1. Project Alliances in the Rail Industry
- Lessons Learnt, Benefits & Difficulties
Richard Morwood
30 July 2009

3. Topics
• Alliance Fundamentals and Options
• Types and Examples in the Rail Industry
QR - Trackstar (Program Alliance)
- Horizon (Shared Project Alliance)
- Services Alliance
ARTC - North Improvement Alliance (Contracted Alliance)
TIDC - Kingsgrove to Revesby (Project Alliance)
• Lessons Learnt
- Contract Fundamentals – the NO BLAME clause
- Insurance (PI or not to PI)
- Commercial Simplicity, Sub-Alliances
- The Power of KRA’s and KPI’s
- Value for Money

4. Alliances Snapshot
• Collective project risk sharing
• No fault, no blame, no dispute
(except default) (No sue)
• Commercial Framework
– “Direct Cost” paid (no risk)
– Corporate Overhead and Profit
at Risk
– Painshare / Gainshare +
KRA’s
• Unanimous principle based
decision making
• Integrated project team – best
for project selection

5. Alliance Options
• Conventional Project Alliances
• Conventional Program Alliances
• Dual TOC
• Contracted Alliances
• Thin Client Alliances
• Services Alliances
• ECI Hybrids
• NEC3 Options
• PPP/Alliance Hybrids

6. TrackStar Program Alliance
SEQ Infrastructure
Plan : 2006 - 2024
Rail projects
29 projects : 18 years
268 km of new track
$107 billion
(Rail component)
$19 billion
TrackStar Alliance
Program to date is 9
projects : 6 years
More than $1 billion

7. TrackStar Projects
Project 5
Beerburrum to 5
Landsborough Duplication 4
Project 4
1
Beerwah Rail Crossing
Project 1
Caboolture to Beerburrum
Track Duplication

8. TrackStar Projects
Project 2
Robina to Varsity Lakes
3 Rail Extension
Project 3
Corinda to Darra
Rail Upgrade 2

9. QR Horizon Alliance - Shared Project Alliance
• Rail - Road Corridor
• QR
• Main Roads

10. QR Network Alliances
Program Alliances Project Alliances

11. ARTC – North Improvement Alliance –
Contracted Alliance

12. TIDC - Kingsgrove to Revesby
Quadruplication Alliance
Participants TIDC, Leighton Contractors,
AECOM, SKM, MVM
Rail, Ansaldo STS
• 2 additional tracks between existing 4
tracks (Beverly Hills Station to Revesby
Station)
• Civil and rail systems, traction supply
• Revesby Station upgrade
• 12 new underbridges and extensions of
6 bridges

13. Lessons Learnt
Alliances Snapshot
Contract Fundamentals and the NO BLAME clause
• Collective project risk sharing
• No fault, no blame, no dispute (except
default) (No sue)
• Commercial Framework
– “Direct Cost” paid (no risk)
– Corporate Overhead and Profit at Risk
– Painshare / Gainshare + KRA’s
• Unanimous principle based decision
making
• Integrated project team – best for project
selection

14. Woodlawn Bioreactor Alliance NSW

15. Containers transferred from rail wagons onto semi-trailers for
the short haul to Woodlawn

16. Alliance Response What didn’t Occur
• “Oh shit” • ‘Blame’ – Adversarial / Legal
• Emergency PAB via video positions
conference • Communication breakdown
• Emergency AMT – • Delay to operation
rectification, alternatives • Environmental harm
• External expertise – Coffey
Canberra
• Combine PAB/AMT meetings
on site
• Briefings to Collex executives

17. Insurance
Professional Indemnity (PI)
• no blame (no sue) events based cover (Aon, Swiss Re / Vero lead)
• Now 3 underwriters providing this cover for most major Alliances (currently
cheaper than traditional PI)
Contract Works Insurance
• LEG 3 extension (allows rectification to what it should have been)
Design write back on public liability insurance (policy improvement)

18. Commercial Frameworks - The Fundamentals
• Direct costs paid (no risk)
• Corporate overhead and profit at risk
• Painshare / gainshare – costs 50/50 split
• Non cost Key Result Areas (KRA’s)
– Incentivised
– Non incentivised
– Joint TCE / TOC derivation
– No dispute, no sue

