1. Summary of the Project, Product, Framework
In 2022, TfNSW completed the Western Harbour Tunnel and Sydney Harbour Tunnel Asset Manager transaction, marking the conclusion of the first phase of a unique procurement model. The first of its kind, the Asset Manager model can be likened to a disaggregated public-private partnership that leverages the expertise and resources of the asset owner, D&C contractor, and asset manager (AM).
The key features of this model include the early procurement of the AM, which contributes its expertise into the D&C specifications, procurement and build. The benefits of this model include early consideration of whole-of-life, cost savings, and sharing of knowledge.
2. Description of Project or Framework Addressing the Assessment Criteria
Transport for New South Wales (TfNSW) is a leading transport agency and their innovative approach towards the Western Harbour Tunnel and Sydney Harbour Tunnel Asset Manager transaction in 2022 highlights their commitment to innovative, best practice asset management principles. The Asset Manager model, the first of its kind, is a unique project structuring approach akin to a disaggregated public-private partnership. Improved whole-of-life outcomes are delivered by the Asset Manager model by harnessing the expertise and resources of the asset owner, design and construction contractor and asset manager.
Background
The inspiration and need for the Asset Manager model was driven by the following key requirements and logic:
- TfNSW recognised that the life of the new Western Harbour Tunnel would be in excess of 100 years and the whole-of-life solution was equally important (if not more important) than the design and construction solution alone.
- In order to genuinely include whole-of-life input into the design, the Asset Manager organisation would need to be one that has demonstrated expertise in the management of tunnel operations, maintenance and lifecycle.
- The early incorporation of the Asset Manager’s whole-of-life input is needed to ensure recommendations are appropriately incorporated. This is due to the phenomenon whereby the cost of change increases and the ease of changing decreases as a project develops over time.
- To achieve early input, this would need to (at latest) be provided in conjunction with the D&C procurement, due to the significant investment that each tenderer would make in developing its concept designs during the tender phase. This has the implication of needing either a DCOM, PPP or (ultimately) the Asset Manager model.
- In weighing up these models, TfNSW recognised that independence of the Asset Manager is a key consideration in getting the best whole-of-life advice. Consortia often have “best for bid” obligations in the consortium agreements which may run counter to the optimisation of whole-of-life. Similarly, by forcing the market to form their own D&C and O&M partnerships, TfNSW would potentially be limiting itself from procuring the best Asset Manager available on its own merits.
- The skills and capacity available in the market were also a key concern, and TfNSW was keen to encourage solutions that would attract greater investment in asset management capabilities to Australia. Retention of the intrinsic knowledge from the incumbent staff on Sydney Harbour Tunnel was also of high importance to the model.
Benefits
The Asset Manager model developed by TfNSW addresses all of the above requirements and, in doing so, provided an innovative new model with the potential to transform the way projects are procured in the future. By incorporating consideration of whole-of-life aspects early in the project lifecycle, when the cost of change is still low and the ease of change is high, genuine improvements to the whole-of-life performance will be achieved in line with asset management principles. The benefits include:
- Optimised performance
- Reduced risk
- Improved customer outcomes
- Improved sustainability and resilience
Use of Best Practice Asset Management
| TfNSW ensured that asset management thinking has been included from the Needs Analysis and Needs Solution phases, as illustrated by the Capability Delivery Model |
Best practice asset management principles were considered in the formulation for this new model, with thinking led by Certified Fellow in Asset Management, John Hardwick (TfNSW) and Chartered Professional Systems Engineer, Jeff Dusting (CBS Group).
In considering the AM Council’s Capability Delivery Model, it can be seen that TfNSW, through the Asset Manager model, has been able to incorporate asset management right at the inception of this major infrastructure project in the needs analysis and needs solution phases.
The concept of considering the cost and ease of change over time is also well-documented by systems engineering pioneers, Wolter Fabrycky and Benjamin Blanchard, however is not well understood outside of systems engineering and asset management practitioners. By bringing in the skills and experience of Systems Engineer, Jeff Dusting, TfNSW was able to make a strong case to NSW Treasury and Government for adopting a novel approach.
