The business case identified that the MCCD should be pursued as a PPP in order to:
• transfer the construction and future maintenance risks to the private sector
• gain innovation and technology which would enhance the value of the project.
The business case also identified that a complementary commercial development within the precinct would be a desirable outcome of private sector involvement.
The current approved business case was considered by the Government in late 2003 and, subsequently, DIIRD was requested to explore the procurement options on a "no commitments" basis. This was done by commissioning a procurement strategy report from a consultant in January 2004.
The procurement strategy report identified 3 realistic options for procurement and delivery of the proposed new convention centre (outlined in Figure 2A).
Figure 2A MCCD procurement options
Procurement option | Description of option |
Design and construct | State build - using private sector contractor(s) |
PV 1 PV 2 | Design Build Finance Manage (PPP) - MCET as operator Design Build Finance Operate (PPP) - private operator |
Source: Victorian Auditor-General's Office analysis of MPV documents.
The strategy options analysis in the report recommended the "PV 1" option, as it was expected to:
• provide the State with the best value-for-money
• give flexibility to prioritise and actively manage the type of events that used the facility (as the State would maintain operational control)
• leverage from the successful business that had been built up by MCET.
The report also updated the Public Sector Comparator (PSC)10 to take into account environmental changes since the business case was first developed, and analysed the essential considerations specified in the Partnerships Victoria policy suite.
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10 The Public Sector Comparator (PSC) is a financial model which develop a theoretical whole-of-life cost of delivery of a project by the State (by the most efficient means). Under PV policy, the PSC is used as a benchmark to assess the costs bid by the private sector.