The new Royal Children's Hospital project was a $946 million hospital upgrade (Partnerships Victoria 2011). The project was the biggest re-development of its kind in Victoria and designed to improve the quality of the delivery of children's health services (Partnerships Victoria 2008: p.1; Victorian Auditor-General 2009: p.11) across the State. The project comprised a new 165,000 square metre hospital facility over seven levels that had the capacity to treat an additional 35,000 patients annually, an expansion of existing facilities such as accommodation for parents and childcare services, 2,000 car parking spaces, extra play areas and improved access to parkland, enhanced research and training facilities (Partnerships Victoria 2011) and utilised a range of environmental initiatives that may potentially lead to a 10 % reduction in overall energy savings (Lend Lease 2011).
More specifically, the Government's objectives related to (Partnerships Victoria 2008: p.2-3):
- Modern facilities e.g. supply of accessible, cost effective and high quality services;
- Service delivery care e.g. that the provision of services remain operationally efficient;
- People e.g. attraction and retention of high quality employees;
- Future-proof and flexible e.g. supports adoption / transition to new technologies, addresses emerging trends in paediatric healthcare and changes to government policy, legislation and standards;
- Teaching and research e.g. provision of facilities and an active learning environment for delivering teaching and research excellence;
- Stakeholder relationships e.g. development and continuation of productive relationships with service users, staff and the community;
- Value-for-Money e.g. delivery of project within budget and schedule; and
- Sustainability e.g. adherence to government environmental policies and objectives.
The Victorian State Government was the project's contracting entity and signatory to the Project Agreement (Partnerships Victoria 2008: p.10) as well as the owner of all operating equipment (to be maintained and replaced by the concessionaire during the length of the contract's operational term (Clayton Utz 2007b: p.202)). The new Royal Children's Hospital, on behalf of the Government and through the Department of Health, will continue to operate all core clinical services, employ and manage clinical staff as well as provide training and research facilities (Department of Health 2012a; Royal Children's Hospital 2012). The Department's Major Projects Team is thus accountable for delivering the new Royal Children's Hospital on behalf of the State and the new Royal Children's Project Team is responsible to the Hospital for the delivery of the project (Royal Children's Hospital 2012). In November 2007, the Children's Health Partnership, a private sector consortium, was awarded the Project Agreement to design, build, finance and then maintain the new Royal Children's Hospital for a 25 year period (Partnerships Victoria 2011; Department of Health 2012a). In December 2036, the facility will be handed back to Government at nil cost when the operational phase is complete (Partnerships Victoria 2008: p.19).
The consortium consisted of:
- Babcock and Brown International Pty Ltd, the project's equity sponsor (Partnerships Victoria 2008: p.10);
- Goldman Sachs and JBWere, underwriters of the debt finance component for the facility's construction;
- Bovis Lend Lease, contracted to design, build and commission the new amenities (Royal Children's Hospital 2012); and
- Spotless P&F Pty, for providing facilities management (Partnerships Victoria 2011).
Project delivery consisted of two stages. Site preparation for Stage One commenced in 2007 (Department of Health 2012b). This involved the construction works for the new hospital as well as initiation of the operational phase (Partnerships Victoria 2008: p.9) which was scheduled to begin in October 2011 (Royal Children's Hospital 2012; Department of Health 2012b).
During that period (in 2008), and after approval from the Minister for Health, sponsorship control of the original equity requirement for the Children's Health Partnership was sold by Babcock and Brown International Pty Ltd (the parent company) to its London Stock Exchange listed satellite fund called Babcock and Brown Public Partnerships (Victorian Auditor-General 2009: p.15) for commercial reasons (the fund now trades under the name 'International Public Partnerships Ltd' (Royal Children's Hospital 2012)). In 2009, Babcock and Brown International Pty Ltd announced that its Australian listed entity, Babcock and Brown Limited had entered into voluntary administration (Victorian Auditor-General 2009: p.72). After seeking legal advice, the Government confirmed there was no risk to the State as all equity funding had already been paid to the Children's Hospital Partnership during 2007 (Victorian Auditor-General 2009: p.71) and therefore neither Babcock and Brown International Pty Ltd or Babcock and Brown Public Partnerships were obliged to provide further funding (Victorian Auditor-General 2009: p.72) for construction costs under terms of the Project Agreement.
The first stage of the project was delivered on time and on budget (Infrastructure Partnerships Australia 2012) and the hospital was subsequently judged by Infrastructure Partnerships in 2012 as being the best new project in Australia due to its "design excellence, engineering quality and its scale" (Infrastructure Partnerships Australia 2012). Stage Two is currently underway (commencing in 2012) and involves the demolition of buildings no longer required, the development of the commercial precinct, underground car park spaces, consulting suites and the current site reinstated as parkland (Department of Health 2012b). This final stage of the project is scheduled for completion in December 2014 (Partnerships Victoria 2008: p.9).