6.1  Introduction

The government's Partnerships Victoria approach focuses on the purchase of service outputs within agreed quality, quantity and timeframe parameters. This approach differs from traditional public sector infrastructure procurement methods which usually focus on delivery of an asset or a specified service input.

Contracts entered into by the state with the private sector for Partnerships Victoria projects differ from traditional 'design and construct' contracts because they are long-term service contracts with ongoing performance-based payments for services, instead of upfront milestone payments for the construction of an asset.

As the focus of public private partnerships (PPPs) is on the long-term, effective contract management-including performance monitoring-is critical to the state's achievement of the expected value from the arrangement during both the construction and the operating phases.

To assess whether there is adequate supervision of the delivery of high quality infrastructure and services for the RCH redevelopment project, the audit examined:

•  the state's management of its involvement in the design and construction phase of the project

•  arrangements to supervise the long-term role of the private sector partner during the operating phase of the arrangement.

Excavation and early construction works at the new RCH site in August 2008.