In 2012, prompted by NSW Commission of Audit recommendations, the NSW Government decided to embark on a reform program that would subject Sydney’s road operations and maintenance to contestability. This would allow private contractors to bid for road maintenance works, resulting in better outcomes for Sydney’s road assets and network. It would also make road maintenance more cost-effective and enable the Roads and Maritime Services (RMS) to manage the work more efficiently.

However, before it could begin, RMS needed a Program Management Office (PMO) to develop the business case to support the program. The PMO would identify potential options for delivering road maintenance, manage procurement of contractors and formalise how the new arrangement would work in the future. In October 2012, RMS appointed Advisian to create and lead the PMO.

Challenges

The PMO was an integrated team, including Advisian and RMS staff, and external legal and financial advisors.

The PMO needed to identify global best practices, principles and methods in road maintenance. It would then use this information to form a business case for the future delivery of Sydney’s road maintenance and recommend a preferred solution to Government.

Extensive research

The PMO conducted extensive research to form a clear picture of potential options for increasing contestability. To aid this process, the PMO hosted an industry forum that drew together over 100 industry organisations from Australia and around the world.

The forum provided the PMO with an opportunity to explain the nature of RMS, Sydney’s road assets and the role of the network. Attendees were encouraged to provide written submissions that detailed issues RMS might face, and offer advice based on their own best practices. These submissions allowed the PMO to open up direct discussions with industry bodies and road services jurisdictions, which helped determine the best options for contestability. During the consultation process, more than 40 one-on-one interviews were undertaken with industry to inform the business case.

A compelling business case

Working closely with RMS, the PMO used research insights to develop a business case supporting road maintenance reform that met guidelines set by NSW Treasury.

This included a financial model showing how the reform program would benefit the network and customers. Many variables were considered in identifying and recommending the best approach, including the activities and types of assets; potential sub-divisions of Sydney for more efficient maintenance; and the type, length and number of contracts required.

The business case incorporated all of this information to present a range of options for road maintenance reform. In early 2013, it was submitted to and approved by the NSW Government.

Aligning processes

The reform program required RMS to change from a road maintenance supplier to an informed asset-owner and client. This transition required significant changes within the organisation so that it could properly support the new contestability arrangements.

To assist the change, the PMO worked closely with RMS on an organisation-wide restructure, helping to redesign processes and establish new internal capabilities.

Procurement and transaction management

Drawing on our extensive experience, the PMO developed Expression of Interest (EOI) and Request for Proposal (RFP) documents. These detailed the relevant asset information, specifications and scope of material to allow prospective contractors to draft proposals. The office also prepared a pre-tender estimate and cost model so that RMS could gauge the cost-effectiveness of contractor proposals. The PMO then conducted a two-phase procurement process, comprising the EOI and RFP, to find new contractors that would manage road maintenance for RMS in the future.

Contract management office

RMS needed a way to manage road maintenance contracts and sustain contestability once the reform program was complete.

Under our leadership, the PMO created a contract management office (CMO) to administer future road maintenance contracts on behalf of RMS. It conducted an extensive organisational design process to establish how the CMO would function within RMS. The PMO then designed an operating model for the office that detailed staff roles, office culture, processes and systems and the tools the office would need to continue to manage ongoing contracts on behalf of RMS.

Result

In managing the PMO, we worked closely with RMS staff and other stakeholders to create a model for contestability that met RMS’s objectives.

The preferred option will see external service providers undertake operations and maintenance of the Sydney Region as ‘stewards’ of the network.

The stewardship arrangement means that the service providers will act as though they are owners of the assets, with a commercial model and contract that closely aligns their key performance indicators with RMS’s priorities. This encourages innovation and a focus on customer service, and allows the department to focus on strategic ownership and asset management.

The business case was accepted by NSW Government, enabling Advisian to lead the PMO through a comprehensive procurement process to secure suitable contractors for RMS.