Gold Coast City Council Desalination Plant

Client:

Gold Coast Water

Location:

Gold Coast

Project date:

August 2005 - December 2005

Approximate Value of Consultancy:

$300,000

Description of Consultancy

GCW’s objectives for the desalination project are:

1. to ensure there is sufficient bulk water available when it is needed;
2. to be able to make an informed choice between implementing the desalination project and proceeding with the Southern Regional Water Pipeline;
3. to obtain community acceptance of the desalination project, before Council meets to decide whether or not to implement the project;  
4. that the desalination scheme meets its performance, quality, time and cost objectives;
5. that the Alliance partner is a reliable producer of bulk water during the operating phase.

Gold Coast Water has determined that the 55MLD capacity desalination project will be developed and implemented (to the extent that a decision is taken to proceed in May 2006) as a Project Alliance.

The purpose of the consultancy is to select an Alliance Partner with the capability and commitment to develop, deliver, operate and maintain the desalination scheme.

Procurement strategy

GCCC had to make a choice between putting capital into a pipeline to connect to the Wivenhoe Dam source through the Brisbane Water Treatment Plant at Mt. Crosby, or to develop its own source namely desalination. It needed the capital choices clear in scope and price at the end of the next summer wet season, namely early May 2006. As the decision was taken to proceed only in August 2005 and the site needed to be settled between 12 options, no approvals or geotechnical investigations had commenced and capacity was yet to be finalized, only an alliance delivery form was possible.

All of the likely suppliers of the Desalination technology for that size plant were all overseas companies the project needed to be widely publicized and the DBO terms made suitably attractive. Industry briefing sessions were held well in advance of the public advertisements.

Challenges to procurement strategy

Needed a package and procurement strategy to attract overseas players in an immature local market and the much larger Sydney Plant had already been advertised.

Alliance transaction management

SPAN Transaction team included specialists who had enough industry, operations, maintenance, marine works and process knowledge to effectively scope the work and assess the tender, legal expertise to draft the contracts, commercial expertise to conclude the negotiations on commercial terms, relationship expertise to facilitate the workshops.

The SPAN deliverables were:

1.   A robust project delivery strategy and process developed and agreed.
2.   Tender package prepared and put to the market,
3.   Suitable contractors appointed.
4.   Framework for High performance Alliance teams developed.

The main tasks undertaken by the SPAN team were:

1.   Scoping of the project.
2.   Generating interest in the project from potential providers so enough specialist providers were interested to ensure a competitive response. 
3.   A tender package was prepared and put to market.
4.   Manage proposal evaluation, including:-

                        Proposal Evaluation Management Plan

                        Proposal Evaluation Report

1.   Recommendation of preferred proponent for the Desalination Project Alliance using the      agreed assessment process.
2.   Facilitate the agreement of 'Concept Design' and TOC for the Desalination Project.
3.   Facilitate signing of 'A Project Alliance Agreement' covering Design, Building and Operation of the facility signed by the Contractor and GCW.
4.   Develop an agreed framework for managing the relationship between the Contractor and GCW

Challenges to Alliance transaction management

Each proponent had a major overseas corporation as a key member of their consortia. The necessary speed of the engagement process was threatened by the approval processes for commercial risk acceptance in their overseas partners.

SPAN consultants involved

Project Director                                               Brad Cowan    

Transaction Manager                                 Greg Cashin           

Lead Commercial Adviser                        Greg Cashin    

Support Commercial Adviser                   John Davis      

Lead Legal Adviser                                     Fiona Yeang     

Facilitator/Relationship Coach                 Angela La Motta  

Facilitator/Leadership team Coach         Brad Cowan   

Client said.....  

SPAN was asked to be involved through each phase of the project on the basis of its performance in developing the procurement strategy and also its commitment to relationship contracting. As part of the procurement strategy SPAN had recommended a design, build and operate alliance (10+5 Years) for the best outcome.

Client said: "Without this alliance we would not have been able to respond effectively to the significant changes in scope when the State Government asked to increase the plant capacity from 55 to 125 MLD'

Press release

Desalination Press Release 27/1/06

SPAN CLOSES GOLD COAST DESALINATION TRANSACTION IN RECORD TIME.

Southern Pacific Alliance Network (SPAN) has completed the transaction phase of the Gold Coast Desalination Design Build Operate Alliance Contract on behalf of Gold Coast City Council.  The Preferred Tender for the 55 ML/d project, Coast Water Consortium (comprising Veolia Water Australia, John Holland Water, SKM and Cardno), was announced on the 28th of November 2005, with contracts signed prior to Christmas. 

Services provided by SPAN throughout the engagement included, project definition and scoping, preparation of tender and alliance contract documentation, tender evaluation, contract negotiation and closure.  SPAN will have a continuing involvement in the project, assisting the Alliance Team to develop the concept design and agree the Target Out-turn Costs by the end of April 2006

The decision to progress a Desalination Plant on the Gold Coast was driven by increasing pressure on water supply and ongoing drought conditions in South East Queensland.  The water supply situation required an extremely fast track and the team managed to complete all scoping and procurement activities and close the contract in less than five months.

The Gold Coast Desalination Project is the largest desalination project awarded on the eastern seaboard, and the second largest in the country.  The contract structure is also the first integrated design build operate alliance agreement, with all project phases covered by a single agreement.

Gold Coast City Council is scheduled to make a decision on whether to move beyond concept design and target cost development in May this year.

For more information contact Greg Cashin, SPAN, Transaction Manager. greg.cashin@alliancenetwork.com.au