from issue of

RFP documents

to submission of

proposals)

8 to 4 weeks

(from issue of

RFP)

6 weeks before

RFP close

4 weeks before

RFP close

6 weeks before

RFP close

24 to 18 weeks

(from issue of

RFP documents

to submission of

proposals) and

up to 34 weeks

for ‘unique

projects’ – subject

to market

feedback

20 to 10 weeks

(from issue of

RFP)

12 weeks before

RFP close

9 to 8 weeks

before RFP

close

12 weeks before

RFP close

12 to 8 weeks

(from issue of

RFP documents

to submission of

proposals)

6 to 4 weeks

(from issue of

RFP)

4 weeks before

RFP close

2 weeks before

RFP close

2 weeks before

RFP close

Purposes of Time Metrics

For proponent to have:

sufficient time to develop the full proposal.

For Agency to have:

reasonable minimum time to receive proposal.

For proponents to have:

sufficient opportunity to maximise Project

knowledge.

For Agency to have:

sufficient opportunity to align Proposals with

Agency objectives.

For proponents to have:

sufficient time to accommodate change in

Proposal.

For proponents to have:

sufficient time to accommodate change in

Proposal.

For proponents to have:

sufficient time to consider and assess position

for the proposal.

28 | Consultation Outcomes Report

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Evaluation/Finalisation Phase Time Metrics

The proposed time metrics and the purposes of those time metrics for the Evaluation/Finalisation Phase are

as follows.

Activity

Earliest technical

submissions

Duration of Evaluation

Duration of Finalisation

Approval duration

Approval to Financial

Close

VOLUME 2

Time Metrics

(more complex to less complex)

D&C PPP Alliance

4 to 2 weeks

before RFP

close

6 to 4 weeks

from submission

close to

selection

3 weeks from

selection to final

documentation

(assuming all

material issues

are resolved)

2 weeks

duration

-

8 to 4 weeks

before RFP

close

12 to 8 weeks

from submission

close to

selection

4 weeks from

selection to final

documentation

(assuming all

material issues

are resolved)

2 weeks

duration

10 to 6 weeks

duration

3 to 1 week

before RFP

close

4 to 2 weeks

from submission

close to selection

(assuming

TOC’s are

acceptable)

3 weeks from

selection to final

documentation

(assuming all

material issues

are resolved)

2 weeks

duration

-

Purposes of Time Metrics

For proponent it should be:

sufficiently late to enable design and delivery

strategies to be sufficiently certain.

For Agency to:

enable early commencement of technical

evaluation.

For proponents to have:

reasonable minimum time to limit standby.

For Agency to have:

reasonable time to undertake evaluation.

For proponents to have:

reasonable minimum time to limit standby.

For Agency to have:

sufficient time to resolve issues.

For proponents to have:

reasonable minimum time to limit standby.

For Agency to have:

reasonable minimum time to obtain approvals.

For proponents to have:

sufficient time to effect financial close (dependent

upon market).

For Agency to have:

reasonable minimum to ensure timely Project

commencement.

Consultation Outcomes Report | 29


7 Review of

Contributions

The review of contributions identified that all

participants essentially agreed that efficiency would

improve if:

a pipeline of PPP projects is developed and

committed to by Governments; and

Procurement timing and processes are certain.

The review of contributions revealed significant

differences in views in respect of:

design effort for PPP and D&C Proposals;

the extent to which PPP proposals are underwritten;

and

evaluation / finalisation with multiple

proponents.

The resolution of these differences is discussed

further in this section.

Pipeline of Projects

The private sector sponsor and financier participants

advised that the ‘one off’ nature of PPP

projects in Australia made it difficult for sponsors

and financiers to permanently support a sustainable

PPP business. Consequently, the cost and effort for

PPP proposals was greater (and the appetite less)

than would otherwise be the case. The sponsors

and financiers expressed the view that to create

and maintain an efficient and sustainable PPP

market, a planned pipeline of projects was essential.

Reference was made to the efficiencies and

sustainability effects created by longer term PPP

program planning in other countries, particularly

UK and Canada. Although this is not an efficiency

strategy in relation to procurement of a particular

project, it was considered to be an important overall

consideration for Agencies and Governments. In

response to this issue, the following objective and

strategy is proposed.

Program Objective Developed, sustainable and competitive PPP providers in Australia.

Program Efficiency Strategy

Long term, coordinated PPP programs of projects are developed, committed

to and implemented by Government and Agencies.

30 | Consultation Outcomes Report

VOLUME 2


Common Views

Notwithstanding the range of perspectives of the

participants, the efficiency factors developed in

the interactive stakeholder sessions were largely

consistent. In particular, the stakeholder groups

held common views in respect of the needs for

Agencies to:

acquire specific knowledge, and expert

resources for procurement;

design procurement to align with market

capability, capacity and appetite;

undertake comprehensive procurement

planning, in consultation with the market, and

communication of accurate and sufficient

project and procurement details;

provide early resolution of approval processes,

Government/Agency issues and project

interfaces;

reasonably minimising requirements for nonmaterial

documentation;

provide early resolution of risks and minimising

delays and changes during the procurement

process; and

establish appropriate time metrics for the

procurement processes.

Differences in Views

There were only limited, but significant, issues of difference

between the participant group contributions.

The differences related to:

the design effort for D&C and PPP proposals;

the extent to which PPP proposals are underwritten

at the time of submission; and

the evaluation/finalisation process with

multiple proponents.

While each of these differences are discussed

below, the outcomes developed in the interactive

sessions are incorporated in the efficiency strategies

and efficiency factors identified in this Report.

VOLUME 2

D&C Design

Participants stated that design costs represent

approximately 75 per cent of the PPP Proposal

preparation costs and represent a greater proportion

of D&C proposal preparation costs.

While all stakeholders endorsed a reasonable minimum

approach to proposal requirements relating to

Contractor systems, project plans and the like, the

construction delivery stakeholders expressed the

view that in many cases, sponsor agencies specified

extensive design requirements to be submitted

with proposals. These participants proposed that

the extent of the proposal design should be at the

discretion of the constructor, and only to the extent

necessary to develop the pricing for proposal.

Both Government Delivery Agency participants

and private sector project sponsors and financiers

expressed the view that sufficient design was necessarily

required to ensure that the proposed solution:

would comply with the project requirements;

could be built for the price; and

elements which represent value or commitment

could be captured in a future Contract.

On this basis, the session participants suggested

that Agencies should:

require only material design elements to be

included in a proposal; and

consider a contribution to proposal costs

where design obligations were particularly

onerous.

It was noted that in some jurisdictions, including

Canada, PPP proponents had been required to

include a specified amount to contribute to proposals

costs of unsuccessful proponents.

Consultation Outcomes Report | 31


PPP Commitment Levels

In the initial interactive sessions with private sector

sponsors and financiers, views were expressed that

the Agency requirements for ‘fully underwritten’ and

‘fully committed’ PPP proposals were unreasonable.

In contrast, the Delivery Agency and Central

Government experience was that ‘fully underwritten’

and ‘fully committed’ Proposals were necessary for

evaluation and (ultimately) for Contract certainty.

These differences of opinion were discussed

in some detail in the subsequent sessions. The

outcome of the discussions was that:

Agencies should give consideration to the

market capacity and should take steps,

including non-exclusivity requirements and

the like, to ensure funding availability to enable

financing certainty:

full resolution of commercial and financial

terms (in the form of the Project Deed and

other primary documents) are essential to all

parties, however Agencies should give consideration

to ‘term sheets’ (at the time of proposal

submission) in respect of the secondary

arrangements and documentation;

Agencies should maximise the use of

precedent document structures and precedent

commercial arrangements to minimise unique

activities; and

while complete proponent ‘due diligence’ is

desirable for proposal submission particularly

where patronage risk is with the proponent,

Agencies should consider allowing partial

due diligence to be completed where the

outstanding risks to the Proposal value and to

outcome certainty are not material.

