The Importance of Excellent PPP Mobilisation, and Challenges to Delivering This

Presented byStephen McIntyreGroup General Manager – Healthcare & PPPs

Golden Rule

• If a contract is firmly established going into operations phase, then it is in a strong position to deliver the services well, at a commercially sustainable level

• A poorly mobilised contract will likely require years and $ millions to recover

• Mobilisations cannot be underbid, underplanned or underinvested

• Mobilisation is not the place to save money!

• Excellent mobilisation builds a great relationship foundation for the challenges sure to arise throughout the project

• Spotless’ early year performance history, abatement experience and portfolio financial success, prove the above factors

An effectively mobilised PPP is well positioned to become a successful PPP

Excellent mobilisation significantly reduces contract term risk!

About Spotless

Integrated Solutions

Diverse and committed staff deliver millions of hours a year across more than 100 essential services. We

are unmatched in our ability to deliver integrated services.

Take Great Care of Assets Across all Stages of the Lifecycle

Benefits from our management of a PPP asset include:

• Improved financial performance

• Managed risk

• Improved services and outputs

• Corporate/ social responsibility

• Demonstrated compliance

• Enhanced reputation

• Improved organisational sustainability

Proven PPP Partner for the Long Term

• First PPP awarded in 2002

• Spotless has Australia’s largest portfolio of social infrastructure Public Private Partnerships (PPPs)

• 16 PPP Contracts:

• 5 x Healthcare

• 7 x Education

• 1 x Defence

• 1 x Corrections

• 1 x Leisure

• 1 x Property

Representative PPP

Contracts

Southbank Campus of TAFE Brisbane

• Commenced this 25 year PPP within a consortium Axiom Education in 2005

• Partners: Finance-AMP Capital Infrastructure / Design & Construct-John Holland

• Dedicated Life Cycle Manager role - responsible for integrating the WOL planning and refurbishment program with TAFEQB

• Introduced a Strategy Development Board to engage the contract delivery team and empower them to proactively manage initiatives for contract improvement

Southbank Campus of TAFE Brisbane

Services:

• Electrical • Infrastructure

maintenance

• Pest control • HVAC

• ICT • Grounds

maintenance

• Kitchen

hands

• Laundry /

linen

• Fire • Lifecycle

replacement

• Plumbing • Porterage

• Security 24 / 7 • WH&S consultancy • Cleaning

New Sydney Convention, Exhibition and Entertainment Centre

Darling Harbour Live PPP was commenced in 2012 with mobilisation in December 2016

Our role as the Facility Manager includes:

• Asset management

• Comprehensive FM Services, including all planned and reactive maintenance and lifecycle replacement for building services, building fabric and select FF&E

• High-level façade, window and internal cleaning

• Horticultural and general maintenance services to the public zone adjacent to the Core Facilities

• Utilities management

Royal Children’s Hospital Parkville

Commenced 25 year PPP with Children’s Health Partnership in 2011

Integral in the design and construction stage of the New Royal Children’s Hospital

Now responsible for maintaining the facility, including two retained buildings (12 year old research building with 6000m2 of floor space and 25 year old administration building with 5000m2 of floor space)

Directly employs approx. 50 staff with a number of specialist subcontractors assisting in maintaining the RCH Facility

SERVICES:

• Asset management • Car parking • Engineering

services

• Facilities management • Grounds maintenance • Help desk

• Pest control • Security • Waste management

PPP Mobilisation Learnings and Experience

Current Spotless PPP Mobilisations

• 3 Hospitals

• New Royal Adelaide Hospital

• Bendigo Hospital

• Sunshine Coast University Hospital

• 2 Primary & Secondary School Contracts

• Victoria New Schools PPP

• WA Schools PPP

• Darling Harbour Live Convention Centre (ICC)

• Australian National University student accommodation

Annualised Year 1 Revenue of mobilisations > $130 Million

People - a key success factor

• Quality of leadership driven by complexity of contracts

• The emphasis on people also comes down to excellent relationships

• Put in place your senior, experienced and committed FM team right from the start

• The right team and leadership with an unyielding can do approach

Transition from Bid to Mobilisation

• Mobilisation of a PPP begins at commencement of Bid

• All stakeholder interactions during bid phase form critical foundations for mobilisation and operator commencement.

• Spotless has developed formal internal bid guidelines that set expectations for delivery in mobilisation

• Continuity of knowledge from bid to mobilisation (and then operations) cannot be underestimated

A great mobilisation is only possible if closely linked to the bid!

Critical Design & Construct Phase

• Workable design… From bid stage through D&C

• Critical to capture all modifications and variations right throughout mobilisation and beyond

• Design and construction drives all service delivery plans, maintenance plans & Asset Management plans

• All of the above can only successful with a very tight and well understood contract, interface agreement and service delivery specifications

• All elements in D&C Phase must be critically assessed given KPI’s and abatement regime

The FM has a tremendous responsibility through D&C phase

Commissioning, Witness Testing and DLP

• Significant resources / expertise to ensure services delivered as committed

• The service provider only gets “one chance” to get this right

• All relevant IT development and interface testing is completed at this time

• Spotless now gaining significant benefit due to recent acquisitions:

• AE Smith

• UASG

• TGS Security

• Nuvo

A Milestone FM mobilisation hurdle is what we refer to as “DLP plus 1”

Mobilise across the sector not by contract

• In early mobilisations, Spotless was continually “reinventing the wheel”.

• Inefficient and poor sharing of best practices

• Poor risk management as it relied on contract staff ability rather than Spotless systems and expertise

• Resulted from PPP’s sitting in service sector, not a combined “PPP sector”.

• Group Operations Managers now have oversight of all related contracts, drive staff to collaborate and share.

• We actively disseminate best practices and innovations, daily and via regular team interaction.

• Commercial benefits:

• Sourcing and procurement to maximise purchase power

• Consistency of goods, services, sub contractors

• Consistency of systems and software

Learnings from historical mobilisations

• The “lower complexity assets”, such as primary and secondary schools, can present greater challenges due to lesser technical focus:

• Grounds and gardens

• Playing fields

• Damage and vandalism

• Bins and cleaning

• FFE

• There are 2 distinct phases/ elements of PPP mobilisations:

• Ensuring that we deliver to all milestones, deadlines and commitments

• Maximise commercial positions

What appears simple can be the most challenging!

PPP Mobilisations Compared to Traditional Contracts

• Lengths of contract dictate a totally different approach

• Enables greater payback time for investment to fix ‘surprises’

• Regardless of how tight a contract is, impossible to foresee every instance….many arise at mobilisation

• Very rarely have a D&C phase in traditional contact mobilisations:

• So much risk is in the D&C

• Building in quality and serviceability rather than addressing with labour and human intervention afterwards

PPP mobilisations as a sector, are more closely related than a PPP and traditional contract in the same industry

Summary

Summary

Key success factors to mobilising and operating contracts well, regardless of the sector include:

• Don’t save $ on mobilisation

• Good people

• Strong relationships

• Detailed focus from day one of bid

PPPs are nothing like ‘traditional contracts’

Thank you