| Background The Partnerships Victoria approach focuses on the purchase of service outputs within agreed quality, quantity and timeframe parameters. This approach differs from traditional public sector procurement methods which usually focus on delivery of an asset or a specified service input. It is important for the state to effectively manage its involvement during both the construction and the operating phases of the new RCH project to achieve the expected outcomes and value from the PPP arrangement. Key findings • The Government is adequately managing its involvement in the design and construction phase of the project. • The timing of development of the state's contract administration manual is not consistent with the Partnerships Victoria guidelines and needs to be progressed. Also, project management documentation requires enhancement, to give more assurance that project risks are being effectively managed. • The governance framework for the project allows effective communication between relevant parties, as well as assessment, monitoring, reporting and actioning of emerging issues and risks. • The state's actual project costs to date are on target and are forecast to remain within the approved budget. • The project company's construction schedule is on target and the independent reviewer appointed for the project has recently reported that the project remains on track for the 21 September 2011 technical completion milestone. • The state is actively monitoring any impact on the project of the downturn in global financial markets. Approximately $1.38 billion in debt and equity funding for the project was contributed in December 2007 and remains in place, in authorized investments. • The project agreement adequately defines the services to be delivered by the project company during the operating phase of the new hospital and includes a comprehensive performance monitoring and reporting regime. Key recommendations • DHS and RCH should promptly execute a memorandum of understanding setting out their respective responsibilities in relation to the project. (Recommendation 6.1) • DHS should complete and endorse the RCH contract administration manual and address observed gaps and weaknesses in project management documentation as a priority. (Recommendation 6.2) |