19. Commercial Framework – Lessons Learnt -
Gainshare

20. Commercial Framework – The Future
• Transperancy
• Value for Money reporting “ Alliance
– FA = KIS2”
– IE one report
– IV
• Two stage TCE’s
• Always reward outstanding results
• Risk linked program alliances
• Services alliances – annual commercial
framework review
• Community legacies formulised
corporately

21. Sub-Alliances
After excavation (old quarry)
• Next to residential communities
• Based on 800,000 tonnes
• Actually > 1 million tonnes removed
• Staged to suit construction
Worked around critical path

22. Varsity Lakes Landfill Remediation
• 25m deep unclassified landfill for future station
• Better understand risk (volume, density, classification)
• Unique two stage TCE Process – offered real value
Industry priced
Dec 06
• Lump sum – $42m (high risk)
Sub alliance formed
Jun 07
• TCE 1 – $39m
Measured density
Mar 08
• TCE 2 – $37m and productivity
25% volume increase
Nov 08
• Actual outturn – $37m

23. Key Result Areas (KRA)
Driven by Key Performance Indicators (KPI)
• Traditional (e.g. Safety, Environmental, Community & Quality)
• Additional (e.g. Innovation, Industry Change)

24. Seek Gamebreaking Outcomes
• Outstanding outcomes
• Non incremental development
• Achievable but not just
extension of “Business as
Usual”
• Example: Lawrence Hargrave
Drive environmental Approvals
achieved in 6 months from
commencement of concept

25. Commercial Framework – Lessons Learnt – KRA’s
• KRA’s have hidden power
• Be aspirational
– Breakthrough innovation ( not just risk &
opportunity
– Alliance health (beyond safety)
– Sustainability (not just environmental
compliance) LHD
– Community legacy (not just consultation)
– Value for Money (not just gainshare)
– Big Q Quality (Not just QA) INB Sustainability Initiatives
• Energy management and
• KRA’s greenhouse gas emissions
• Waste management and recycling
– Incentivised
• Impacts on local business continuity
– Not incentivsed • Water resource management
• Intelligent integrated design

26. Best Value – More than value for money!
What?
Understanding the clients drivers and expectations
Why?
We must always demonstrate Best Value because
TrackStar’s success depends on it
“Options Assessment Criteria”
1 Whole of life cost
2 Safety and quality
3 Stakeholder positive impact
4 Legacy

27. Criteria 1: Whole of Life Cost
• Net present value of capital,
maintenance and replacements
• Political implications Business Case
• Reliability and availability
Stakeholder World -
Value add mindset
TrackStar’s Option 2D
$216 million
•Whole-of-life
cost
Engineering World - •Safety
Dollars mindset •Quality
•Legacy
Base Option
$270 million

28. Criteria 2: Safety and Quality
• System safety (staging and temporary works risks)
• WH&S (Night work, fatigue issues, interface between trains,
people, equipment)
• Fit for purpose (Operational functionality, technical compliance,
robustness of solution)

29. Criteria 3: Legacy
• Significant new quality assets
• Long term safety improvements
• No harm (environment and safety)
• Ecologically sustainable
• Industry capability
• Interface to the future – savings in
future capital works spend

30. Criteria 4: Stakeholder positive impact
• Minimise disruption during construction
• Ease of maintenance
• Impact on communities
- passengers, services, security, amenity
• Modal integration at stations
• Timeliness of project delivery
• Impact on other Government infrastructure projects

31. How do we achieve VFM through Alliances?
Risk sharing - sharing the pain
and gain
Ability to influence outcomes
Transparency
Flexibility
Stretching people
Saving time and money
Strong and trusting culture
Being innovative
Valuing Safety – Zero Harm

32. How do we measure it?
Getting tension drivers right
Best for project
Need to measure cost and non-cost KRAs, stretch targets
Independent estimators
Cost comparison – with end result
Other drivers
• Time
• Customer and Stakeholder satisfaction
• Environmental performance
• Safety (should be inherent)

33. Alliance Delivery ‘Value-Adds’
Best suited to projects with complex relationships – multiple owners
Government shares savings when market improves
Owner participants continuously involved in decision-making
Greater control over long term maintenance/whole of life costs
Can effectively address stakeholder/community issues
Encourages good design
Delivers government procurement priorities
Creates way to encourage different thinking
Moves beyond financial focus only
Emphasises holistic approach and sustainability