Evaluation/Finalisation of Multiple

Proponents

A significant discussion item related to the practice

by Agencies to require multiple proponents to progress

to finalisation of documentation. In response to

this issue, the private sector participants recommend

that the Agencies:

select a preferred proponent as soon as

practicable into the evaluation process;

suspend or terminate further evaluation of the

other proponents; and

engage the selected proponent in the finalisation

process, with the knowledge that if that

process fails, then a reserve proponent be

reengaged.

However, the experience of the Agency and

Government participants has been that retained

competition, in the form of multiple proponents, is

necessary to ensure the timely resolution of uncertainties

and to ensure the retention and capture of

the value of the selected proposal in the Contract.

While this difference was not resolved between the

parties, it was generally accepted that the Agency

should:

recognise the costs to proponents to support

the evaluation and finalisation of a proposal;

sensibly minimise effort, costs and delays to

proponents; and

suspend evaluation and finalisation of unlikely

proposals as soon as is sensible to do so.

32 | Consultation Outcomes Report

VOLUME 2


Attachment 1

Terminology


Term Description

Agency

Alliance

Contract

Contract Models

D&C

EOI

EOI Phase

EOI response

Evaluation/Finalisation Phase

PPP

Means the sponsor agency charged with responsibility for project

procurement and is the counterparty to the Contractor under the

Contract.

Means the contract model of that name, more particularly

described in Attachment 2.

Means the arrangement between the Agency and the Contractor

for the Contractor to provide works and/or services.

Means Alliance, Public Private Partnership (PPP) and Design and

Construct (D&C).

Means the contract model titled Design and Construct, more

particularly described in Attachment 2.

Means the formal invitation issued to potential Contractors which

advises information related to the expression of interest (EOI)

Phase and information required in the EOI response.

Means the expression of interest phase, which generally:

commences with formal notification to invite potential

Contractor’s to respond to the Agency in respect of a proposed

Contract for works and for services;

involves the submission of responses from potential

Contractor’s which seek to be selected to submit a proposal in

respect of the proposed Contract;

culminates in a number of proponents being selected to submit

proposals in respect of the proposed Contract; and

is finalised when notification and de-briefings are completed

for proponents and for the non-selected potential Contractors.

Means the response submitted by a potential Contractor pursuant

to the EOI.

Means:

in the case of Alliance, the evaluation and finalisation phase

which:

- commences with receipt of Proposals by the Agency;

- involves evaluation of Proposals and selection of one or

two more proponents to submit a Target Outturn Cost;

- involves resolution of commercial terms and selection of a

Contractor;

- culminates in the execution of the Contract and debriefing

proponents;

in the case of D&C and PPP, the evaluation and finalisation

phase which:

- commences with receipt of proposals by the Agency;

- involves evaluation of proposals and selection of

one or more proponents to progress to full Contract

documentation;

- culminates in the execution of the Contract and debriefing

proponents; and

- is finalised when conditions precedent (if any) are satisfied

(including, in the case of a PPP Contract, achievement of

financial close).

Means the contract model titled Public Private Partnership, more

particularly described in Attachment 2.

Pre-Procurement Phase Means the period prior to the EOI Phase.

34 | Consultation Outcomes Report

VOLUME 2


Term Description

Procurement

Procurement Phases

Project

Proponent

Proposal

Respondent

RFP

RFP Phase

VOLUME 2

Means the process of engaging a Contractor under a Contract to

perform works and/or services.

Means the:

Pre-Procurement Phase;

EOI Phase;

RFP Phase; and

Evaluation and Finalisation Phase.

Means the entire project which, under the Contract, is required to

deliver the required works and/or services and/or functions, and

which may involve a number of separate Contracts.

Means the participant or participants which submit a Proposal in

response to the RFT.

Means the proposal submitted by a proponent pursuant to the

Request for Proposal (RFP).

Means the participant or participants which submit an EOI

response.

Means the formal request issued to proponents which advises

information related to the RFP and Evaluation/Finalisation Phases

and which advises the information required in the proposals.

means the Request for Proposal phase which:

commences with notification to the Proponents of their

selection;

involves preparation of Proposals by each Proponent; and

is completed when Proposals are submitted to the Agency.

Consultation Outcomes Report | 35


Attachment 2

Contract Models


Public Private Partnership (PPP)

A Public Private Partnership (PPP) contract is fundamentally

different from the models described below.

Instead of contracting for the provision of a facility

which the Agency will own, the Agency contracts for

a service. The facility is used to provide the service.

Therefore, the Agency’s focus is less on the technical

aspects of the facility, and more on the quality of

the output that the facility provides.

The Agency specifies its high level requirements

for the output. The Agency then appoints the

Contractor to provide the output to meet the

specification. The Contractor designs, constructs,

commissions and operates a facility that will provide

an output to meet the specifications. Often the

Contractor will engage its own separate Design and

Construct (D&C) and Operation and Maintenance

(O&M) subcontractors to deliver the facility. The

facility is transferred to the Agency after a specified

period of time for an agreed price.

The provision of the service is paramount. If there

are changes which affect the provision of the service

(which are not Force Majeure or changes made

by the Agency), the Contractor is responsible for

managing those changes at its cost. If there are

improvements in technology or efficiencies, the

Contractor is incentivised to implement changes at

its own cost, to improve its performance or reduce

its cost and, therefore, increase its profit margin.

The PPP structure usually involves finance provided

by a third party financier. The financier finances

construction of the facility. As the Agency is buying a

service from the Contractor, the Agency usually does

not make any payments to the Contractor until the

Contractor provides that service to the Agency (usually

after commissioning). The funding arrangements

are set at the start of construction, which gives a

known fee as at the date of commissioning. That fee

can vary in accordance with an agreed mechanism

– i.e. to take account changes in the Consumer Price

Index (CPI) – but otherwise does not vary unless the

Agency agrees.

For the provision of an asset, the Agency often pays

the Contractor on a take and/or pay or available

capacity basis. In this way, the Contractor is guaranteed

a monthly payment during operation of the

facility, which it uses to finance repayment of its debt

and to pay its ongoing operating costs, and provide

a return to equity investors.

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The transfer component of this structure can occur

shortly after commissioning (e.g. 5 years) or towards

the middle or end of the life of the facility (10 or

20 years). The timing for transfer will affect the

payment regime, either increasing the payment to

the Contractor to ensure that the debt is repaid by

the time the facility is transferred, or by requiring a

lump sum payment on transfer to cover the debt and

equity contributions that have been made to fund the

facility. Usually, there is a mixture of both of these

elements in the payment regime. If the Agency does

not require ownership of the facility at any stage, it is

not necessary to include a transfer component, and

the debt repayment is structured over the whole of

the operating period.

A performance management component is included

in the payment regime. The Contractor’s performance

measured in key result areas can reduce or

increase the fee that the Contractor is paid.

The structure requires the Agency to enter into

a tripartite agreement with the financiers – and

potentially direct agreement with key contractors

and suppliers of the Contractor.

Both the financiers and the shareholders monitor

the Contractor’s performance to ensure that it is

entitled to receive full payment and is not breaching

the contract. Similarly, financiers will undertake a

comprehensive technical and financial due diligence

on the project prior to advancing funds to the

Contractor necessary for the construction of the

facility. Typically, a financier will appoint an independent

engineer to monitor performance. A reduction

in payment can affect repayment of debt and equity.

A breach of contract which leads to termination

exposes the financiers and equity providers to the

risk of not recovering their investment. The Agency

can use these third party pressures on the Contractor

to its advantage to manage the Contractor.

