case study southern cross stationto achieve or satisfy a relevant kpi (kpi failure) then each kpi...

JULY 2015

AUSTRALIA

CASE STUDYSOUTHERN CROSS STATIONAUSTRALIA

WSP|PARSONS BRINCKERHOFF STATION CAPABILITY

Railway stations are key nodal points for the sustainable transport of passengers. As such they have an important social-economic and environmental role to play.A well-functioning station that can provide comfortable transport options for passengers in an efficient way will encourage commuters and travellers to use this passengers in an efficient way will encourage commuters and travellers to use this comparatively environmentally friendly way of travelling.Because of the facilities and the technology that a station has to include to function safely and efficiently, a station by itself consumes large amounts of resources and might have negative environmental and social impacts on the adjacent environment.

TRANSFORMATION OF TRANSPORT HUBS –SOUTHERN CROSS STATION

1859

1960’s

2000’s

Opening Modernisation Redevelopment

1960’s

2000’s

•The 1880s saw the first of several unrealised plans•Opened as Spencer Street Station in 1859,•From 1888 to 1894 the layout platforms was altered, with new country platforms

•In October 1960 work on a new Spencer Street station commenced•The station building largely replaced the 1880s iron shed •A new 413-metre platform number 1 was built. •A new double-track

•Southern Cross was redeveloped by the Civic Nexus consortium•Innovative design by Grimshaw Architects •Construction began in October 2002 and was completed in late 2006•The central features of platforms

•The current coach terminal location was the site of a number of new platforms built for suburban services.

•A new double-track viaduct was constructed between Spencer Street and Flinders Street station.

•The central features of the design include a wave-shaped roof, a new entrance and concourse on Collins Street

SOUTHERN CROSS STATION PROJECT GOALS

Urban regeneration for Melbourne was a key focus of Victoria’s Premier, Jeff Kennett, who publicized several high profile capital improvement profile capital improvement projects in the city, leading up to a bid for the 2006

One of the largest projects associated with the bid was a $2 billion plan to

regenerate Spencer Street Station and Docklands

CIVIC NEXUS CONSORTIUM CONTRACTED TO DESIGN, BUILD, FINANCE AND MAINTAIN

Key Facts

The project included two components:• A transport interchange • A commercial redevelopment that includes a retail precinct, car parking and offices

Project nameSouthern Cross Station Value$309m (net present cost value, as at June 2002) is the net cost to government for the station development$350m estimated value of commercial development at no cost to governmentDepartment or agency

retail precinct, car parking and officesSome of the features include:• An open design light filled space with full glass frontage to Spencer Street and Collins Street with platform access from both the Bourke Street Bridge and Collins Street extension;

• Passenger information screens with real time train arrival and departure information and comfortable waiting areas;

• A 30-bay coach station;Department or agencyPublic Transport VictoriaDepartment of Economic Development, Jobs, Transport and ResourcesNumber of trains per week14,000 trains operated by Metro, V/Line and CountryLinkNumber of passengers per week328,700

• A 30-bay coach station;• Secure, sheltered parking facilities for 800 cars and five-minute drop off and pick up area; and

• Improved public facilities and new retail outlets.

“INTEGRAL HUB OF MELBOURNE’S PUBLIC TRANSPORT SYSTEM.”

Long Distance ‘InterCity’ Services

Tram Interchange at

Street Level

Freight to Intermodal Terminals

Suburban Rail Services

Retail Shopping Centre

Station Outlets

Bus Terminal Linking Urban Regeneration

MANAGEMENT OF SOUTHERN CROSS STATION

The Southern Cross Station Authority manages the Partnerships Victoria contract for the transport interchange.

There are a number of operators at the site who lease rail and station infrastructure to provide key rail services to the public.

Rail operators exchange payment for access rights to the station – by type of train, axle weight, time of day, number of station – by type of train, axle weight, time of day, number of services per day

Concessionaire gains revenue through retail leasing

SOUTHERN CROSS PPP CONCESSION

Civic Nexus Consortium

Leighton Contractors1

Leighton Contractors

ABN Amro

Nicholas Grimshaw and Partners

Honeywell

2

3

4

Concession

HoneywellAt the end of the lease, the contract can be renegotiated and renewed. If either party chooses not to renew the contract, the station will be returned to the Victoria

government in working order

Cost of Procurement: US$2.3mBasis of Award: Best design at least cost and lowest availability payment for operations and maintenance with

consideration for valuation of surrounding real estate

AVAILABILITY PAYMENT

30 Year Concession From Start of Operating Period

Availability payment

(Core

Annual payment Paid

Reviewed against

quarterly

Annual Indexing

(Core Services Payment)

payment AUD$ 34 million

Paid Quarterly

quarterly passenger

count

Indexing of

Payment

FINANCIAL STRUCTURE OF SOUTHERN CROSS

Equity Investor

Development Australia Fund Management Ltd

Equity Investor

ABN AMRO

75% Equity Stake 25% Equity Stake

Developer

Civic Nexus

Government

Public Transport Victoria

Debt Financier

Civic Finance Limited

D&C Contractor Debtor

AUS$34m p.a.

