In July 2002, the then Spencer Street (now Southern Cross) Station Authority entered into an SDA with a private consortium (the concessionaire) for the redevelopment of the station in accordance with Partnerships Victoria policy and guidance. Under the SDA, the concessionaire was assigned responsibility to redevelop the station and, upon completion, manage the operations of the station for a 30-year period.
Construction of the station was to be completed on 27 April 2005. The concessionaire subcontracted the design and construction of the station to the developer. Delays were encountered by the developer and the agreed construction milestones were not met.
These delays led to the negotiation of a global settlement agreement between the State of Victoria, the concessionaire and the developer. This settlement agreement was supplementary to the SDA, and amended some of the risk allocations and responsibilities that had already been agreed by the State and the private party.
The Partnerships Victoria policy4 suite provides a framework and guidance for the establishment of partnerships with private sector entities for the provision of public infrastructure and related services.
One of the principles of Partnerships Victoria is the allocation of key project risks to the party which can best manage those risks in order to achieve value-for-money and the best outcomes for the State of Victoria. Further guidance, including government preferred risk allocations, is provided in the Partnerships Victoria Risk Allocation and Contractual Issues Guide5.
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4 Found at <www.partnerships.vic.gov.au>.