A PPP is often used for a facility which is able to

be separated from the Agency’s core operations,

allowing the Agency to focus on its core operations

and the quality of the output that it receives from the

facility. A PPP is also used to provide a service that

the Agency does not have expertise in providing. The

PPP structure allows the Agency to focus on whether

its requirements for the provision of a service are

being met. This differs from the structures above

where the Agency owns the facility and so monitors

Consultation Outcomes Report | 37


Figure 4: Typical PPP Structure

Debt 1

Debt 2

Equity 1

Equity 2

Trustee

Guarantees

Side Deeds

how a facility is being operated. The PPP structure

is commonly used by government to take advantage

of private sector innovation and efficiencies and to

bring forward the provision of a service that might

otherwise be delayed due to the unavailability of

government resources.

In addition, under a PPP structure the facility can,

depending on accounting treatment, be off-balance

sheet for project owners.

The PPP structure requires the finance arrangements,

the term and scope of the project to be

agreed and documented upfront. Whilst some

flexibility can be built in, this needs to be raised and

priced in the procurement process and appropriate

Deed of Charge

Agency

Lease

Project Deed

Special

Purpose

Vehicle

D&C Contract

Guarantees

D&C Contractor

Side Deeds

O&M Contract

Joint Venture Agreement

Subcontracts similar to D&C

Operations and

Maintenance

Contractor

provision made in the project documentation. It

should also be noted that the existence of nonrecourse

debt financing also creates significant

unwind costs as other circumstances of contractor

default break costs will, as a minimum, need to cover

outstanding debt.

The PPP project delivery structure involves

significant procurement costs given the level of

documentation required and a longer tendering process

than the other procurement methods described

in this Attachment.

A simplified typical PPP structure is illustrated in

Figure 4.

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Design and Construct (D&C)

The Design and Construct (D&C) model involves the

engagement of a Contractor to design and construct

the project, generally for a lump sum price.

A typical D&C structure is illustrated in Figure 5.

Figure 5: Typical D&C Structure

Design Package

The inherent advantage of a D&C model is that

it results in a significant transfer of the price and

delivery risk to a third party contractor. This in turn

provides a significant incentive for that contractor to

deliver on time and on budget.

The inherent disadvantage of the D&C model is that

it does not offer the flexibility of the Alliance model

for continued design refinement by the Agency during

development of the project.

In summary, the inherent advantages of a D&C

model are that:

it provides comprehensive risk transfer and

price certainty (subject, in the case of risk

transfer, to caps on contractor liability);

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Design &

Construction

Package 1

Design &

Construction

Package 2

Principal

D&C Contract

D&C Contractor

Joint Venture Agreement

(if applicable)

Construction

Package 1

Construction

Package 3

Construction

Package 2

Construction

Package 4

In-House

Resources

it drives performance outcomes to the extent

that such outcomes are defined;

it drives whole of life outcomes only to the

extent that particular standards are prescribed

and measurable;

it requires some management effort during

delivery to ensure whole of life outcomes are

delivered;

it provides single point accountability for all

site activities; and

it requires limited management burden during

delivery and commissioning.

Consultation Outcomes Report | 39


The disadvantages of the D&C model are that:

the project requirements (including interfaces)

must be well defined (and better defined than

under an Alliance delivery model) to enable

contractors to effectively price the works;

there must be comprehensive data to allow

design and construction risks to be priced and

managed;

changes introduced during construction can

create performance risk transfer back to the

client and may be costly to implement;

it does not directly drive whole of life outcomes

because it relies on specified standards to

provide such outcomes;

the D&C model is widely used on civil projects,

including PPPs;

it does not have the same flexibility as the

Alliance model to enable design development

to continue following engagement of the

contractor;

the “front end” procurement process generally

requires significant tenderer design effort;

there must be capability and appetite in the

market to undertake a project of the size and

complexity; and

it may involve the parent of the owner (Agency)

providing a parent company guarantee where

the Agency is not regarded as sufficiently

credit-worthy on a stand alone basis in respect

of its contractual obligations under the D&C

contract. This scope of potential liability under

this guarantee may be significant (i.e. up to the

construction cost under the D&C contract).

Alliance

An alliance is a relationship between the Agencies

and the Contractor (or Contractors) that is intended

to jointly share the risks of project delivery between

the Participants. Customarily, however, the Agency

carries full direct cost risk together with performance

incentive payment obligations. The Participants cost

risks are limited to an apportionment of margins and

unachieved delivery incentives.

Normally, alliancing is used to deliver larger, more

complex and high-risk infrastructure projects.

Projects suitable for delivery as alliances are generally

characterised by one or more of the following

factors, which have been identified by the Victorian

Department of Treasury and Finance (2009):

1. the project has risks that cannot be adequately

defined or measured in the business case or

prior to tendering;

2. the cost of transferring risks is prohibitive;

3. the project needs to start as early as possible

before the risks can be fully identified and/or

project scope can be finalised, and the owner

is prepared to take the commercial risk of a

sub-optimal price outcome;

4. the owner has superior knowledge, skills,

preference and capacity to influence or

participate in the development and delivery

of the project, including for example, in the

development of the design solution and

construction method; and

5. a collective approach to assessing and

managing risk will produce a better outcome,

for example where the preservation of safety to

the public / project is best served through the

collaborative process of an alliance.

The alliance is governed by an Alliance Board, comprising

senior members of each participant, and an

Alliance Management Team, comprising members

of all participants selected on a best for project

basis. The Alliance Board is responsible for strategic

decisions, which must be made unanimously, giving

each participant a right of veto over any decision.

The Alliance Management Team is responsible for

the day to day management of the project. The

structure means that the Agency has a ‘hands on’

involvement in the running of the project, through

its representatives on the Alliance Board and the

Alliance Management Team. In effect, the Agency

has two distinct roles – one as owner of the project

40 | Consultation Outcomes Report

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and the other as a participant in project delivery. A

failure by the Agency to recognise this and perform

accordingly can lead to substandard outcomes.

Under an Alliance, there is a ‘no-blame’ culture

which means that risks are not assigned to any

participant, but are the responsibility of all. If an

issue arises, it must be resolved by all participants

and the cost consequences are essentially carried

by the Agency, with limited financial incentives on

the other participants to perform. This is regardless

of the nature of the risk. The payment regime is used

to crystallise risks, losses and gains and distribute

them amongst all of the members of the Alliance.

An alliance has a ‘no litigation’ requirement. This

means that the participants are not entitled to sue

each other for breach of contract or breach of

other obligations owed to each other. The theory

behind the ‘no litigation’ requirement is that if the

participants do not have an entitlement to sue each

other, they will focus on resolving an issue on a best

for project basis. There are certain exceptions to the

‘no litigation’ requirement, being wilful default, fraud

and criminal activities.

Figure 6: Typical Alliance Structure

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Designer

Agency

(as participant)

Constructor

Agency

(as client)

Alliance

Agreement

Payment is usually on a direct cost plus margin

(overhead and profit) basis, with a pre-determined

budget used to control costs and determine

participant’s share of overruns or savings under the

agreement’s risk/reward regime. Payment is on a

cost incurred and not an earned value basis. The

Contractor participant’s performance against budget

and other key performance indicators is measured,

and alters the Contractor participant’s fee. For

example, a cost overrun will be shared equally

between the participants, thereby reducing the

Contractor participant’s fee. The Contractor will usually

a require a limit on the extent of the reduction to

its fee. That limit usually equates to the Contractor’s

profit margin and, sometimes, its overhead margin.

The limit means that the Contractor may only recover

its costs of performance. However, beyond the limit,

cost increases are the responsibility of the Agency.

A typical alliance structure is illustrated in Figure 6.

System

Provider

Alliance Management Team

Alliance Leadership Team

Operator

Maintainer

Consultation Outcomes Report | 41


Attachment 3

Participants in Stakeholder

Engagement


1. MEETING DATES AND TIMES

Meeting 1 – Tuesday 24th January 2012

Meeting 2 – Tuesday 24th January 2012

Meeting 3 – Wednesday 25th January 2012

Meeting 4 – Wednesday 25th January 2012

Meeting 5 – Monday 20 February 2012

Meeting 6 – Tuesday 21 February 2012

Meeting 7 – Wednesday 22 February 2012

2. LOCATION

All meetings held at Infrastructure Australia Office on Level 21 of Deutsche Bank building, Phillip Street,

Sydney.