Degree of originality and ingenuity
The Asset Manager model is new to the market and the authors of this nomination are not aware of any other usage of such an approach before. Significant work was undertaken by the nominee and its advisors to develop the business case, service delivery model, commercial model, contract model and contract administration tools that would enable this model to be implemented.
TfNSW’s advisory team for the Asset Manager transaction included:
- CBS Group – Provision of technical specification, market advisory, project management and transition management support services.
- Infrastructure Advisory Group – Transaction advisory and management services
- Ashurst – Drafted a new Asset Manager contract to underpin the innovative new model
- Firecone – Provided commercial advisory, contract administration tools and ruthless negotiation services
- CICA – Provided lifecycle modelling toolset
Value to the Community
The benefit/value of the Asset Manager model to the community cannot be overstated.
The Asset Manager model enables TfNSW to deliver better whole-of-life outcomes, resulting in safer and more efficient transport infrastructure for the community. Asset resilience and availability will be maximised which, over the 100+ year life of this asset means benefits that extend beyond our lifetimes.
The model pioneers an approach that is aligned with NSW Treasury Asset Management policy, but also encourages consideration of whole-of-life outcomes at the initial onset of the project. This is significant, as there is significant opportunity to improve how infrastructure business cases are prepared to ensure that there is adequate evaluation of the long-term impacts and consequences.
Similarly, as the importance of decarbonisation increases in the lead up to the dates for achievement of interim net zero targets, it becomes even more urgent to have holistic models that ensure all facets of whole-of-life are integrated.
In summary, the authors of this nomination consider the successful implementation of the Asset Manager model to be transformative for the procurement of major projects; establishing a benchmark for the application of asset management and improving the way in which Australia manages its infrastructure.
3. Opinion as to specific contribution made by the nominated individual / team / organisation
Transport for New South Wales (TfNSW) has made significant contributions to the asset management industry, particularly in the development of innovative models that enhance the performance of long-term infrastructure assets. The contributions are unique, significant and will have an enduring impact on industry.
These contributions include:
- Asset Manager Model – The Asset Manager Model itself is a significant and specific contribution that will be transformative for the industry as recognition and awareness increases.
- Whole-of-Life Improvement to Western Harbour Tunnel – The implementation of the new model has assured whole-of-life input throughout all phases of the Western Harbour Tunnel project, with financial benefit achieved in comparison against alternative models.
- Reduced Cost of Change – Early introduction of the Asset Manager ensures the cost of change is reduced through the elimination of potential rework that might have occurred due to the introduction of O&M input at a later stage.
- Development of New Intellectual Property – The scope of works, commercial model, contract model, life cycle cost model and contract administration tools are all significant intellectual property that were developed by TfNSW’s team that will support future Asset Manager transactions
- Increased Asset Management Skills in Industry – The Asset Manager contract has resulted in a significant investment in training with eight Certified Practioners in Asset Management (CPAM) working in the new contract. Three training courses (conducted by Peter Kohler, CFAM) have been run to date, directly in relation to supporting skills for the Western Harbour Tunnel and Sydney Harbour Tunnel Asset Manager contract. The investment in skills and training has increased industry capacity and further supports the Asset Management Council through community engagement and ongoing participation in continuing professional development.
In conclusion, TfNSW has made significant contributions to the asset management industry through the development of innovative models that enhance the performance of long-term infrastructure assets. The Asset Manager model is a prime example of this contribution, which emphasises collaboration, cooperation, and partnership among all stakeholders involved in a project. The model applies best practice asset management principles, incorporates whole-of-life expertise to inform the D&C solutions, and provides clear roles and responsibilities for all stakeholders. The Asset Manager model has had significant benefits/value to the community, including cost savings, sharing of key knowledge,
Furthermore, TfNSW has created a replicable model for procurement that can be applied across industries, including other modes of transportation such as rail and bus. By engaging an asset manager prior to the design and construct consortia, TfNSW has demonstrated a more efficient and effective way of managing assets that can be applied in a variety of contexts.