2 bonds of AUS$335m1 bond of US$73.9m

AUS$167m D&C Contract

D&C Contractor

Leighton Contractors

Debtor

Bond Holders

• No payment to concessionaire until construction completion

• AU$34 million annual availability payment began at operations.

AUS$66m for commercial

development rights for 99 year lease

FUNDING AND PAYMENT MECHANISMFunding

Time from RfP to contract award 9 months

Funding Stakeholders • Bond financing through ABN AMRO, 74%• Equity from ABN AMROB, 14%• Value of rights to the commercial estate transferred to Civic

Nexus, 12%

% of Private Sector Funds 100%

Debt to equity financing of Private Sector Funds

74% debt, 14% equity, 12% value of real estate

Payment

Payment mechanism Core Service Payments (CSP), also known as Availability Payments, are made quarterly during the operations and maintenance period of the concession based on station availability, operations and maintenanceThe CSP comprises of 3 main components:

The project was 100% financed by the private sector through Civic Nexus

• Capital – reimbursement to the private sector for cost of the station redevelopment

• Operating – stations operations and management for the 30 year concession period

• Insurance – public sector covers the cost of insuring station operations for the 30 year concession period

RISK TRANSFERSite risk

Design risk

Construction risk

Environmental and social risk

Design and

Construction

•Availability of site (land acquisition/rights-of-way), quality of site (geological conditions, existing asset condition), zoning permits

• Inadequate planning, substandard design, lack of system integration, delayed construction permits and approvals

•Time delay, completion risk, cost overrun, quality issues, sub-contractor mal-performance, untried/complex technology, design change

•Environmental permits and constraints, stakeholder opposition, Environmental and social risk

Commercial risk

Opex risk

Performance risk

Financing risk

Macro risk

Operations

Political and macro

•Environmental permits and constraints, stakeholder opposition, cost of social/environmental mitigation

•Demand shortfall, price elasticity, network interface risk, collection risk

•Higher O&M, labour and commodity costs

•Operational inefficiency, system underperformance, reduced asset availability, service interruptions, innovation risk

•Refinancing availability, borrowing rate risk, counter-party and sponsor risk

•Changes in economy, population, demographics, industrial Macro risk

Regulatory risk

Political risk

Force majeurePolitical and macro

•Changes in economy, population, demographics, industrial development, interest rates, exchange rates, inflation

•Changes in regulated prices, competition, sector framework, taxation

•Breach of contract, expropriation, currency inconvertibility, profit repatriation

•Natural or man made events, eg. Earthquake, flood, civil war, fire, riots, strike

KEY RISK PRINCIPLES FOR SOUTHERN CROSS STATION

Key Risks Risk Allocated to Private

Risk Allocated to State

Transport interchange facility - Majority MinimalTransport interchange facility -design, construction, finance and operation

Majority Minimal

Commercial development – design, construction, finance, operation and integration

Virtually all Virtually none

Rail and signalling infrastructure -construction

Virtually all Virtually none

Risks that were not taken on by the private sector were:• 50 per cent of risk associated with pre-existing site contamination

(contamination that wasn’t previously identified)• Any financial costs associated with changes to the interpretation of Land Tax

Act 1958.

MONITORING PERFORMANCE THROUGH KPI’S

1

Availability

2 3

4 5 6

Food andBeverage

PassengerUsage

In contrast to the Department’s earlier role of directly managing the precinct and the redevelopment, the key roles are now to:4 5 6

7 8 9

10 11 12

AvailabilityPassengerInformationand Signage

Cleaning

Bus BaysSecurity andEmergencyServices

Repairs andMaintenance

the key roles are now to:

• monitor and assess the concessionaire’s management and operation of the station based on a KPI regime on behalf of the State

• manage a number of capital

Tele –Communication

13 14 15

WasteManagement

EnergyManagement

Car Parking

Baggage/TravellerAssistance

Pest Controlprojects within the precinct

• exercise owner obligations over third party land in the broader station precinct.