3. ATTENDEES

All Meetings:

Rory Brennan (Infrastructure Australia)

Peter Gemell (Everything Infrastructure)

David Longmuir (Everything Infrastructure)

Meeting 1 – Contracting industry representatives

(Covering all three Contract Types – Public Private Partnership (PPP), Design and Construct (D&C), and

Alliance)

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Abigroup

- Peter Walton

Baulderstone

- Ian Luck

- Frank Reynolds

John Holland

- Jim Waller

Leighton Contractors

- Chris Chwee

- Ian Gillings

Thiess

- Mark Lynch

- Ben Cooper

Ferrovial

- Enrique Blanco Gomez

- Kevin Wadds

Consultation Outcomes Report | 43


Meeting 2 – Finance industry and Project Sponsor representatives

(Covering PPP contract type only)

Macquarie Bank

- Tom Mienert

Plenary Group

- Paul Oppenheim

RBS Group

- Rob Ward

National Australia Bank

- Richard Cooper

ANZ

- Peter Davis

Hastings Funds Management

- Ludovi Tuhou

Meeting 3 – Government Agency representatives

(Covering all three contract types – PPP, D&C, and Alliance)

Transport for NSW

- Bevan Brown

- Scott Lyall

- Dimi Rigas

- Johanne Rossi

- Allan Scrace

VicRoads

- John Moylan

Linking Melbourne Authority

- Geoff Rayner

Commonwealth Bank

- Scott Speedie

Capella Capital

- John Bowyer

Brookfield Multiplex

- Patrick Boocock

Ernst & Young

- Matthew Dunn

Price Waterhouse Coopers (PWC)

- Martin Locke

Queensland Department of Transport and

Main Roads (DTMR)

- Derek Skinner (PHONE)

- Vince Scarcella (PHONE)

Ausgrid

- Thu Nguyen

- Walter Stefani

Meeting 4 – State and Federal government treasury representatives

(Covering all three contract types – PPP, D&C, and Alliance)

Department of Infrastructure and Transport

(Commonwealth)

- Troy Sloan

Department of Treasury and Finance (Victoria)

- Kate O’Sullivan (PHONE)

Department of Treasury (Western Australia)

- Andrew Hawkins (PHONE)

NSW Treasury

- Ros Martin

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Meeting 5 – Contracting industry representatives – Monday 20 February 2012

1. David Wilson (Leighton Contractors)

2. Ian Gillings (Leighton Contractors)

3. Jeff Price (John Holland Group, JHG)

4. Jim Waller (JHG)

Meeting 6 – Financiers – Tuesday 21 February 2012

1. Sergio Calcarao (Plenary Group)

2. Michael Cleary (ANZ)

3. Ian Gillings (Leighton Contractors)

4. Martin Locke (PWC)

5. Greg Dobson (Ernst & Young)

6. Patrick Boocock (Brookfield)

Meeting 7 – Agencies – Wednesday 22 February 2012

1. Bevan Brown (Transport for NSW)

2. Sam Lackey (Transport for NSW)

3. Johanne Rossi (Transport for NSW)

4. Geoff Rayner (Linking Melbourne Authority)

5. Ian Payne (Sydney Water)

6. John Moylan (VIC Roads)

7. Mike Tshaikiwsky (Ausgrid)

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5. Javier Lopez (Ferrovial)

6. Peter Walton (Abigroup)

7. David Tierney (Brookfield Multiplex)

7. Peter Murphy (Baulderstone)

8. Peter Ross (Commonwealth Bank)

9. Juan Alcala (Cintra)

10. Tom Mienert (Macquarie)

11. Ludovic Theau (Hastings)

8. Ross Mignacca (Water Corporation)

9. Mark Andrew (RMS)

10. Ray Cameron (QTMR)

11. Mike Swainston (QTMR – phone)

12. Abe Ninan (QTMR)

13. Ian Gray (QTMR)

Consultation Outcomes Report | 45


Attachment 4

Schedules of Procurement

Objectives, Efficiency

Strategies and Efficiency

Factors


Schedule 1 – Efficiency Strategies – Overall Procurement

Objective 1(a)

Efficiency Strategies

Efficiency Factors

VOLUME 2

The procurement process is effective and is designed to ensure

delivery of the project objectives.

Develop and implement an effective procurement strategy and develop and continuously

improve procurement planning for each Procurement Stage.

Identify requirements for Agency and Ministerial approvals and incorporate in procurement planning.

In defining the project requirements, consider and evaluate the consequences of project complexity

including consideration of:

- the number of separate participants;

- the diversity of participants;

- the relationship between the participants and the structure of the proponent; and

- the role of participants in the performance of the Contract services over the life of the Contract.

Ensure that the procurement process is appropriately understood, endorsed and approved within

the Agency and within wider Government (as required).

Understand the market issues affecting procurement, including diversity in proponent teams, and

align the procurement strategy with market capacity, capability and appetite.

Consider the costs of bidding, including considering bid cost contribution where it is warranted.

Implement processes to capture lessons learned from similar projects and from the Procurement

Phases, and to implement continuous improvement.

Implement processes to capture Government and market/industry knowledge.

Incorporate management of State retained obligations and State interfaces, including implementation

of a strategy to resolve intergovernment issues and provide for Agency relationship

management.

Ensure access to (and commitment from) appropriate Government resources throughout the

procurement processes.

Provide particular planning for the level of Agency resources necessary for Alliance procurement and

delivery.

Provide a consistency of approach within the jurisdiction and incorporate jurisdiction procedures,

including ‘gateway’ processes.

Develop comprehensive planning for each Procurement Phase and ensure planning for each

subsequent phase is complete prior to commencement of that phase.

Incorporate sound analysis of the project needs and business case.

Identify appropriate resources and necessary capability of the procurement team with clear responsibilities

within each Procurement Phase.

Develop robust procurement baseline budgets and programmes.

Address contract packaging and contract models in the procurement planning.

Incorporate overall risk and opportunity management throughout all Procurement Phases.

Seeking and respond to feedback from within the sponsor Agency, from potential proponents and

from stakeholders (including central Agencies);

Provide detailed programming at each Procurement Phase, recognising that proponents:

- often consist of separate participants, each with review / approval protocols;

- require reasonable time to resolve inter-participant issues;

- require sufficient time (and information) to plan and commit resources; and

- incur costs for holding and delays.

Provide a strategy to resolve planning approvals, including addressing responsibilities, allocation,

commercial consequences and management plans.

Provide a strategy to resolve land access.

Identify and resolve a statutory approvals strategy.

Provide a strategy to resolve project third-party interfaces.

Understand the cost impact and consequences of risk allocation and provide a strategy to resolve

risk allocation.

Incorporate a clear and focused communications strategy with all relevant stakeholders;

Ensure that the overall procurement strategy is sufficiently developed to ensure consistency

throughout all subsequent Procurement Phases.

Consultation Outcomes Report | 47


Objective 1(b)

Efficiency Measures

Efficiency Factors

Objective 1(c)

Efficiency Measures

Efficiency Factors

All relevant parties (including potential participants and providers, Government

agencies and the sponsor Agency) clearly understand and can rely on the

information provided relating to the project and to the procurement process.

Communicate with stakeholders in respect of relevant aspects of the procurement strategy and

implement the procurement process in accordance with the advised information.

Ensure properly considered planning underpins all undertakings.

Develop, implement, review and improve the communications strategy.

Ensure the accuracy and reliability of information issued.

Ensure relevant Agency and intergovernment approvals are in place in relation to the content of

information provided.

Consider the importance and relevance of information in the context of each Procurement Phase.

Ensure that the communicated strategy is delivered.

