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Publication Date

5-29-2014

Abstract

In the late 1990s the Queensland Government announced its first Public Private Partnership (PPP) contract. No Queensland public sector agency had PPP experience and the search for a suitable project that would test the new Queensland PPP policy evoked disparate expectations within government and within the private sector. The subsequent debate was long, arduous and highly charged on issues of ideology, government business and risk.

The Government accepted the business case for the redevelopment of the Southbank Education and Training Precinct (SETP) and nominated Southbank Institute of TAFE (SBIT) as the public sector agency to lead the procurement of the Government’s first PPP. Supported by a very capable advisory group, the Queensland public sector embarked on a steep learning curve. In April 2005, following a lengthy procurement phase, the winning Axiom Education bid was evaluated as offering greater value for money (VfM) than the Public Sector Comparator (PSC). The Southbank Education and Training Precinct was a social infrastructure project which demanded an extremely complex range of capital and operational outcomes of its PPP solution. The value of transferred risk was a major feature of the evaluation process.

It was evident during the post-procurement stage of the project that the public sector failed to adequately identify and value its own risk, to appreciate and account for the cost of transferred risk over whole of life, and to implement a diligent value management system that ensured the cost of risk would continue to deliver VfM over the life of the project. Many aspects of the Southbank PPP have provided benchmarking lessons on VfM, but the risk allocation and risk transfer process may well be the most important one.

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