MacKillop says this approach removes much of the risk: "I don't see that this road is going to fail. There's not going to be a problem if the tolls aren't there to pay for it. The top priority is safety and the deal is structured to give users a great, motorway standard road."
Under the traditional road PPP model, a private company would get the rights to collect tolls for a set period. This can work, but success is largely down to accurate traffic projections; if the expected number of vehicles doesn't turn up, the road builders are left out of pocket. MacKillop says this happened with two roads in Sydney and two in Brisbane.
Availability PPPs are all about the project outcomes. As technical adviser on the Transmission Gully project MWH's job was to work with NZTA to develop the outcome specifications. MacKillop says this involved geotechnical work and a lot of interaction with the legal advisors and commercial advisors also appointed by NZTA. MWH was appointed to the role over a year ago, but MacKillop says the main work took place over just three months as his team prepared the request for proposal (RFP).
John MacKillop.
For him the most challenging part of the process was the geotechnical investigations programme. He says New Zealanders do this in far more depth than Australians -- perhaps that's not surprising given how close the road is to a major fault line.
MacKillop says though most of the work was done locally by MWH New Zealand staff: "they have the right skills and local expertise"; he was brought in from Australia because there is little PPP experience in this country. This was only the third PPP project in New Zealand. He says the first thing he did in New Zealand was to hold a PPP workshop.
One advantage of the availability PPP approach is that the project is all about what is delivered, not how it is delivered.
MacKillop says this gives contractors freedom to innovate. How they design and build is left to them.
He says the lessons learnt from Transmission Gully helped MWH win a contract to perform a similar role in Queensland. The state Government is building the Toowoomba Second Crossing, which runs across the Great Dividing Range bypassing the city and relieving an existing road that is now close to capacity.
Governments usually look to PPPs because they don't have to outlay capital, but there can be other reasons. MacKillop says another PPP project MWH carried out was when the New South Wales Government decided to sell its desalination plant to raise capital it could invest elsewhere, in schools and roads. By taking the plant off the balance sheet, the state Government raised capital without affecting its credit rating. He says this is another current trend in PPP projects.
In the case of the Sydney desalination plant, MWH worked for one of the bidders handling the due diligence for its bid. This meant working out the condition of the asset and estimating the cost of likely upgrades and operations.
MacKillop says working on PPP projects boosts everyone's skills: "We make sure we transfer our expertise to clients as part of the deal." He says he and his team learnt a lot from working on their first availability PPP: "You have to think differently about things when you're focusing on the project outcome rather than just getting it done. Those are skills we've already applied elsewhere."