Prepare, resource, manage and fund the planning and communication processes.

Ensure Government agencies are aligned in respect of the project issues.

Obtain all necessary Government approvals and endorsements to the procurement process.

Ensure that any changes to program and process are communicated as early as practicable and as

accurately as possible.

All parties have confidence in the procurement team capability and

in the procurement process.

Identify, engage and maintain an appropriately skilled, resourced, structured and managed team

at all Procurement Stages.

Develop a comprehensive understanding of the skills required throughout procurement (including

throughout each phase).

Ensure team leadership is experienced in the planned contract models.

Ensure team leadership is experienced in the particular services and/or infrastructure types contemplated

in the project and, if required, supplement the leadership with expert mentors.

Ensure experienced leadership support (steering committee).

Ensure appropriate talent and capability for appropriate activities and consider independent experts

for particular project issues and tasks.

Ensure effective relationship and process management within Government.

Ensure process experience and capability in the procurement team.

Ensure issue resolution capability in the procurement team.

Ensure timely operator participation in the procurement processes.

Ensure appropriate budgets are identified and approved for the procurement processes.

Facilitate whole of Government alignment and support.

Provide expertise to optimise effectiveness of bidder interaction.

Ensure strong project/program management capability in the procurement team.

Ensure clear responsibilities and accountabilities within the procurement team.

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Schedule 2 – Efficiency Strategies – Pre-Procurement Phase

Objective 2(a)

Efficiency Measures

Efficiency Factors

VOLUME 2

Prior to the expression of interest (EOI) Phase, potential participants

are able to make informed decisions and implement

appropriate arrangements to optimise their opportunity to become

the successful proponent.

Provide potential participants with sufficient, accurate and timely information before

the EOI Phase to enable them to:

understand the project requirements;

assess their appetite for the project;

identify and select participants; and

determine roles and responsibilities for the participants.

Identify the specific market sectors / entities which have the capability, capacity and

appetite to be a participant in the project.

Ensure that the relevant information is available to potential participants, either as part

of an Agency communications program or on a project specific basis.

Communicate information that is relevant to the potential participants, giving consideration

to communicating information relating to:

- Project objectives and key Agency issues and values;

- Project scope and value, the contract model risk allocation, the payment regime and

project programme including term, if relevant;

- the Procurement process and procurement programme;

- intergovernment issues and Agency retained responsibilities;

- approach to related entities;

- Agency governance and approvals processes;

- interfaces definition and obligations;

- planning approvals status and strategy;

- approach to contribution to bid costs;

- consistency of processes, risks and terms within a jurisdiction and similar ‘model’

projects;

- expected prequalification levels or ‘minimum’ capability/capacity hurdles.

Consultation Outcomes Report | 49


Objective 2(b)

Efficiency Measures

Efficiency Factors

Objective 2(c)

Efficiency Measures

Efficiency Factors

The project and the procurement process attracts and promotes

competition from a number of suitable capable entities and optimises

the ability of proponents to provide comprehensive proposals.

Ensure that the Project structure, scope and character aligns with market capabilities,

capacity and appetite and is attractive to (and readily able to be delivered by) a

number of potential proponents.

Ensure that the procurement team understands the appetite, capability and capacity

of the potential participants to deliver each part of the project scope, including

considering:

- a structured early market engagement and sounding;

- communications between agencies and jurisdictions to obtain benefits of experience

and lessons learned; and

- advice to the procurement team from potential proponents;

Ensure that the procurement team understands (and the procurement planning

responds to) the full scope of the project and the specific project and procurement risks

and opportunities.

Ensure that the procurement is designed to best align the project requirements with the

market characteristics, given consideration to:

- capacity, capability and appetite of potential proponents;

- the impact of project complexity, bundling on competition and value;

- the impact of project size (value) on competition;

- the reduced efficiency of joint ventures relative to a single suitable participant;

- the value/benefits/cost of project risk allocation;

- the cost of bidding and the effect of the number of bidders on proponent’s appetite;

- uniformity in approach within jurisdictions;

- the diversity and tensions within bid teams; and

- reasonable procurement programming, including responding to other concurrent

projects, international participation and the like.

Minimise standby costs for potential participants prior to the

EOI Phase.

Resolve known avoidable issues prior to such issues adversely impacting the Pre-

Procurement program.

Establish a procurement risk and opportunity management process.

Ensure early resolution of project physical and contractual interfaces.

Ensure early resolution of interagency issues.

Ensure ongoing alignment of Government agencies in respect of issues.

Ensure commitment of Government resources.

Finalise procurement approval processes.

Implement effective interagency communications.

Clarify and agree interagency protocols.

Establish transparent milestones and monitor progress to program for procurement

activities.

Engage early intervention and/or implement remedial action to mitigate the impact of

events or circumstances which affect procurement.

Ensure clear understanding within Government of the project risks, including those

related to Agency and Government retained obligations.

Ensure early recognition and response to probity issues.

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Schedule 3 – Efficiency Strategies – EOI Phase

Objective 3(a)

Efficiency Measures

Efficiency Factors

Objective 3(b)

Efficiency Measures

Efficiency Factors

VOLUME 2

The selection of those EOI respondents which are most likely to

submit proposals which have the greatest certainty of delivery of the

project objectives.

The EOI process, including the evaluation methodology, is designed to provide alignment

between the EOI response and the Project objectives.

Ensure that the evaluation criteria align with the project objectives.

Ensure that the information required aligns with the evaluation criteria.

Ensure that the evaluation methodology measures the extent to which the EOI response

information satisfies the relevant evaluation criteria.

Ensure that the EOI responses are evaluated in accordance with the advised evaluation

criteria and methodology.

The potential participants have sufficient relevant information to

enable them to effectively develop their project strategy and to inform

the development of EOI responses.

The EOI documents contain relevant information to enable potential participants

to understand the project requirements, the procurement process and the issues

affecting the submission and evaluation of EOI responses.

Ensure that the EOI documents describe:

- the EOI processes;

- the issues which have the potential to materially affect the EOI process or the

procurement process;

- details of the EOI process and its context within the procurement process;

- the EOI stage program and the procurement program;

- the EOI evaluation methodology, criteria and any weightings which may apply;

- the constraints, procedures and protocols for Proponents to comply with throughout

the procurement process, including probity obligations;

- approach to related entities;

- Agency governance and approvals processes;

- approach to contribution to bid costs; and

- expected prequalification levels or ‘minimum’ capability/capacity hurdles.

Ensure that the EOI response requirements include identification and commitment of

the proponent (and participants) to the RFP rules including commitment to submit a

proposal, probity confidentiality, conflict of interest and related company procedures.

Ensure that the EOI documents include details which enable participants to understand

the project with consideration being given to:

- Project objectives and key Agency issues and values;

- all issues which have potential to affect the project;

- Project scope and value, the contract model risk allocation, the payment regime and

project programme including term, if relevant;

- intergovernment issues and agency retained responsibilities;

- interfaces definition and obligations;

- planning approvals status and strategy;

- consistency of risks and terms within a jurisdiction and similar ‘model’ projects; and

- any limits on innovation.

Consultation Outcomes Report | 51


Objective 3(c)

Efficiency Measures

Efficiency Factors

Objective 3(d)

Efficiency Measures

Efficiency Factors

The potential participants do not suffer avoidable delays or wasted

effort during the EOI Phase.

The EOI Phase is undertaken in accordance with the information advised to potential

participants and the evaluation of EOI responses and the announcement of the

selected Proponents is undertaken in the shortest practical time.

Ensure the early undertaking of actions to resolve issues which have the potential to

delay or alter the EOI process.

Ensure that the Agency resources manages, coordinates and delivers the EOI process

as planned, as previously advised and as contemplated in the EOI documents.

To the extent that changes to the EOI program or to the EOI process become unavoidable,

advise the potential participants as soon as possible.

Ensure the accuracy and completeness of advice to potential participants during the EOI

Phase.

