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Lindel James and Darrin Grimsey on Finance
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Melbourne Metro EOI Responses Bidding considerations
Sep 2013
© 2011 Ernst & Young Australia. Liability limited by a scheme approved under Professional Standards Legislation.
Procurement process – where does an EOI response fit in?
Affordability
Value For Money
Financial Close
► Experience ► Capability ► Innovative
ideas
► Detailed bid development
► Deliverability
► Final negotiations of solution and cost
► Money starts flowing and delivery commences
► Options appraisal ► Affordability ► Market Sounding
Business Case
Expressions of Interest
Request for Proposal Preferred
Bidder Financial
Close
© 2011 Ernst & Young Australia. Liability limited by a scheme approved under Professional Standards Legislation.
Who are the consultants and contractors to an SPV?
State Government
PPP Company (Usually an SPV)
Project Finance Debt
Equity
Example Sources • Bank debt
• Capital markets (bond debt) • Institutional (super funds)
Example Sources
• Contractor • Super funds
• PPP investment funds • International pension funds
Facilities Maintenance Provider(s)
Design & Construction Contractor(s)
Example Providers • Spotless
• Honeywell • DTZ/UGL
• Serco • MTR Corp
Example Providers
• John Holland • Leighton Group
• Lend Lease • McConnell Dowell
Advisers • Financial
• Legal • Technical (Design, QS etc)
Advisers • Financial
• Legal • Technical (Design, QS etc)
Service Payments
FM Payments
D&C Payments
Example: North West Rail
Link
© 2011 Ernst & Young Australia. Liability limited by a scheme approved under Professional Standards Legislation.
EOI – What the State is looking for
Articulate your value proposition ► Bidders with a genuine understanding of and commitment to the
Project ► Demonstrate relevant experience of dealing with key issues – tailor to the
Project ► Practical approach (believable – demonstrable) ► Broad experience and capability covering all project elements:
► Finance & funding: Who will provide the debt funding and equity investment? Who will coordinate and ensure the best loan terms are achieved (financial advisor)? What commercial revenue opportunities might there be?
► Design: Who will undertake the engineering design and architectural design? Do they have relevant past experience?
► Construction: Does your builder(s) have the size, capability and experience to deliver all elements of the project? Eg tunnelling, rail systems, stations
► Maintenance/Operations: Do your team members have strong experience in providing maintenance services to station, tunnels and rail projects? Do they have capability with IT systems such as passenger information displays?
© 2011 Ernst & Young Australia. Liability limited by a scheme approved under Professional Standards Legislation.
EOI – What the State is looking for
Articulate your value proposition ► Clear demonstration of
► Experience ► Project understanding ► Proven and tailored approach
► EOI is not about identifying the winning bidder – looking for competent parties with great potential to deliver come RFP
© 2011 Ernst & Young Australia. Liability limited by a scheme approved under Professional Standards Legislation.
EOI – How to provide this information
► Answer the criteria - address all aspects ► Use their terminology ► Use their structure ► Keep short and sharp ► Tailor responses to the Project – avoid generic statements ► Use examples ► Ensure consistency throughout response and clear cross-referencing
where needed ► Recognise all aspects of the project: design; build; finance; operate ► Avoid creating the impression of being ‘finance led’ or ‘construction
led’ – provide integrated response ► Do not assume familiarity of the evaluators with your past
achievements or capabilities
► Make assessment easy for the evaluator!
© 2011 Ernst & Young Australia. Liability limited by a scheme approved under Professional Standards Legislation.
Workshop activities
► Your bid team is looking to develop innovative commercial opportunities to improve the competitiveness of your team to the State.
► Consider possible opportunities attached to the Melbourne Metro Project and develop a shortlist of 2 major initiatives
► For each initiative consider: ► How will you sell the initiative to potential equity investors? Why would
the opportunity be an attractive investment for them? ► How will you sell the initiative to the State? Why would the State choose
your team? What are the benefits of the commercial opportunity to the State; rail users; and/or the wider community?
Thank you