Another key consideration addressed by the investment evaluation report was the analysis of the available procurement model for the new facility. The report addressed the following options:
● design and construct model
● managing contractor model
● Partnerships Victoria model.
Figure 3C shows the analysis of the advantages and disadvantages of the procurement models that were reviewed as part of the investment evaluation report.
Figure 3C Advantages and disadvantages of project procurement models
Advantages | Disadvantages |
Design and Construct model | |
• Potentially facilitates a shorter procurement timeframe • Separates construction and operational aspects such as maintenance | • State remains highly exposed to design risks and cost overruns • Limits focus on whole-of-life cost considerations • Requires significant upfront capital funding |
Managing Contractor model | |
• Open book partnership to develop final design • Transparent pricing allows DHS to make value judgements on inclusions/exclusions | • Limited focus on whole-of-life costs • Significant exposure to design changes post selection of managing contractor, which can generate costs to the state |
• Potentially faster delivery timetable given design not fully developed during tender process |
|
Partnerships Victoria model | |
• Robust delivery model with a clear focus on risk allocation to generate value for money • Locks in high quality outcomes on a defined cost basis • No requirement for payments until operational commissioning • Provides an opportunity for private sector delivery of an expanded facility for Frances Perry House | • Potentially adds six months to the timetable • Structure of the deal/scope of services • Lack of flexibility for change • Impacts on MH's shared services business |
Source:Investment evaluation report, March 2003.
The investment evaluation report also included a more detailed analysis of various potential Partnerships Victoria options for the RWH building works component of the project. The following four Partnerships Victoria options were assessed in detail:
• option 1-the private sector designs, builds, finances and maintains ('DBFM') the RWH (including the car park), upgrades the central plant for the entire site and provides only limited maintenance and other asset-specific services to the whole Royal Melbourne Hospital site
• option 2-as with option 1, but with service provision limited to RWH
• option 3-as with option 2, but with stand-alone plant for RWH only
• option 4-as with option 3, but with only basic investment in the RWH plant.
These options were analysed against the following criteria by the investment evaluation report:
• control of design, capital cost and timetable
• recurrent cost optimisation
• opportunities for risk transfer
• complexity
• potential to deliver value for money.
Based on a detailed analysis of the different procurement options the investment evaluation report recommended that a Partnerships Victoria procurement model, (option 2) should be adopted for the RWH building works, building the hospital at the Royal Melbourne Hospital site (option M5).