Ensure that the Agency resources, manages coordinates, undertakes and concludes the

EOI evaluation in the minimum reasonable time.

In the case of Alliances, ensure that the procurement team has the expertise, support

and availability to undertake the alignment/selection workshops.

Evaluate the EOI’s within the time advised in the prior information, the EOI Phase

program and the EOI documents.

Ensure the approval processes and announcement protocols are confirmed, planned

and followed.

Ensure that the procurement team recognises the waiting/holding costs for participants

after EOI response submission.

The effort and cost of preparing an EOI response is reasonably

minimised.

The EOI response is required to include only information which materially differentiates

between proponents and the EOI program is designed to minimise standby time.

Develop the EOI process program to allow reasonable time for the activities while avoiding

unnecessary holding/standing costs for participants.

Utilise the Pre-Procurement Phase feedback from potential participants to inform the

development of the EOI program.

As far as practicable, reduce EOI response effort giving consideration to:

- the use of existing relevant prequalification arrangements for relevant participants,

(including the application of corporate management and corporate capability and

performance) recognising that this may not be appropriate for particular services or

where new participants are contemplated.

- the utilisation of minimum experience, capability and capacity measures to mandate

standards for relevant participation because this will guide the acceptable potential

participants while discouraging unacceptable parties from seeking to participate.

- requesting only differentiating information and clearly defining the information

requirements;

- allocating specific criteria to specific returnable schedules;

- requiring detailed participant business sustainability information (such as financial

reports) to be in the form in which it was originally produced;

- focussing the EOI response requirements on the character / capability / commitment

/ interrelationships of participants to the Respondent; and

- avoiding the inclusion of works or service solution, unless product issues affect

evaluation.

As far as practicable, simplify the EOI requirements and minimise documentation including

considering:

- maximising application of electronic submissions;

- incorporating page limits on EOI Response specific documents; and

- sensibly requiring schedules and point form summaries rather than text.

52 | Consultation Outcomes Report

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Objective 3(e)

Efficiency Measures

Efficiency Factors

VOLUME 2

Minimise the total overall cost of Procurement to potential participants

and maximise the appetite of participants.

The reasonable minimum number of proponents are selected from the EOI process to

submit proposals.

Consider the number and character of the selected proponents in the context of certainty

of delivery of the project objectives, including the necessity to create and retain

competition throughout the RFP Phase.

Selection of more than three proponents (to submit proposals) should consider:

- the greater overall costs to industry of tendering;

- the risk of reduced Proponent appetite;

- the risk of potential competition between proponents for limited resources;

- the risk of potential limitations on capacity of market sectors (expertise, funding,

insurance etc.); and

- the likely greater Agency/proponent interaction demands.

Selection of less than three proponents should consider:

- management of the potential exposure to related company issues;

- management of the risk of withdrawal of one or more proponents;

- the potential for increased proponent appetite and/or commitment; and/or

- the potential to mitigate market capacity issues.

Consultation Outcomes Report | 53


Schedule 4 – Efficiency Strategies – RFP Phase

Objective 4(a)

Efficiency Measures

Efficiency Factors

The commercial terms prescribed in the RFP represent value for

money.

When designing the commercial terms, the Agency has fully considered the cost

consequences against the benefits of those commercial terms.

As far as practicable, commercial terms should be:

- consistent within the jurisdictions; and

- consistent with similar projects.

Where specific commercial terms are necessary to deal with a particular issue utilise

precedent documents (from precedent projects) where practicable.

Ensure that the Agency team are informed in respect of the evolution of terms over time

in response to Agency and participant needs.

Where particular uncertainty exists, mechanisms involving predetermined commercial

outcomes for particular events should be considered.

The Agency’s approach to commercial terms in the RFP documents should be informed

by the earlier market sounding.

The Agency should recognise that the primary objective of contract terms is to drive

Contractor behaviour and should consider:

- a balance between financial outcomes and contract performance; and

- consistency between good performance incentives and poor performance

remedies;

The Agency should ensure that performance is linked to payments and that payment

adjustment triggers:

- are sensibly limited in number and actually and directly reflect the Agency’s required

outcomes;

- are readily measurable, not subjective and readily auditable;

- are not scaled or structured so that reasonable performance is penalised (a feature

which will encourage proponents to provide for such adjustments in the financial

elements of their proposal).

Recognise the cost / value of particular commercial positions including:

- the added cost of retentions;

- potential value for insurance strategies;

- the savings associated with resolution of project interfaces and inter government

agency issues; and

- the pricing uncertainty in response to the transfer of risk to a proponent which cannot

be managed or cannot be quantified (such as unlimited liability).

Recognise that uncertainty increases both the price of a proposal and the proponent’s

preparation cost.

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Objective 4(b)

Efficiency Measures

Efficiency Factors

VOLUME 2

Proponents are able to effectively plan and manage the development

of proposals.

The RFP process is delivered in the manner and to the program advised to participants,

without causing or exacerbating unplanned delays or wasted effort.

Ensure that the RFP documents describe:

- issues which have the potential to materially affect the RFP process;

- details of the RFP process and its context in the procurement process;

- the RFP evaluation methodology;

- constraints, procedures and protocols to be observed throughout the RFP phase;

and

- effective arrangements for access to information including relevant data;

Ensure that delay and disruption and wasted effort is avoided/minimised including:

- delivering the RFP process in accordance with the advice to proponents (including

in the RFP document);

- ensure the accuracy and completeness of all advice to proponents;

- ensure that unavoidable changes to the RFP process are advised as early as possible

including:

A. requiring clarification requests to be submitted early in the RFP period;

B. issuing any unavoidable material addenda early in the RFP period; and

C. extending the Proposal closing date and time when material changes are not

able to be effectively addressed in the remaining time.

Consultation Outcomes Report | 55


Objective 4(c)

Efficiency Measures

Efficiency Factors

Complete and competitive proposals are received from each

proponent.

The project and proposal requirements are clearly and unambiguously stated in the

RFP documents (and, where appropriate, Agency interactive sessions are provided)

to enable proponents to develop effective and competitive solutions and optimise

their proposals.

Ensure that the RFP documents clearly address all material aspects of the Project

including:

- the commercial terms, including the precise allocation of risk, payment terms,

parties rights and remedies;

- the structure and character of the Contract;

- works and service requirements, including mechanisms for measurement of

compliance;

- details of issues affecting the performance of works and services (including land

access, works approvals and interfaces); and

- clear definition of any limitations on flexibility and/or innovation.

Ensure that RFP documents clearly define what is required to be submitted in the

Proposal including:

- clarity in the extent of detail, certainty and commitment of the various aspects of the

Proposal; and

- clear identification of mandatory requirements.

For complex, major and/or unique Projects, engage in a planned and controlled

interactive process between the Agency and Proponents during Proposal preparation

to enable:

- clarity and delivery certainty in relation to government retained obligations;

- Proponents to test opportunities for innovation (or limits to innovation) and to

optimise Proposal team effort;

- Proponents to raise issues without committing to formal clarification; and/or

- the Agency to define limits and consider clarifications in an informed context.

Where interactive RFP processes are employed, Agencies should consider:

- establishing subject matter streams for interactive sessions to ensure appropriate

Agency representation and to enable efficient targeted interaction;

- establishing protocols which enable the interactive process to be effective within

sensible probity constraints;

- process management to provide equal opportunity to Proponents and to preserve

the Proponents intellectual property;

- the engagement of skilled experienced representatives to manage the Agency roles;

and

- appropriately skilled Agency / Government representatives participation in the

relevant subject matter meetings.

Strategies should be developed to ensure that competition is not materially diminished

during the RFP Phase, including:

- related company protocols;

- considering strategies to ensure that selected Proponents submit Proposals,

recognising that bid bonds have an associated cost;

- considering the programs for other competing projects; and

- where market finance capacity is an issue, considering the mandating of nonexclusivity

requirements for banks.

