2. Quo Vadis? Issues and Opportunities for Australian Infrastructure Marko Misko Partner, Construction and Major Projects, Clayton Utz 20 September 2012 © Clayton Utz

3. Overview The general state of the infrastructure market The project pipeline Market appetite for projects and risk Project delivery methods Funding sources Capital vs maintenance projects Procurement and tendering Future market developments

4. The general state of the infrastructure market What is the market? Public Sector Private finance Public finance Private Sector Resources Other

5. The general state of the infrastructure market (2) Some key indicia: Construction sector - negative growth Resources - boom or bust? Toll road modelling concerns Cost overruns Financial default Skills shortage?

6. Project Pipeline... or Pipe Dream? The benefit Ongoing efficient and full utilisation of resources The cost Contraction of resources and capability (through demobilisation) The opportunity Greater public/private sector collaboration/dialogue Matching of demand and supply

7. Market appetite Debt, equity, contractors Function of: Recent major project experience Global financial conditions Implications: Planning, packaging, procurement and funding Market soundings/increased dialogue

8. Project Delivery Methods Major project ≠ PPP Greater focus on packaging (at a macro level): size/capability delivery method/risk allocation source of finance whole of life opportunities

9. Project Delivery Methods (2) Risk allocation (at a micro level): market appetite procurement/negotiation processes value for money

10. Funding Sources Public Traditional/ D&C Managing Contractor Alliance Private - PPP Availability charge Third party revenue (with/without patronage risks) Hybrid Government contribution split packages Other

11. Procurement and tendering VFM - not just for the public sector, but the private sector too Tendering for projects has to be bankable

12. Procurement and tendering (2) Bankability a function of: duration complexity/volume of paper risk "numbers game" overall tender cost / scope for reimbursement The challenge and response are clear!

13. Capital vs Maintenance projects Focus too often on capital - ribbon-cutting But maintenance is the "old chestnut" (whether roads, public housing, defence facilities) Greater focus needed on: maintenance funding delivery methods maximising "bang for buck"

14. Future Market Developments- BIM and IPD Implications for: design processes whole of life cost buildability maintainability proactive risk mitigation legal risk profile Rethinking delivery methods and industry participation Prefabrication

15. Questions?

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