Southern Cross –Services and

Development Agreement

PERFORMANCE ABATEMENT‘if a Quarterly Performance Report reports the Concessionaire, in the provision of the Services, as failing to achieve or satisfy a relevant KPI (KPI Failure) then each KPI Failure will attract, and the Concessionaire will accumulate, the applicable Penalty Points.’

4 Penalty Bands – Points Based

Band 1 - 2.5%

Band 2 – 10%

Abatement Amount =

Abatement Amount =

(Adjusted Core Services

Agreement x Penalty

Bracket 1 Percentage)

xAbatement points per Quarter

250

(Adjusted Core Services Agreement x

(Penalty Bracket 1 Percentage) +


(Penalty Bracket 2 Percentage – Penalty


x (Abatement points per Quarter – 250))

250

Band 3 – 40%

Band 4 – 100%

Abatement Amount =

Abatement Amount =








250







250

AVAILABILITY PAYMENT LINKED TO PASSENGER NUMBERS

4,00,00,000

4,50,00,000

Pa

sse

ng

er

Nu

mb

ers

Annual Passenger Numbers

0

50,00,000

1,00,00,000

1,50,00,000

2,00,00,000

2,50,00,000

3,00,00,000

3,50,00,000

4,00,00,000

Pa

sse

ng

er

Nu

mb

ers

YearFlinder Street Station

Southern Cross Station

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Southern Cross Station

• Annual passenger numbers using Southern Cross Station have remained half of those through Flinders Street Station

• Average annual passenger growth:• Flinders Street Station 3%• Southern Cross Station 0.7%

PROJECT PROGRAMME

April 2005 August 2006

15 months late

2000 2001 2002 2003 2004 2005 2006

Intention to redevelop Spencer St station announced

Planning study completed

Civic Nexus announced as preferred bidder

Construction delays begin to occur

Ongoing difficulties related to construction

Construction of intermodal facility completed and GSA finalised

Approvals complete

Design complete

Planned

Completion

Payments to the developer withheld

• $21 million for modifications and additional works to which the Department Of Infrastructure agreed that the developer was entitled under the original contractual terms

• $8.5 million to settle claims to which the concessionaire did not admit liability• $2.75 million to settle a site access claim after the 2006 Commonwealth Games

Over Budget Payments to Developer

Southern Cross Station Authority created

Expressions of interest sought and request for proposals

Construction commenced

Settlement deed agreed to deal with delays

Descoping

• Rail modification and signalling upgrade works were removed from the project• Department Of Infrastructure taking over responsibility for completion of the project• The State received a credit (calculated by an independent reviewer) from the concessionaire for the de-scoped works

DELAYS AND OVER BUDGETThe state required the redevelopment consortium to keep the station at full

operation capacity throughout the project

Work could only occur for three hours at night. This proved even more daunting than originally expected as proved even more daunting than originally expected as construction crews struggled to move equipment in place, complete daily tasks, and leave enough time for clearing the tracks, cleaning the site, and re-electrifying the system before the morning rush

Dangerous work and undesirable hours, construction crews had to be paid much more than normal, often just to sit and wait

DESIGN SPECIFICATIONThe redevelopment had a loosely defined design specification that allowed innovation, but ultimately provided the catalyst for costly flaws in the design

Key

Design

• A transport interchange facility, including a 30 bay coach station• 800 car parking facility• A commercial development

Southern Cross has suffered from design issues. Its award- winning roof caused concerns in the form of complaints from

workers and passengers alike that the station

Design

Requirements

• A commercial development• Rail modifications and signal upgrades• To create a new iconic building in Melbourne, placing particular emphasis

on design• Construction was required to have minimal impact on station operations

workers and passengers alike that the station is not circulating air quickly enough to prevent the build up of train exhaust on the platforms. In 2011, the state agreed to front the funding

for fitting large fans onto the roof.

PEDESTRIAN FLOW

Poor planning can create ‘hotspots’ in pedestrian congestion

The new station layout has resulted in significant inconvenience to thousands of passengers who use the station every day, and the station has been criticised in urban design circles for poor connections to secondary streets surrounding the station and awkward pedestrian junctures

Poor pedestrian access and tram interchange at street level

LEVERAGING THROUGH COMMERCIAL RETAILThe performance of the commercial development is also inconsistent with

forecasts for both inside and outside spaces

November 2006Shopping complex opened as a Direct Factory Outlet (DFO) with food court and Virgin Megastore

• A more efficient complex and a subtle mix of retail facilities and public spaces could have been achieved.

and Virgin Megastore

March 2007With unoccupied tenancies, Phase 2 opens

2009

The DFO relocates to a new site at South Wharf and the shopping centre is refitted by the owner Austexx and rebranded as ‘Spencer Street Fashion Station’

2013Struggling, the shopping centre is again rebranded as ‘Spencer Outlet Centre

• A more efficient complex and a subtle mix of retail facilities and public spaces could have been achieved.• This may have been improved with greater involvement of expert retailers in the design and approval processes

• The lessons learnt by the contractor in building the roof were not carried through to the adjacent retail development.

