The South Australian Government approved the procurement of the new Royal Adelaide Hospital via a Public Private Partnership (PPP) delivery model for a contract term of 35 years from financial close. This partnership will see the public sector (SA Health) continue to operate the hospital and provide all core clinical services, staffing, teaching, training and research, while the private sector will finance, design, construct and maintain the new hospital building. 

Advisian’s role 

Advisian acted as Financial and Transaction Manager for the New Royal Adelaide Hospital for the Major Projects Unit of the Department of Treasury, South Australia. The role commenced in 2010 and concluded at the time of financial close in mid-2011. Advisian worked with Treasury and the government side project team to develop the processes required to bring the project to a successful financial and contractual close in June 2011. This involved full interaction with the legal and financial/commercial teams as well as specific areas of the technical team as they related to financial and commercial considerations. 

Advisian’s roles and inputs included: 

  • analysis of systematic transfer approaches and input to finalising methodology for risk transfer quantification 
  • analysis and advice on potential alternative funding mechanisms related to value for money 
  • review and analysis of commercial and financial submissions from shortlisted bidders 
  • advice on the negotiation strategy and participation to remove GFC style clauses from the commercial conditions 
  • participation in major negotiations and interactive bidding process 
  • advice on evaluation procedures and attendance on relevant subcommittees and steering committee presentations 
  • assistance in drafting relevant papers to the steering committee and ultimately to Cabinet for progress reporting and approvals 
  • assistance with analysing commercial issues and in key negotiation points in the project Deed and D&C Contract 
  • formulating the closing process and managing it for the State including interacting with the South Australian Government Financing Authority as well as the Major Projects Unit 
  • assistance and advice on audit trail and information storage 

Results 

The New Royal Adelaide Hospital was at the cusp of government retrieving some of the risk transfer lost at the time of the GFC. It was innovative particularly in its use and commercial approach to Interactive Tender Processes and in introducing not only a state-of-the-art acute and teaching facility but also shepherding in a new model of care. The commercial terms and conditions were similar to the pre GFC status in Australia and the project was successfully funded under a competitive approach without syndication or market disruption risk. The risk transfer and value for money approach was effective and compliant with policy and good practice and delivered