Metro Tunnel PPP Project Summary - 21 February 2018

TUNNEL AND STATIONS
PUBLIC PRIVATE PARTNERSHIP

PROJECT SUMMARY
FEBRUARY 2018
FOREWORD
On 16 December 2017, the Victorian Government entered

into a Public Private Partnership (PPP) with Cross Yarra
Partnership (Project Co) to deliver the Tunnel and Stations
PPP work package of the Metro Tunnel Project. The Tunnel
and Stations PPP was procured and will be delivered
as an ‘availability-based’ PPP under the Partnerships
Victoria framework.
Under this model, Project Co is The second part details the financial
responsible for the design, construction outcome of the Tunnel and Stations
and financing of the twin nine PPP including the value for money
kilometre tunnels under the CBD, five calculation. The third part sets out the
underground stations, station fit-out, key commercial features of the Tunnel
mechanical and electrical systems and Stations PPP, including the main
and commercial opportunities at the parties and their general obligations,
new stations. Project Co will also be the broad allocation of risk between
responsible for specific maintenance the public and private sectors and the
and other services to support the use treatment of various key project issues.
of the infrastructure delivered by the
package for 25 years. Partnerships Victoria forms part of
the Victorian Government’s strategy
This Project Summary provides for providing better services to all
information about the contractual Victorians by expanding and improving
and commercial aspects of the Tunnel Victoria’s public infrastructure and
and Stations PPP. The document is service delivery. The Partnerships
divided into three parts. The first Victoria framework uses private sector
part is an overview of the Tunnel and expertise to design, finance, build,
Stations PPP, including the rationale operate and maintain infrastructure
for PPP delivery, and summarises: projects. The framework consists of
the National Public Private Partnership
• the project objectives and scope; Policy and Guidelines and supplementary
• the tender process; Partnerships Victoria Requirements.
• the public interest considerations for Further information on the Partnerships
the Tunnel and Stations PPP; and Victoria framework is available at
www.dtf.vic.gov.au.
• the Tunnel and Stations PPP
timetable. This summary should not be relied
upon to completely describe the
rights and obligations of the parties
in respect of the Tunnel and Stations
PPP, which are governed by the Project
Agreement and associated documents.
The Project Agreement and associated
documents are available online at
www.tenders.vic.gov.au.
CONTENTS
1 PROJECT OVERVIEW 4
1.1 THE METRO TUNNEL PROJECT 4
1.2 THE TUNNEL AND STATIONS PPP 7
1.3 A PUBLIC PRIVATE PARTNERSHIP 8
1.4 TENDER PROCESS 8
1.5 TENDER PROCESS OUTCOMES 10
1.6 PUBLIC INTEREST CONSIDERATIONS 12
1.7 CONTRACT MILESTONES 12
1.8 STATE ADVISORS 12
2 FINANCIAL OUTCOME 13
2.1 VALUE FOR MONEY 13
2.2 ADDITIONAL VALUE FOR MONEY BENEFITS 14
2.3 OTHER COSTS 15
2.4 COSTS AND SERVICE PAYMENTS 15
2.5 STATE CONTRIBUTIONS 18
2.6 SUMMARY OF PAYMENT ARRANGEMENTS 19
2.7 BID COST REIMBURSEMENT 19
3 KEY COMMERCIAL FEATURES 20