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Objective 4(d)

Efficiency Measures

Efficiency Factors

Objective 4(e)

Efficiency Measures

Efficiency Factors

VOLUME 2

Proponents are able to fully understand the Proposal evaluation

methodology.

The RFP document provides sufficient information to enable Proponents to understand

how Proposals will be evaluated, to enable Proponents to better understand

the Agency’s view on relative value and, consequently, to enable Proponents to

optimise their Proposals.

Include details of the evaluation methodology in the RFP document including (where

applicable):

- clarity of mandatory requirements;

- clarity in respect of the assessment of value for money;

- identification of issues relating to price point, affordability and/or the relevance of

the PSC;

- the circumstances which would justify adjustments to the PSC value (for PPP’s);

- the mechanism and application of comparative quantitative risk assessment;

- the mechanism and value of relative economic benefits;

- clear evaluation benchmarks (including discount rates, economic benefit costs/

benefits and whole of life costs);

- mechanisms to deal with options, alternatives and innovation (including ranked

preferred options up to a value (PV) cap, if nominated);

- clear and unambiguous evaluation criteria;

- application of (and relationship between) relative value, non-price, economic and/or

outturn cost analyses; and

- weightings of non-price assessments if used.

Proposals are readily able to be evaluated and the Contract is readily

able to be finalised with the selected Proponent.

The RFP is designed and structured to facilitate Proposal evaluation and to enable

the incorporation of particular aspects of the successful Proposal into the Contract.

To facilitate evaluation of the various aspects of Proposals, Proposal requirements are

structured to provide alignment between:

- the required content of a specific returnable schedule;

- the specific evaluation criteria for that returnable schedule;

- the particular expertise of the Agency group engaged to evaluate that returnable

schedule; and

- the methodology for evaluation of that returnable schedule.

To facilitate early and complete resolution of issues and evaluations, the Agency should:

- concurrently plan, program and manage concurrent evaluation;

- centralise issue identification, management and resolution; and

- ensure that the form of the issue resolution is able to be incorporated into the

proposed Contract.

To facilitate consolidated evaluation of all aspects of Proposals, the RFP generally (and

the Evaluation Plan specifically) describes how the evaluation of each Proposal element

(returnable schedule) contributes to the overall evaluation of the Proposal.

To facilitate the later Contract finalisation and to readily capture the relative value of the

selected Proposal, the RFP is structured so that key aspects of the selected Proposal

(particularly those which contribute to that Proposal’s relative value) are able to be

incorporated into the proposed Contract.

Consultation Outcomes Report | 57


Objective 4(f)

Efficiency Measures

Efficiency Factors

As far as practicable, the overall Proposal effort and costs to

Proponents are reasonably minimised.

The Agency’s overall approach to the RFP process (including the prescribed Proposal

requirements) is reasonable for the Project and recognises (and sensibly responds

to) the cost and effort for Proponents to submit Proposals.

To the extent practicable, hardcopy requirements should be minimised and electronic

submissions should be employed.

To the extent practicable, the structure and content of Proposals should be consistent

with similar projects within the jurisdiction.

Proposal documentation requirements should be limited to that which has material

impact on the certainty of delivery of the Project objectives.

Where appropriate, a contribution to bid costs should be considered in response to

large and/or complex projects requiring significant unique effort.

If consideration is to be made in respect of bid costs, those considerations should be:

- only in respect of unsuccessful Proponents;

- limited to a fixed, predetermined amount;

- subject to demonstrated third party expenses exceeding that fixed amount; and

- subject to submission of a bona fide Proposal.

Ensure that Procurement team resources are authorised, experienced and available to

effectively respond to:

- the interactive and clarification processes in PPP models and in D&C models

(including early contractor involvement); and

- the engagement for Alliance participation in TOC preparation.

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Objective 4(g)

Efficiency Measures

Efficiency Factors

VOLUME 2

As far as is practical, the effort and costs for the technical (design,

delivery and service) aspects of Proposals are reasonably minimised.

The Proposal requirements in respect of design, delivery and services are limited to

require only that information necessary to ensure delivery of the Project objectives

and the Proposal requirements recognise (and sensibly respond to) the Proponent’s

cost and effort to submit Proposals.

Proposal requirements should be focussed on that which has a material impact on the

certainty of delivery of the project objectives, including information which:

- is characteristic of the Proponent (and will be inevitably captured by the engagement

of that Proponent in a Contract) or

- represents relative value; or

- represents value to the Agency and therefore should be captured in a Contract with

that Proponent (if successful);

Proposal technical requirements should be minimised where practicable, including

considering:

- elimination of documentation relating to Contractors’ corporate systems (ie

Management, Safety and Environment), which most likely have been directly or

indirectly dealt with in the EOI Phase;

- limitation of Project specific method statements (project plans) to those which are

genuinely material to delivery of the Project objectives; and

- limitation of design documents to those which capture the relative value of the

Proposal including those which are necessary for assurance of functional certainty

and aesthetics;

When considering Proposal design, delivery and service documentation requirements,

Agencies should recognise that:

documentation should be limited to that which provides certainty of outcomes; and

to the extent that elements of the successful Proponent represent greater relative value

or outcome certainty, then those elements should be incorporated in the Contract.

The Procurement team should sensibly limit option pricing.

The Procurement team should be aware that a certain level of design and delivery

development by Proponents is unavoidable to establish certainty of pricing (in PPP and

D&C projects) during the RFP Phase and, consequently, the requirement to incorporate

that level of design and delivery documentation in the Proposal frequently has limited

material impact on costs.

As a minimum, technical documentation should include those documents necessary to

provide functional, aesthetic and whole-of-life certainty.

Agencies should consider receipt of technical aspects of (D&C and PPP) Proposals prior

to the closing date and time to reduce the evaluation period and reduce the standby

time for Proponents technical resources.

Consultation Outcomes Report | 59


Objective 4(h)

Efficiency Measures

Efficiency Factors

Objective 4(i)

Efficiency Measures

Efficiency Factors

As far as is practical, the effort and costs for financial and commercial

aspects of Proposals are minimised.

The Proposal requirements, in respect of financial and commercial aspects, are

necessary to deliver the Project objectives and recognise (and sensibly respond to)

the cost and effort of Proponents to submit Proposals.

Fully documented commercial terms are necessary to provide certainty in respect of

Proposal evaluation and in terms of Contract finalisation (for D&C and PPP Contracts).

Fully documented commercial terms for options and alternatives are necessary to

provide certainty (in respect of the known variables) for the purpose of evaluation of

Proposals and for the purpose of Contract finalisation (for D&C and PPP Contracts).

The Procurement team should recognise that the PPP Contracts invariably involve a

suite of commercial/financial documents at Contract Close due to the necessity to identify

the relationships between the various participants, the Agency and (possibly) the

government. In the context of minimising the Proponents effort and costs, it is prudent

to consider the character and completeness of the commercial documentation required

as part of the Proposal, including considering:

- the use of precedent documents;

- the use of term sheets where sufficient certainty can be achieved, such that the

resolution of outstanding issues will not result in adverse changes to the commercial

terms (in the Contract documents) during finalisation; or

- deferring finalisation of non-material documents with only a selected Proponent

while other Proponents are held in reserve.

The Procurement team should recognise the inherent uncertainty associated with

validity periods which are less than the duration of the Evaluation/Finalisation Phase

and should require adequate realistic validity periods together with refresh protocols for

extending the validity.

Agencies should consider resolving commercial terms (particularly PPP) with each

Proponent prior to the closing date and time to reduce the evaluation period and reduce

the standby time for Proponents commercial / financial resources.

