Were risks allocated in accordance with the Partnerships Victoria policy?

The Partnerships Victoria Public Sector Comparator (PSC)6 was used as the basis for allocating risks.

The following parties were consulted on the risk allocations:

•  Spencer Street Station redevelopment project team

•  DOI

•  DTF.

Risks to be transferred as a result of assessment from the PSC were reviewed by the project team to ensure the best value-for-money. If the proponent's price for the risks was significantly higher than the State's costs, it either allocated the risk to the proponent or retained the risk with the State.

An example of a State-retained risk we observed was the cost of operating insurance up to the commencement of the operating phase, which was related to the decision to maintain services at the station during the construction phase.

Tenderers were required to indicate which risks they were willing or unwilling to accept in their bids. Consistency of a bid with the Government's preferred allocations was one of the main considerations in choosing the successful bidder.

The final risk allocations agreed by the State and the proponent are detailed in the SDA. A summary of the risk allocations is in Appendix C of this report. Some of the risk allocations achieved a better outcome for the state compared with the preferred allocations described in Partnerships Victoria.

Southern Cross Station's iconic wave shaped roof under construction.

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6  The PSC estimates the hypothetical risk-adjusted cost if a project were to be financed, owned and implemented by government, so that this hypothetical cost can be used as a benchmark against private sector bids. Further information on the PSC can be found at <http://www.partnerships.vic.gov.au>.