Public Private Partnership
Throughout 2008 and early 2009 the State Government examined a number of Public Private Partnership (PPP) models for the delivery of the project, selecting the Partnerships Victoria 'Availability' model, where the private sector company designs, builds, finances and operates the project for an agreed period of time, with the State Government making regular payments to the company based on performance against a set of key performance indicators, which avoided any charges being imposed on road users.
An invitation for Expressions of Interest was issued in March 2009 followed by a Request for Proposals, with two bidders short listed by November 2009. Final bids were received a month later, with the Southern Way consortium (made up of construction companies Abigroup and Bilfinger Berger, along with financier Royal Bank of Scotland) being awarded the contract to design, build and operate the freeway on 20 January 2010.
Under the Public Private Partnership, the consortium is required to operate and maintain the freeway for a 25 year period, with the government making quarterly service payments to Southern Way once the freeway has been certified as completed in accordance with the Project Deed.
These payments are adjusted on an availability basis, with reductions being made when each half hour of unavailability, weighted according to the nature and severity of the unavailability. Failure to meet key performance indicators for emergency contact points, incident response, compliance with operational plans, maintenance inspections and works, reporting and environmental management will also results in the government deductions being applied to the service payments.
The delivery cost of the project is $759 million: made up of Southern Way's construction costs, along with the Linking Melbourne Authority's land acquisition, project management, environmental effects statement and Environment Protection and Biodiversity Conservation Act costs.
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