Published 08 Mar 2010: Maintaining Australia’s International Reputation in Infrastructure

Plenary Group Principal, John O’Rourke, has called for greater certainty in bidding processes for public private partnerships (PPPs).

In the aftermath of the Sydney Metro decision, Governments across Australia should commit to a PPP bidding process participants and capital markets can trust.

Mr O’Rourke said, “Of course governments have a right to change their minds, and it’s comforting that NSW is moving quickly to commercially resolve with bidders the implications of the Metro termination”.

“However, the bigger picture is making sure Australia retains its international reputation as best practice in procuring infrastructure. Other Governments could benefit from looking to the Victorian model as the benchmark in this regard”, Mr O’Rourke said.

“The Victorian PPP framework provides a clear and reliable bidding process that has now led to a number of highly successful projects”, he said.

“When a project comes to the market in Victoria, investors and consortium partners can have some confidence that the hard yards of departmental planning, budgeting and political approvals have been obtained”, Mr O’Rourke said.

“The market requires projects that are not going to be subject to last minute u-turns; nor pulled well after private sector resources and project capital has been committed. This gives the market confidence to participate in a competitive framework – the end result in Victoria has been consistent value for money outcomes”, Mr O’Rourke said.

Infrastructure projects compete in a tough global environment for critical international financing and project delivery expertise. These are investment decisions that follow markets with highly credible procurement practices.

These are sophisticated businesses that understand the risks that transfer to them as part of a PPP, including the possibility that a project may not proceed if the private sector does not meet value-for-money benchmarks.

However, as the Victorian policy framework has proven, national and international businesses can, and do, work with the public sector to extract the full value of PPPs. This happens most effectively when the private sector has confidence a Government’s procurement plans will lead to a completed project.