Case Studies

Propelling city growth: Solutions to help Australia close its social infrastructure gap

Case Studies

Small-scale and smart: Casey Hospital

The Casey Hospital expansion cost less than a quarter of a new hospital and delivered all required infrastructure

The project

Victoria's Casey Hospital expansion project provides a master class in smart social infrastructure delivery. Located in one of the state's fastest-growing municipalities, the upgrade cost less than a quarter of the average cost of a new hospital and will deliver all additional infrastructure required to meet the surging healthcare demands of its southeast Melbourne surrounds.

The Plenary Health consortium, advised by Allens, is due to complete construction of the expansion in late 2019. It will provide new facilities and upgrade existing infrastructure, including 160 new beds, the hospital's first intensive care unit, six new operating theatres, a new day surgery unit, and upgrades to pharmacy, pathology, back-of-house and parking facilities.

The project responds to demand within the lifecycle of the existing PPP and delivers critical infrastructure at a lower price point. It demonstrates the power of adding to existing infrastructure, even in complex operating environments, and its ability to address the concerns of a range of funding providers.

Ensuring the coordination and sequencing of work to ensure clinical services were not interrupted was one of a number of unique challenges presented by the project. It also involved a unique capital structure that preserved a 2002 bond issue in respect of the original infrastructure.

The new infrastructure was funded through a combination of new equity and a bespoke funding arrangement with the Victorian Government.

Allens' role

Allens' infrastructure and debt capital markets teams worked closely with the Plenary consortium, drawing on market-leading experience to balance stakeholder interests and close the deal. Familiarity with all stages of the project lifecycle positioned the firm to take the lead on operational and handback issues as they arose.

A strong performance all around. Allens was firmly 'in the tent' rather than providing abstract advice. They effectively responded to what was a very complex and lengthy process, maintained focus on what mattered, working collaboratively with the other advisors to ensure things got done.

Finance and commercial lead – Casey Hospital Expansion Project.
https://www.allens.com.au/med/pressreleases/pr11sep17.htm

Commonwealth gold: Gold Coast Light Rail

The Gold Coast Light Rail project has become the model for the majority of PPP augmentations in Australia

The project

One of the first successful PPP augmentations in Australia, the $420 million Gold Coast Light Rail (Stage 2) is the product of a happy marriage between the public and private sectors. Having identified the benefit of extending existing light rail infrastructure, a private sector consortium worked with the public sector to devise a structure for its delivery.

The project developed and proved the model that has since been adopted as the base for the majority of augmentation projects.

The Queensland Government revealed plans to extend the Gold Coast Light Rail Network following its successful bid to host the 2018 Commonwealth Games. The extension connects the original light rail network to the heavy rail coming out of Brisbane, making it a key piece of infrastructure to support attendance at the Games and necessitating delivery in a very short timeframe.

As an augmentation of an existing PPP, the interface between the extension, the existing operating project and its financing structure was critical. Its landmark success is thanks in no small part to successful collaboration between GoldLinQ (advised by Allens), the State of Queensland, Keolis Downer and CPB Contractors.

Allens' role

Following its work on the original construction, operation and maintenance of Stage 1, Allens was quickly able to devise a workable structure for the deal and stay focused on the ultimate objective of reaching financial close under a tight timeline. The project was delivered well ahead of the 2018 Commonwealth Games.

This was a difficult deal as it was the first augmentation of a PPP in Australia and the timeframe was very tight. Allens was central to driving the commercial outcomes, navigating everyone to a commercial position that was palatable for two sets of banks, multiple SPVs, contractors across two projects and the State. Running an efficient process is essential and the Allens team really played its part in helping us achieve this.

Commercial Lead – GCLR Stage 2
https://www.allens.com.au/med/pressreleases/pr18dec17.htm

Arrested development: Ravenhall Prison PPP

The complex Ravenhall Prison PPP was world-leading for its service model and outcomes focus

The project

A new approach to the tendering process and public-private collaboration led to a world-leading social infrastructure development in the Ravenhall Prison Project, which opened in late 2017.

The 1300-bed facility, located in Melbourne's west, introduced the first 'payment by results' model to the market. Four primary service providers and a broad range of additional services providers, representing both the public and private sectors, worked together on a complex operating model to address behavioural, educational, and drug and alcohol issues.

The GEO Consortium (The GEO Group, Capella Capital, John Holland and Honeywell), advised by Allens, won the role to design, build, maintain and operate the prison over a 25-year period.

With a focus on new and long-term ways to reduce the risk of future crimes, the project is expected to have a significant impact on re-offending rates and, in turn, significant benefits for the wider community. It has also boosted the local economy, creating thousands of jobs during the construction period and additional jobs during operations.

The project involved the coordination of five service providers (including a government body, Forensicare, which was integrated into the consortium offering as a 'nominated contractor'), making it the most complex integrated service offering delivered through an Australian PPP.

On completion the prison represented the largest 'whole of life' investment in a prison ever undertaken by a government (approximately $6 billion). Its service model and outcomes focus were world-leading.

Allens' role

Allens played a central role in refining the performance regime to ensure it incentivised the right behaviours. This regime formed the basis of the performance regime adopted in the subsequent Grafton Prison PPP as well as the majority of operating arrangements since.

The complexity of the project's integrated service offering played to Allens' strengths in dealing with complexity and developing new structures to address it.

Allens was awarded the 2015 Infrastructure Partnerships Australia (IPA) Advisory Excellence award for its work advising the GEO Consortium.

Ravenhall was incredibly complex. It introduced a number of firsts for the Australian market that required new thinking, particularly around the structure, unique risks and the many interfaces. The Allens team expertly drew on their experience across all aspects of these projects to deliver clear, workable and importantly explainable solutions, and then bring a very broad group of stakeholders along for the ride. The team are incredibly commercial and go well beyond what you usually expect. They just get it.

Commercial Lead – GEO Consortium
https://www.allens.com.au/med/pressreleases/pr26mar15.htm

What we do

From origination to end-of-life, we help clients deliver more and better quality social infrastructure through insight and ingenuity. The infrastructure industry is challenged to become more efficient and accountable in an environment of political uncertainty and unprecedented demand. To be successful social infrastructure players in the future need to be more digitally enabled.