3.1 PARTIES TO THE CONTRACT 20
3.2 CONTRACTUAL RELATIONSHIPS 22
3.3 RISK ALLOCATION 22
3.4 INTERFACE MANAGEMENT 28
3.5 GENERAL OBLIGATIONS OF PROJECT CO 29
3.6 GENERAL OBLIGATIONS OF THE STATE 31
3.7 OTHER CHANGES IN COST TO THE STATE 31
3.8 DEFAULT, STEP-IN AND TERMINATION REGIME 32
3.9 FINANCE AND SECURITY ARRANGEMENTS 33
3.10 STATE RIGHTS AT EXPIRY OF CONTRACT 34
3.11 AUDIT AND INSPECTION RIGHTS OF THE STATE 34
3.12 PROCESS FOR STATE MODIFICATION
TO SERVICES/FACILITY 34
APPENDICES35
APPENDIX A: GLOSSARY 35
APPENDIX B: USEFUL REFERENCES/LINKS 39
APPENDIX C: KEY CONTACT DETAILS 40
APPENDIX D: RFP EVALUATION CRITERIA 41
APPENDIX E: PUBLIC INTEREST TEST 43
1
PROJECT
OVERVIEW
1.1 Importantly, the alignment provides the
opportunity to connect passengers to the
THE METRO TUNNEL PROJECT Arden, Parkville and Domain precincts via
The Victorian Government is committed heavy rail for the first time and provides much-
to the design and delivery of high quality needed relief to the heavily congested Swanston
and integrated major transport infrastructure Street / St Kilda Road tram corridor, currently
in Victoria. The Metro Tunnel Project will the busiest in the world.
transform the way people move around
Melbourne and is the first step towards the The Metro Tunnel Project, when combined
‘turn up and go’ train services that are a feature with other upgrades on the network, will allow
of major cities around the world. The Metro more trains to run in and out of the city on
Tunnel Project is the largest investment the Sunbury, Cranbourne and Pakenham lines
in Melbourne's CBD rail capacity since the as well as the Werribee, Craigieburn, Upfield,
City Loop was completed 30 years ago. Sandringham and Frankston lines. It will provide
capacity to enable 39,000 more passengers to
The Metro Tunnel Project will deliver twin use the rail system during each peak period.
nine-kilometre rail tunnels from Kensington The Metro Tunnel Project is on track to be
to South Yarra as part of a new end-to-end completed by 2025.
Sunshine-Dandenong line and new
underground stations at: The Metro Tunnel Project route alignment
is shown is Figure 1.
• North Melbourne (Arden);
• Parkville; 1.1.1
• State Library (with a direct pedestrian METRO TUNNEL PROJECT OBJECTIVES
connection with Melbourne Central Station); The objectives governing the strategic direction
• Town Hall (with a direct pedestrian for the Metro Tunnel Project are to:
connection with Flinders Street Station); and
• provide additional capacity on Melbourne’s
• Anzac (Domain). rail system to meet customer needs that,
as part of a program of investment, meets
projected medium-term demand and
supports long-term patronage growth;
4 TUNNEL AND STATIONS PUBLIC PRIVATE PARTNERSHIP PROJECT SUMMARY

1. PROJECT OVERVIEW
Figure 1: The Metro Tunnel route alignment
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• optimise the efficiency and reliability of 1.1.2
operations and improve customer experience METRO TUNNEL PROJECT WORK
by moving towards a metro-style rail system;
PACKAGES AND RELATED PROJECTS
• support the long-term plan and vision to
The Metro Tunnel Project is being delivered
develop and operate Victoria’s rail network;
through four major work packages (collectively,
• improve access and reduce congestion the Work Packages):
of the tram system in the CBD and the road
network in the north, west and south east • an Early Works Managing Contractor
by diverting travel to the metropolitan arrangement which includes utility service
rail network; relocations and works to prepare
construction sites;
• improve accessibility to jobs, education
and other social and economic opportunities • the Tunnel and Stations PPP which includes
by enabling growth and more effective the design and construction of the twin
use of land in Melbourne; nine kilometre tunnels under the CBD,
five underground stations and certain
• deliver strong productivity, sustainability
maintenance services;
and liveability benefits by providing a value
for money transport solution; and • the Rail Systems Alliance (RSA) which
includes design (including conventional
• contribute to a safe and accessible
signalling, high capacity signalling, train
metropolitan rail network that supports
and power control systems and operational
the health and wellbeing of users.
control systems), installation works, rail systems
integration and commissioning along the
Metro Tunnel Project alignment; and.
• the Rail Infrastructure Alliance (RIA)
which includes works at the eastern and
western portals including cut and cover
tunnelling, decline structures, turnbacks
and local reconfiguration and realignment
of existing lines.