Ensure that the degree of Proponent ‘due diligence’ for Proposal submission is to be

appropriate for the Project in understanding that:

- incomplete ‘due diligence’ results in uncertainty in the value of a Proposal and in

terms of commercial and procurement program outcomes;

- completed ‘due diligence’ at submission provides certainty of the Proposal, however

it requires Proponents to expend greater effort and cost; and

- Proponents may seek to delay full ‘due diligence’ to be a contract condition

precedent to be resolved after Contract execution, which could result in ongoing

negotiation following Contract award.

The Evaluation / Finalisation period is reasonably minimised and not

avoidably prolonged.

During the RFP Phase, the Agency has resolved all evaluation issues and concluded

all evaluation and finalisation planning.

Prior to the closing date ensure that the Agency is fully prepared for the Evaluation /

Finalisation Phase, including ensuring that it has:

- developed its evaluation plan and contemplated documentation;

- engaged and committed the evaluation resources;

- developed and structured the evaluation team;

- inducted and trained its evaluation resources;

- finalised the evaluation program;

- established receipt security and document control arrangements;

- implemented centralised issue (identification, coordination, clarification and resolution)

management;

- obtained endorsement of the evaluation processes as required; and

- identified and planned evaluation reporting and approval processes.

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Schedule 5 –Efficiency Strategies – Evaluation/Finalisation Phase

Objective 5(a)

Efficiency Measures

Efficiency Factors

VOLUME 2

The selection of the Proposal which best delivers the Project objectives

and execution of a Contract which captures the value of that

Proposal.

The Evaluation/Finalisation process enables effective:

assessment of the relative value of each proposal;

resolution of material uncertainties in respect of proposals; and

in the case of the selected proposal, inclusion of the relative value and the resolution

of uncertainty in the Contract.

Ensure effective management of material issues (affecting the value and/or uncertainty

of proposals) including:

- coordination and centralisation of issue management (across disciplines) to recognise

the interrelationships and materiality of issues;

- implementation of effective cohesive issue resolution strategies;

- design of clarifications requests to ensure that the responses enable evaluation with

certainty;

- design of clarifications requests to provide the precise Contract wording which

would be employed to capture the outcomes;

- recognition of the occasional necessity to sequence clarification requests to

consider responses prior to subsequent clarifications.

Recognise that validity periods have the potential to affect proposal certainty and

implement processes to monitor, manage and refresh validity during the Evaluation/

Finalisation Phase.

Recognise that competition should be preserved until all material aspects of proposals

are resolved, to ensure:

- minimum adverse shifts in commercial terms (‘deal creep’);

- minimum extended multi-party negotiations; and

- minimum delays to execution of the Contract and/or to financial close.

Ensure that the evaluation/finalisation plan is fully consistent with the RFP and provides

clear direction to the evaluation team in respect of precise criteria, evaluation tools,

comparative measures, innovation and aesthetics measures, relative risk assessment,

the application of the PSC and the like.

Understand that certain options and alternatives may be mutually exclusive (or result

in cumulative impacts) and evaluation finalisation should include consolidation of each

proponent’s proposal inclusive of the selected options.

The consolidated Contract document must accurately and comprehensively incorporate

the particular value aspects of the Proposal and the resolution of uncertainties during

the Evaluation/Finalisation Phase.

Consultation Outcomes Report | 61


Objective 5(b)

Efficiency Measures

Efficiency Factors

The Evaluation/Finalisation process is undertaken fairly, with

competence and in accordance with the methodology advised to

Proponents and stakeholders.

The Evaluation/Finalisation process is undertaken fairly, with competence and in

accordance with the methodology advised to Proponents and stakeholders.

Ensure development and implementation of effective robust evaluation planning.

Ensure that the Agency resources, manages, coordinates and delivers the Evaluation/

Finalisation process as planned, as previously advised and as contemplated in the RFP

documents.

Ensure the accuracy and completeness of advice to Proponents during the Evaluation/

Finalisation Phase.

Ensure ongoing/committing of sufficient funding and experienced resources to lead/

manage and deliver the evaluation/finalisation outcomes in accordance with the plan.

Ensure the engagement and commitment of well structured evaluation teams with the

requisite specialist skills.

Recognise that multiple material changes to the Project during the Evaluation/

Finalisation Phase may result in the need for a ‘best and final offer’ (BAFO).

While process certainty is preferred, particular events and circumstances may arise

(including financial market conditions in relation to PPPs) which warrant modification to

the Evaluation/Finalisation process. In this case, advise the proponents as quickly as

practicable, having addressed, as appropriate:

- market, industry and participant knowledge;

- issues in other jurisdictions;

- Government agency knowledge;

- affected stakeholders;

- option analysis and selection; and

- endorsements and approvals.

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Objective 5(c)

Efficiency Measures

Efficiency Factors

VOLUME 2

The effort and cost to proponents during the Evaluation/Finalisation

Phase is reasonably minimised.

The Evaluation/Finalisation process is:

undertaken in the reasonable minimum time;

requires the reasonable minimum effort by proponents; and

releases (or suspends) proponents from further involvement at the earliest

practicable time.

Ensure the early undertaking of actions to resolve issues which have the potential to

delay or alter the Evaluation/Finalisation process.

To the extent that changes to the Evaluation/Finalisation program or to the Evaluation/

Finalisation process become unavoidable, advise the Proponents as soon as possible.

Ensure that the Agency resources, manages coordinates, undertakes and concludes the

EOI evaluation in the minimum reasonable time.

Evaluate the proposals within the time advised in the prior information, the Evaluation/

Finalisation Phase program and the RFP documents.

Ensure the approval processes and announcement protocols are confirmed, planned

and followed.

Ensure that the Procurement team recognises the waiting/holding costs for participants

after proposal submission.

Recognise that unresolved issues potentially compromise the evaluation and diminish

the value captured in the final Contract.

Recognise the ongoing costs of retaining/continuing to evaluate or finalise with three

proponents rather than two proponents or one proponent.

Understand that requests for clarification (during the Evaluation/Finalisation Phase) that

involve design, costing, programming and/or financing changes can cause delay to the

overall Evaluation/Finalisation program, can cause significant cost to the proponent and

can compromise the underwriting of PPPs.

Recognise the duplication of cost and effort for multiple proponents to develop planning

submission documents during the Evaluation/Finalisation Phase.

Recognise the duplication of cost and effort for multiple proponents to complete full

documentation.

When deciding to continue to evaluate/finalise with multiple proponents (and release or

suspend evaluation of particular proposals) the Procurement team should consider:

- the materiality of the remaining uncertainties in respect of all proposals;

- the possibility that further clarification and evaluation could alter the relative rankings

of proposals;

- the necessity to retain competition; and

- the cost and commitment required from participants to continue to support a

proposal.

Consultation Outcomes Report | 63


Objective 5(c) cont.

Efficiency Measures

Efficiency Factors

The effort and cost to proponents during the Evaluation/Finalisation

Phase is reasonably minimised.

The Evaluation/Finalisation process is:

undertaken in the reasonable minimum time;

requires the reasonable minimum effort by proponents; and

releases (or suspends) proponents from further involvement at the earliest

practicable time.

Ensure that intra-Government agency evaluation/finalisation issues are effectively managed

and resolved and that all endorsement and approval processes are understood

and are implemented, including:

- Federal/State funding and/or environmental issues;

- agency stakeholder alignment on scope and processes;

- Government understanding of issues and risks;

- Gateway and approval processes;

- Government stakeholder participation;

- agency interfaces resolved; and

- State Ministerial approvals.

Ensure continued effective project governance, leadership and management throughout

the Evaluation/Finalisation, including:

- ensuring Agency is an informed client;

- reporting against original plan;

- maintaining clear governance, steering and mentor structures;

- maintaining strong project management disciplines;

- ensuring decision makers remain directly involved to close out issues;

- ensure that there is no impediment to Contract execution;

- ensuring there are no impediments to financial close of PPPs including predetermined

rate set protocols;

- ensuring that Government obligations are managed with a whole of government

approach; and

- developing and implementing an effective project initiation process.

64 | Consultation Outcomes Report

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