Woolgoolga to Ballina Pacific Highway upgrade

Context^[1]

The New South Wales (NSW) Government sought to upgrade a 155 km section of the Pacific Highway between Woolgoolga and Ballina into a dual carriageway as part of an AUD4.9 billion (USD3.7 billion) project.
The completed project aimed to improve road safety, reduce travel times, and improve access and amenity for local residents.
This was a time-critical project that the NSW Government was prepared to accept integration risk for and wanted to deliver quickly.

Under its standard procurement models and internal resources, the NSW Government would have been required to procure and deliver the project as five separate sequential packages.
A sequential procurement approach was not preferable as it would have taken longer to conduct than the NSW Government preferred.
Aggregating the project into a smaller number of larger packages would have resulted in a smaller field of tenderers, limiting competition in the bidding phase.

The NSW Government adopted a delivery partner model which saw it, with the assistance of its delivery partner, repackage the works and tender packages on a trade or activity basis in response to a logical sequencing of works across the entire project.
Under this model the client retains control or significant input over the appointment of subcontractors or suppliers, and either engages them directly or with the delivery partner engaging them as agent for the client.
The NSW Government also adopted an incentivised payment mechanism painshare / gainshare regime with the delivery partner similar to an alliance (or integrated project delivery) arrangement, with a lower fee payable to the delivery partner by virtue of lower risk being borne. This is due to actual costs and profit including corporate overhead being reimbursed to the delivery partner on an open book basis.

Roads and Maritime Services (NSW Government) – Project owner
Pacific Compete consortium – Delivery partner
- Laing O’Rourke
- WSP Parsons Brinckerhoff

Adopting the delivery partner model helped the NSW Government to achieve significant time and cost savings.
The savings associated with the delivery partner model come at the expense of less cost and time certainty when a project owner contractually commits to a project, and sees these owners bear cost and time risks without the protections that a traditional delivery model would provide. This can be managed through painshare / gainshare mechanisms that motivate the delivery partners to help the owner manage these risks.
With the assistance of its delivery partners, the NSW Government was able to implement a similar procurement strategy to one that a tier-one contractor would adopt without having to engage such a contractor under a traditional design and construct (D&C) contract.

Delivery partner models can help project owners achieve significant cost and time savings by assisting with tasks such as project planning, programming, design management, and construction management services.
This allows project owners to adopt procurement strategies that involve the direct engagement of suppliers and subcontractors, eliminating the need to engage a contractor under a traditional D&C arrangement.

[1]	https://investment.infrastructure.gov.au/projects/ProjectDetails.aspx?Project_id=051617-13NSW-NP
[2]	PwC Collaborative Contracting report pp. 25/26
[3]	PwC Collaborative Contracting report pp. 25/26
[4]	https://investment.infrastructure.gov.au/projects/ProjectDetails.aspx?Project_id=051617-13NSW-NP
[5]	https://investment.infrastructure.gov.au/projects/ProjectDetails.aspx?Project_id=051617-13NSW-NP
[6]	PwC Collaborative Contracting report pp. 25/26

Last Updated: 18 October 2021