1. PROJECT OVERVIEW
This Project Summary provides information on 1.1.4

the Tunnel and Stations PPP package. ENVIRONMENTAL ASSESSMENT
Information on the other packages can be found
AND STAKEHOLDER ENGAGEMENT
at http://metrotunnel.vic.gov.au/.
Key Government stakeholders have been
The Victorian Government has committed to a consulted during the procurement of the Metro
number of related projects that will support the Tunnel Project, and will continue to be consulted
benefits of the Metro Tunnel Project including during delivery. The following individuals/groups
the High Capacity Metro Trains Project (HCMT were identified as being affected by the Metro
Project) that will deliver 65 High Capacity Metro Tunnel Project:
Trains (HCMTs) to operate on the new Sunshine-
Dandenong Line, the Level Crossing Removal • transport users;
Project (LXRP), and a range of other network- • local businesses and local residents;
wide enhancements (collectively, the ‘Related
State Projects’). • Metro Trains Melbourne (Train Franchisee);
• Yarra Trams (Tram Franchisee);
1.1.3 • V/Line;
KEY PARTIES • VicTrack;
The Melbourne Metro Rail Authority (MMRA) is • VicRoads;
the Victorian Government body responsible for
delivering the Metro Tunnel Project. MMRA is • Transurban / CityLink;
responsible for overseeing all aspects of the • Signal Sighting Steering Committee;
Metro Tunnel Project including planning and
• other Accredited Rail Transport Operators;
developing a project reference design, site
investigations, stakeholder engagement, • Government stakeholders including
planning approvals and procurement, through Transport for Victoria, Public Transport
to overseeing construction delivery and project Victoria, Department of Premier and Cabinet,
commissioning. Department of Treasury and Finance,
Department of Environment, Land, Water
The Metropolitan Rail Franchisee (the Train and Planning, Aboriginal Affairs Victoria,
Franchisee) will operate the rail services utilising Office of the Victorian Government
the infrastructure delivered by the Metro Tunnel Architect, Heritage Victoria, Environmental
Project and the rolling stock delivered by the Protection Authority Victoria and the
HCMT Project. Commonwealth Department of Environment;
and
The Cross Yarra Partnership consortium
(Project Co) is the private party contracted • local councils including Cities of Melbourne,
under the PPP arrangement. The consortium Stonnington, Port Phillip, Maribyrnong and
comprises a design and construction other relevant councils.
unincorporated joint venture of Lendlease
In addition, a range of non-Government
Engineering Pty Ltd, John Holland Pty Ltd and
organisations and transport advocacy
Bouygues Construction Australia Pty Ltd, John
stakeholders were, and will continue to be,
Holland Pty Ltd as maintenance subcontractor,
consulted including local residents, businesses,
Capella Capital as financial sponsor and multiple
hospitals, universities and other institutions
equity and debt providers. Further information
along the Metro Tunnel Project route.
on the parties is provided in section 3.
The Metro Tunnel Project was assessed through
an Environment Effects Statement (EES)
process, a requirement of the Minister for
Planning's original 'public works' declaration
(published in an Order on 3 September 2015 and
accompanied by a 'Statement of Reasons').
The EES included an integrated assessment of

the potential environmental, social, economic
and planning impacts of the Metro Tunnel
Project, and the approach to managing these
impacts. The EES was supported by a range of
technical studies that identified and assessed
the potential effects of the project and provide
guidance on mitigation measures.

