high speed rail norway commercial, contractual and organizational issues public conference 16th...
TRANSCRIPT
High Speed Rail NorwayCommercial, Contractual and Organizational issues
Public Conference 16th December 2010
www.pwc.com
PwC
Work stream: Commercial and Contractual Strategies and Organizational aspects
Outline of tasks
Approach
Interconnectivity between the work streams
Preliminary considerations
– Commercial
– Contractual
– Organizational
High Speed Rail Norway Commercial, Contractual and organizational issuesSlide 2
16 December 2010
PwC
Outline of tasks
• Commercial Strategy
- How the procuring Authority might limit and manage the cost of building and operating HSR in Norway ?
- How to get best value for money from the procurement?
• Contractual Strategy
- The key issues to be addressed in delivering successfully HSR in Norway including the allocation of responsibilities and risk
• Organizational issues
- How to structure the organization in order to implement the commercial and contractual strategies and achieve a successful delivery of HSR
High Speed Rail Norway Commercial, Contractual and organizational issuesSlide 3
16 December 2010
PwC
Approach
• Key drivers of approach
- Consider all realistic alternatives at a generic level
- Describe the pros and cons of options, no recommendations in this phase of work
• Key activities
- Review of previously prepared material
- Leverage experience
- Develop lessons from case studies
- Preliminary market sounding
- Understanding key risks
- Recognise dependencies on other workstreams
High Speed Rail Norway Commercial, Contractual and organizational issuesSlide 4
16 December 2010
PwC
Interconnectivity between the workstreams
High Speed Rail Norway Commercial, Contractual and organizational issuesSlide 5
16 December 2010
Market
Technical
Environmental
Rail planning
Economic
Commercial, contractual
and organizational
The Commercial, contractual and organizational solutions chosen should deliver the key requirements defined by the other workstreams.
The tailored solutions will impact the business case for each project
PwC
Commercial Strategy – preliminary considerations
• Life Cycle Cost considerations
- How to avoid a cheap build that requires extensive maintenance?
- How to encourage contractors to look at cost implications for the whole system of their solution? (TransPennine Express)
• Risk identification and allocation
- What are the key risks? (Planning, land purchase, tunnelling conditions)
- How much risk could be allocated to contractor? (Size of project, risk premia, risk of no bid)
- How to deal with interface issues? (Rail-wheel, tunnelling with civils)
• Achieving cost certainty (West Coast Mainline, Gardermobanen)
• Potential for funding through operating profit (Taiwan experience of increasing State support)
High Speed Rail Norway Commercial, Contractual and organizational issuesSlide 6
16 December 2010
PwC
Contractual Strategy – preliminary considerations
• Packaging - criteria and considerations
- Reducing interface risk whilst being able to procure the “best” for each activity (Signalling systems may constrain choice of rolling stock)
• Interfaces
- With the existing network (Specification, access to build and maintain, timetables)
- Outside the HSR programme organization (Roads Authority, City Authorities, Power)
• Nature of contracts
- Traditional approach has been one of input specification (Minimises interface risk)
- More recent trend is towards output (what the asset/service should deliver) or outcomes (the impact of those outputs)
• Charging
- What revenues will the infrastructure generate? How determined/ controlled? (Setting of fares and access charges)
High Speed Rail Norway Commercial, Contractual and organizational issuesSlide 7
16 December 2010
PwC
Organisational – preliminary considerations (1)• Roles to be fulfilled for project delivery:
• Who should be the Procuring Authority ? (Independent Authority has overseen successful introduction of HSR in Spain)
• How much of the work should the Procuring Authority do? (CrossRail engaging delivery organisations)
• How much interface risk should the Procuring Authority allow and manage? (Japanese approach – all work together to resolve)
High Speed Rail Norway Commercial, Contractual and organizational issuesSlide 8
16 December 2010
GovernmentSet policy
Procuring Authority
Define specification
Government Delivery Co
Manage delivery
Contractor/ConsortiumBuild/operate infrastructure
Train OperatorOperate services
Rolling stock contractor
Build/Maintain stock
PwC
Organisation – preliminary considerations (2)
High Speed Rail Norway Commercial, Contractual and organizational issuesSlide 9
16 December 2010
Example organization structure
• on
Government
Procuring Authority
DeliveryCo(Govt owned)
PassengersRegulator
HSR OperatorInfraBuildCo
Constructionsubcontract
Constructionsubcontract
VehicleCo Rolling stock (manufacturer
and maintenance
Signalling and Operationsubcontract
Maintenancesubcontract
InfraCo
Build contract (including milestone payments)
Transfer of assets and liabilities at construction completion
Debt Finance
Equity
Debt Finance Equity
Contractual and payment arrangement
Financing cashflow
Shareholding
Maintenance and operations contract
Operating contract
Customer revenue
Track access
charges
Possibly PPP-type contract (including milestone payments
Thank you
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