The PPP was supported by reasonable analysis and robust procurement
The analysis in 2009 and 2010 supporting a Design, Build, Finance, Maintain PPP was reasonable. After considering DoE’s Strategic Asset Plan and expected enrolments, the final package included 4 primary schools and 4 secondary schools. Secondary schools were included because their larger costs and more complicated design offered greater efficiencies than primary schools. Further analysis and market sounding in 2014 confirmed the package was likely to provide value for money.
The strong tender process with an independent probity advisor made it more likely that predicted or expected benefits could be achieved. Six companies responded to the expression of interest and 3 were shortlisted. EduWest’s successful bid of $631 million was assessed to save $100 million compared with the State delivering the project.
Read more … The PPP was supported by reasonable analysis and robust procurement
The project is on track so far despite issues opening the first schools
The 4 primary schools and the first stage of the first secondary school (Aveley Secondary College) were handed over to DoE on time, and the remaining secondary schools are on schedule. Construction times for primary schools have been shorter than those built using traditional procurement even though they must be defect free at Commercial Acceptance.
The PPP contract includes whole of life maintenance costs, and clearly defines what is and is not covered. Any changes to facilities and extra school equipment (such as playground equipment) initiated by the State or schools will be additional to the $631 million contract figure. As is normal in long-term contracts, costs will be also affected by interest rate changes and indexation.
By the end of May 2018, contract modifications for whole of life asset maintenance and replacement costs had added $1.68 million to the contract over 32 years (representing 0.26% of total contract costs). Another $1.35 million in contract modifications were also under consideration at the time of audit.
Contract parties were under-prepared for the transition to operations in 2017 which led to dissatisfaction and comparatively high financial deductions under the contract in early operations at the 4 primary schools and Harrisdale High School. Some of the more significant examples were:
- EduWest was under resourced. Cleaning and gardening staff were not recruited early enough and lacked training. Valid working with children and police checks for cleaning staff were not provided until the 20th school day of term 1.
- Some furniture and equipment, such as principals’ furniture and teacher bookcases was replaced. This was because primary school principals had personal preferences but limited involvement in selecting these items due to timing of their recruitment. Earlier appointment of secondary school principals allowed them to be more involved in the selection process.
- DoE contract management staff were employed 2 months before the schools opened which limited information and support provided to schools in the lead up to operations.
- The electronic system (QFM) for recording and measuring school jobs developed by EduWest was not well tailored to contract requirements, resulting in some school jobs being incorrectly prioritised in the system.
Resolution of these resourcing, furniture and equipment, and QFM system issues and lessons learnt from opening the first 5 schools minimised concerns during the opening of Aveley Secondary College in 2018.
After more than 1 year of operations school principals are generally satisfied with services and their facilities. From December 2016 to March 2018, 84% of 2,539 school jobs were completed on time (Appendix 2). Principals told us that PPP facilities were comparable with other schools, while maintenance was quicker.
Read more … The project is on track so far despite issues opening the first school
Governance is sound but DoE lacks contract management tools and is yet to take full advantage of PPP learnings
The project has sound governance and there are good working relationships between all contract parties. A steering committee gives strategic leadership and a cross-agency project control group provides direction. DoE, Strategic Projects and EduWest also meet to discuss minor works, complaints, occupational health and safety and school facilities management.
However, DoE has not ensured that all processes and tools are in place to manage the contract. It has 2 dedicated contract staff to check detailed workings of the contract, but has not created a contract management plan and audit or inspection program. Nor has it ensured that EduWest provides the performance monitoring program required in the contract. High value and long-term contracts need these contract management tools to ensure building maintenance and other services meet contract specifications.
Although it is early in the contract, DoE has adopted some design and construction lessons from the PPP project for some other primary schools due to be completed in 2019. Potential benefits of other design features such as lightweight steel construction, solar panels and utility management systems have been recognised but not yet adopted elsewhere in the public school system. The secondary school price has been used as a benchmark for new builds but the design has not yet been used. DoE believes it is too early to adopt the secondary school design because only 1 stage of 1 school has been built.
The PPP schools will eventually give DoE a clear picture of whole of life maintenance costs which it expects will lead to a better understanding of cost information across its school system.