• This has resulted in less favourable public opinion of the commercial development and detracted from the impact of the overall station development

MORE RECENTLYThe need for comprehensive Due Diligence from the outset……

PTV have funded all night rail services.PTV have funded all night rail services.However, the concession does not

allow for the station to open and night trains do not stop

POSITIVE OUTCOMES OF THE REDEVELOPMENT

• Environmentally sustainable design

• Innovative low-energy solutions

Sustainability

• RIBA International Award • RIBA Lubetkin Prize • Australian Institute of Architects

• Innovative low-energy solutions

• Dispersal of diesel fumes, exhaust gases and hot air without any use of electric fans

Major Awards

• Australian Institute of Architects Victorian Architecture Medal

• Australian Institute of Architects William Wardell Award for Public Architecture

• Victorian Industry Capability Network Industry Achievement Award

APPLICATION IN INDIA - IDENTIFYING AND ATTRACTING THE RIGHT SERVICE PROVIDERS MIX

Travel Retail(eg. Large bazaar, Lifestyle, Vishal Mart…)

Food and Beverages(eg. Haldirams, CCD…)

• Formats varying from mono-brand stores to multi brand stores•Focus on diverse range of fast moving goods

•Fast-food retailers to fine-dine restaurants•Option for take-away/collaboration for on-board food services

Key Metrics

Footfall

Passenger Entertainment(eg. cinemas…)

Parking Facilities

Office Space

food services

• Increasing passenger dwell-time through movie theatres, spa facilities•Ensuring right mix of high vs low turnaround time of services to maintain smooth passenger flow•Multilayer parking facility for all modes of transport•Segregation between long-stay parking for leisure travellers vs short stay parking•Vertical expansion to monetise air-space efficiently•Offer temporary/permanent leasing, conference room facilities, desktops

Visibility

Growth forecast

Exposure to tourism /

In-station Hotel

Other Real Estate

room facilities, desktops•Bank branches

•Quality stay in-station hotel with waiting lounges

•Other construction such as affordable housing etc.

tourism / business

Type of customers

High return with little investment

APPLICATION IN INDIASTATIONS TO REFLECT THE CULTURE AND CHARACTER OF THE CITY

Information centre for famous Tie-ups with tour

Access Wait/Leisure time at the station

Information centre for famous cultural / heritage sites close to the station and famous places

in the City

Local theatre / music shows

Tie-ups with tour operators for short

day tours

Museums preserving city heritage

Vicinity and station exterior architecture to give flavour of the

City specific murals on station walls adding to

Exhibitions / community shows showcasing local

to give flavour of the City

station walls adding to aesthetic appeal

shows showcasing local arts and crafts

LESSONS LEARNT

What does it mean for station redevelopment?

• Align all stakeholders

‘Constructability‘of designs could

arguably have been fully analysed to ensure that relevant parties had

the capacity to

Construction risks need to be proactively

managed by all parties but PPP

models can be very effective forms of • Align all stakeholders

such as railway boards, private players and government bodies

• Focus on whole life-cycle instead of opportunistic approaches

• Predictable and cost efficient processes

the capacity to deliver the project The

complexity of the roof design was potentially underestimated by the private sector partner and its cost was higher

than expected

Major project upgrades, on existing infrastructure

The precinct development was

There are additional risk associated with ‘iconic’ projects and these risks need to be managed

intensively

effective forms of delivery

• Long-term contracts need long term commitment and resources

on existing infrastructure that needs to remain

operation, pose complex technical challenges

Important to ensure construction companies have a suitable team to perform the tasks and manage all the risk that are accepted by them

development was generally well integrated and able to ensure that the project did not dive

the city from the Docklandsdevelopment

Speaker – Paul Holmes

Technical Lead Transport Commercial and Strategy

Melbourne

www.pbworld.comwww.pbworld.com

case study southern cross stationto achieve or satisfy a relevant kpi (kpi failure) then each kpi...

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