Infrastructure / Other

A new model for delivering value add in PPP design

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Quantifying the value that design adds in a PPP project is no easy feat. Often the value doesn’t reveal itself until well into the life-cycle of the asset, when its ability to withstand demographic, environmental or technological changes is put to the test.

Any upfront value may be completely eroded by factors like urbanization, disaggregation of distribution networks, climate change, new technology or legislation, for example. To create value across the whole life-cycle, the asset must be designed with these changes in mind.

But how feasible is it for designers to effectively predict the long term value of an asset, 10-20 years into the future?

And aside from contractual obligations to do with physical durability, is there any incentive for designers to implement adaptable features that may endure these changes? In the current paradigm, they simply present upfront value, get paid and move on to the next project.

For complex ventures, in which there are performance criteria for people using the asset, this can present a real issue. Can train station infrastructure accommodate a significant population increase, or cope with an unprecedented weather event, for example? Can a prison fulfill new policies relating to inmate rehabilitation, deal with changes in bail law, or comply with new security regulations? Can a school enable new models of teaching? Can a hospital effectively deliver during a pandemic? The list goes on.

AECOM Director Geoff Hardy, who is due to speak at Informa’s National PPP Summit next month in Melbourne, cites a new model which is beginning to emerge in the USA, and more recently Canada.

geoff-hardy Geoff Hardy, Industry Director – Strategic Planning & Advisory, AECOM is due to speak at the National PPP Summit in Melbourne this November.

In this model, designers take on a permanent role for the entire life-cycle of the asset. They join the consortia and have continual input regarding the operational aspects of the project, including maintenance and redesign, as required by external demands. They may reduce their fees upfront if they can recover them by participating over a 20-year concession period.
Geoff argues that this different paradigm of thinking creates greater accountability for designers, which in turn creates better infrastructure and improved financial outcomes.
“How do you expect a designer to create real and meaningful value when they have to imagine so far into the future, including things that they cannot be certain of”, Geoff tells Informa ahead of his presentation at the Summit.

“Designers that stay for the full life cycle have a great deal of insight to contribute to the optimization of maintenance expenditure. They ensure that detailed knowledge of the original design features are not lost and therefore value is maintained as things change”.
So what’s in it for the designer?

“Globalization of the design market is pushing down prices to the point that designers are struggling in a commoditized market”, says Geoff. He argues that this proposed model is a win-win situation, in which designers can better commercialize their input and end users can profit from improved assets and greater cost-effectiveness.

Success stories of the new model, emerging from across the pond, are beginning to arouse interest among government departments and agencies within Australia.

Geoff will disclose full details of these success stories at next month’s Summit and discuss the financial and operational considerations of implementing this new approach to PPP value add.

Book your place at the Summit now.

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