1. PROJECT OVERVIEW
A comprehensive engagement program was –– power

and traction power infrastructure;
undertaken by the State since early 2015, and
including as part of developing the EES, to –– mechanical and electrical systems,
provide directly affected stakeholders and the including the tunnel ventilation systems,
broader public with an opportunity to input into vertical transport and lighting;
the planning process and have their say on the
concept design and proposed construction • systems integration, commissioning and
approach for the Metro Tunnel Project. operational readiness activities to ensure the
Tunnel and Stations PPP works are fully
commissioned, accredited and “ready for
1.2 service”, noting these activities will also
THE TUNNEL AND STATIONS PPP involve the RSA, RIA, the Train Franchisee,
MMRA, the HCMT Project and other
1.2.1 stakeholders such as the Office of the
OVERVIEW National Rail Safety Regulator (ONRSR), PTV,
Melbourne Fire Brigade and Victoria Police;
The Tunnel and Stations PPP will deliver the twin
nine kilometre tunnels from South Kensington to • providing commercial opportunities within
South Yarra, five underground Stations, station the Stations that are synergistic and
fit-out, mechanical and electrical systems and complementary to the functions and
commercial opportunities at the new Stations. operations of the Tunnel and Stations PPP;
Project Co is also required to provide a range of • maintaining specified assets and systems
asset management services in respect of various (Maintained Assets) and providing other
assets and infrastructure, including the asset management services (Services)
maintenance of the Tunnel and Stations during during the 25 year Maintenance Phase; and
the Maintenance Phase of the project.
• providing private sector finance required for
The Tunnel and Stations PPP will create more the Tunnel and Stations PPP.
than 5,000 new jobs in Victoria and create new
opportunities for the local industry, with the In addition to the above, Project Co is also
Tunnel and Stations PPP including a minimum of responsible for installing specific assets and
88.3 per cent local content for the D&C systems that the RSA designs in the Tunnel and
Activities. The Tunnel and Stations PPP will be Stations, and certain design and installation
the centrepiece of the Metro Tunnel Project and works at the tunnel Portals.
is the largest package of works.
1.2.3
1.2.2 OVER SITE DEVELOPMENTS
SCOPE OVERVIEW Land will be acquired by the State for the
The Tunnel and Stations PPP is divided into a station entrances for the State Library and Town
number of phases and Project Co’s activities will Hall stations. As part of the works outlined
vary by phase. In summary, Project Co is above, Project Co is required to design and
responsible for: construct the State Library and Town Hall
Stations to support over site developments
• designing and constructing the following (OSD) on and above this land.
assets and systems:
The OSD buildings will be developed under
–– the
Tunnel, including all cross passages, separate contractual arrangements (not as part
ventilation shafts, access shafts (including of the PPP) by related entities of members of
at the western and eastern portals the Cross Yarra Partnership consortium (and in
(collectively, the Portals), walkways, relation to OSD at State Library, a joint venture
tunnel drainage system, cable ducts, partner). The OSDs were packaged together
embedded pipework and civil supports with the Tunnel and Stations PPP works on the
for high capacity signalling wayside basis that an integrated process would result in
equipment; optimised functional design outcomes, reduced
–– the Stations, including at-grade station interface risk between the Tunnel and Stations
entrances and ventilation shafts; PPP D&C Subcontractor and OSD Developers,
–– public realm works around the Stations, potential for cost efficiencies, reduced
where urban design is paramount, and disruption for stakeholders including transport
including hard landscaping and irrigation users and overall truncated construction
systems for trees; timeframes.
–– tram works in the precincts at Town Hall,
Anzac and Parkville;

