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Australia's PPP method in crisis
In the wake of the millions of dollars the successful PPP bidders spent pitching for the Brisbane Airport Link (US$33M) and North South Bypass (US$23M), a Council of Australian Governments is currently developing a plan that could completely change the nature of PPP project procurement in Australia.
The plan is in response to a report commissioned by the government advisory board, Infrastructure Australia, that examined accusations that the current PPP process initiates excessive bid costs, prolongs contract award, and puts off foreign investors.
The report recommends earlier and less sporadic announcements of potential future PPP projects, and requests a more rigorous process into deciding whether a PPP model is actually appropriate for a project.
The clouded issue of PPP procurement in Australia is so severe the report warns that if things aren't clarified soon there will be a situation of "reduced competition and possibly worse value for money."
Leading industry group, Infrastructure Partnerships Australia's executive director, Brendan Lyon said, "Australia needs to deliver a more transparent pipeline of infrastructure projects, (it) is only a small part of a global market for skills and investment. . . we need to focus on how we attract global and Australian investment into our next generation of major projects."
Sources say the real problem is essentially a closed market with few companies big enough to take on the PPP set up, and limited financial outlets being available following the world recession.
The spotlight on PPP projects comes after the high profile collapse of several schemes, not least the London Underground Upgrade that was essentially taken out of the private sector's hands recently, and the cancellation of Sydney's US$4.5bn CBD Metro project.
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