Home' Future Building Australian Infrastructure Review : Volume 8 Number 1 Contents futurebuilding 81
Special purpose vehicles
delivered the most reliable trains anywhere in this country,
enabling Sydney Trains to introduce timetable changes that
were unthought-of when the project started.
KC: I agree. We’ve looked at some projects, which are made
out to be failures, but actually from a government perspective,
the PPP structure and the way they’ve been constructed has
protected us. Some people look at these examples and think
that perhaps we shouldn’t do PPPs anymore, but it’s actually
the reason we should do more. These risks are being better
managed by the private sector, which protects the state.
CV: Moving to the operational phase, Matt, Charles and Ian:
how well do you think SPVs are equipped to deal with work
across both the construction phase and the operational phase
of projects? Is there a transition that you see in staffing and
approach through that period?
CM: Well, certainly there has been a transition. About 20
years ago or so, SPVs were literally and legally pass-through
vehicles. There were little resources applied and a tiny budget
resulting in a lot of the heavy lifting being passed to the
The realisation that SPVs could do more occurred on a
whole lot of fronts. The reality emerged that these enterprises
were principals under a number of material contracts, and
had a lot of legal and legislative obligations to fulfil, which was
ultimately the responsibility of directors to fulfil. The model
has since evolved into looking at what residual resources are
required by an SPV. There are a lot of issues to consider here –
refinancing, bond issues and these sorts of things. SPVs don’t
typically carry a ‘Treasury Team’, but we do have expert buyers,
expert managers, and people who are able to engage at the
same level as their counterparts under each of the different
types of contracts that an SPV deals with. I think that’s the
transition, and SPVs are better for it.
MB: In our case, we have had quite a transition from the
D&C team to a different team when we entered the operations
and maintenance (O&M) phase; however, in reality, you don’t
need to do this because we don’t dig holes and design stuff. We
comply with contracts and make sure that other people comply
with contracts. The skill sets across different phases of an SPV
are quite similar.
The main difference in the D&C phase is that you need
people who are more attuned to a lively pace of life. The O&M
phase is perhaps a little bit more pedestrian. Some of the people
who did well for us during the D&C phase simply didn’t want to
stay through the O&M phase. It’s not as exciting. We built it. We
now just have to send out the invoices every month. There’s
more to it than that, but, broadly speaking, that’s the difference.
It’s the fact that you need a slightly different mentality in the
O&M phase, not necessarily a different skill set.
IH: I’ve got a slightly different view on that. I think you do
need a different skill set. In my experience, the D&C phase is
very well thought-through in the formal bidding process. The
effort that goes into getting ready for the D&C phase and
overseeing the D&C phase is enormous. The O&M phase,
particularly on toll roads in the old days, was something that
no-one thought too much about until after opening. Then you
get to the point of being the toll road operator and it raises a
question: do you invest a whole lot in maintenance to limit the
renewal cost later, or do you just let it wear out and spend a lot
of money on the renewal?
That’s actually a question for the SPV, because the O&M
contractor’s view is: ‘I’m not going to spend any money, I don’t
Source: Moorebank Intermodal Company
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