1. PROJECT OVERVIEW
The integrated OSDs will improve customer Further information on procurement analysis is
experience and amenity, aspire to deliver available in the Metro Tunnel Project Business
excellent urban design and architectural Case available at http://metrotunnel.vic.gov.au/
outcomes and, ultimately, result in value creation library/business-case.
for the State and a lasting legacy for Victorians.
The Partnerships Victoria framework requires
OSD AT STATE LIBRARY that projects comply with the:
The OSD at State Library will be developed by a • National PPP Policy and Guidelines that
joint venture between John Holland and Scape, apply across all state, territory and
a student accommodation provider. The commonwealth arrangements; and
development will include student housing and
other accommodation, co-working and • requirements specific to Victoria as detailed
education facilities, retail and other in the Partnerships Victoria Requirements
complementary facilities. (November 2016).
OSD AT TOWN HALL Details of the National PPP Guidelines and the
Partnerships Victoria Requirements are available
The OSD at Town Hall will be developed by at https://infrastructure.gov.au/infrastructure/
Lendlease. The development is expected to ngpd/index.aspx and www.dtf.vic.gov.au
include a City of Melbourne visitor centre, retail respectively.
and office accommodation.
1.4
1.3
TENDER PROCESS
A PUBLIC PRIVATE PARTNERSHIP
The Tunnel and Stations PPP is an ‘availability- 1.4.1
based’ Public Private Partnership being OVERVIEW
procured under the Partnerships Victoria
The State conducted a competitive tender
framework. This is a long-term service contract
process to select a private sector party to
between the public and private sectors where
deliver the Tunnel and Stations PPP. The tender
the State pays the private sector a service fee to
process was implemented in accordance with
deliver infrastructure and related services over
the Partnerships Victoria framework to ensure
the 25 year term. The Partnerships Victoria
the State received the best value for money
model seeks to achieve better value for money
outcome. The tender process involved three
by capturing the expertise and efficiencies of
phases as described below:
the private sector in designing, financing,
building and maintaining infrastructure projects • Expressions of Interest (EOI) phase, involving
and providing services on a whole-of-life basis. releasing the invitation for EOI and then
selecting three Shortlisted Respondents.
The decision to procure the Tunnel and Stations
as a PPP focuses on achieving value for money • Request for Proposal (RFP) phase, involving
outcomes by: issuing a RFP to Shortlisted Respondents, an
intensive interactive tender process,
• allocating risks to the party, or parties, best Shortlisted Respondents submitting
placed to manage them, with the majority of Proposals, and clarifying and evaluating the
design, construction, maintenance and Proposals.
facility management services risks being
• Negotiation and completion phase, involving
transferred to the private sector on a whole-
a negotiation period, appointing a Preferred
of-life basis. Introducing private finance also
Respondent, final negotiations, executing the
provides additional discipline and scrutiny of
Project Agreement and achieving Financial
risk (for example, financier due diligence and
Close.
oversight);
• increasing opportunity for the State to
1.4.2
harness private sector innovation in whole of
life design, construction and service delivery TENDER PROCESS TIMETABLE
to enhance customer experience; and The tender process for the Tunnel and Stations
• incentivising delivery of the Tunnel and PPP commenced when the EOI was released on
Stations package on time and within budget. 26 April 2016 and concluded when Financial
The additional cost and budget certainty was Close was achieved on 18 December 2017. Table
considered to be a material issue for the 1 summarises the key dates of the tender
Tunnel and Stations package given its risk process.
profile, complexity of the works and the
value of the package.

1. PROJECT OVERVIEW
Table 1: Tender process – key dates
Tender Process Phase Date

EOI phase
Invitation for EOI issued 26 April 2016
EOIs received 9 June 2016
Shortlisted Respondents announced 11 August 2016
RFP phase
RFP issued 21 September 2016
Proposals received 6 April 2017
Negotiation and completion phase
Preferred Respondent announced 17 July 2017
Contract Close 16 December 2017
Financial Close 18 December 2017
1.4.3 Specialist advisers and other Government

TENDER PROCESS GOVERNANCE agencies supported the evaluation panel as
required. For example the Office of the Victorian
The State established a formal evaluation and Government Architect was a member of the
governance structure to oversee the EOI and Urban Design and Architectural Advisory Panel.
RFP evaluation processes. An evaluation panel The Evaluation Criteria used in assessing
supported by three specialist evaluation Sub- Proposals are presented in Appendix D.
Panels, whose members were specifically
selected for their skills in a particular area, The evaluation panel reported to an Executive
conducted the EOI and RFP evaluations. The Review Team (ERT), which included senior
specialist evaluation Sub-Panels comprised: representatives of the Department of Treasury
and Finance and the Department of Premier and
• a Commercial and Legal Sub-Panel that Cabinet, which in-turn reported to the Major
evaluated the commercial, financial, Transport Infrastructure Board (including the
contractual, commercial opportunities and Coordinator General) (MTIB). MTIB is
insurance aspects of the Proposals; responsible for advising Government of the
• a Design and Technical Sub-Panel that recommendations of the tender evaluation
evaluated the master plans, civil design, process.
architectural, engineering, project
management, stakeholder engagement, The governance structure for the evaluation
construction methodology and program process is illustrated in Figure 2.
related aspects of the Proposals; and
• a Facilities Management Sub-Panel that
evaluated the facilities management related
aspects of the Proposals.

1. PROJECT OVERVIEW
Figure 2: Evaluation governance structure
Priority Sub-Committee of Cabinet Approval of

(PISC) recommendation
Major Transport Infrastructure Board

(incl. Coordinator-General)
Endorsement of
recommendation
Executive Review Team
Evaluation Panel
Specialist
Advisors
Evaluation,
Probity Adviser –
OCM Evaluation Sub-Panels Assessment and
Recommendations
Probity Auditor
Advisory Groups
1.4.4 1.5
PROBITY TENDER PROCESS OUTCOMES
Probity and maintaining the integrity of the tender
process was of utmost importance to the State. To 1.5.1
assist the State monitor and maintain high probity OVERVIEW
standards throughout the tender process, the
Three consortia submitted EOIs and three were
State engaged the services of a Probity Adviser
selected to proceed to the RFP phase, including:
and a separate Probity Auditor who both oversaw
the evaluation process for the Tunnel and Stations • Continuum – comprising ACCIONA
PPP, performing two separate distinct roles. Infrastructure, Ferrovial Agroman, Honeywell,
Downer EDI and Plenary Origination;
The role of the Probity Adviser was to
independently monitor procedural aspects of the • Cross Yarra Partnership – comprising
tender process to ensure compliance with all Lendlease Engineering, John Holland,
relevant tender documentation and to advise the Bouygues Construction and Capella Capital;
Project in relation to probity and process matters. and
• Moving Melbourne Together – comprising
The role of the Probity Auditor in relation to the
Pacific Partnerships, CPB Contractors,
RFP phase involved an independent validation
Ghella, Salini Impregilo, Serco and Macquarie
role at the end of the evaluation process to check
Capital.
and sign off compliance with Government
Procurement guidelines, State probity and
procurement procedures and the RFP and any
associated documentation. At the completion of
the tender process, the Probity Auditor concluded
that the tender process had been conducted in a
manner consistent with the probity principles.

1. PROJECT OVERVIEW
The RFP was issued to the three Shortlisted 1.5.2

Respondents on 21 September 2016. The State OUTCOMES AGAINST GOVERNMENT
conducted a comprehensive interactive tender
POLICY REQUIREMENTS
process, involving numerous workshops with
each Shortlisted Respondent. The Shortlisted Table 2 summarises key project outcomes in
Respondents submitted their Proposals on 6 relation to Government policy requirements, and
April 2017. where appropriate indicates the degree to which
the Tunnel and Stations PPP has exceeded the
Following an extensive evaluation of the State’s minimum requirements as contained in
Proposals, including a structured clarification the RFP.
process, the State formally announced Cross
Yarra Partnership as its Preferred Respondent In addition to the Government policy outcomes,
on 17 July 2017. Following this announcement, Project Co is required to achieve a number of
both parties negotiated the final form of the sustainability targets for the Tunnel and Stations
Project Documents and executed the Project PPP works, including:
Agreement and ancillary contracts that govern
the Tunnel and Stations PPP on 16 December • a certified design and as built Infrastructure
2017. Sustainability Council Australia’s (ISCA)
Infrastructure Sustainability Rating Tool score
Project Co’s offer was assessed as providing of 84 for the works, corresponding to a
value and affordability relative to the Public rating of 'Leading'; and
Sector Comparator (PSC) and the best overall • a minimum 5 star certified rating under the
value for money relative to the other two Green Building Council Australia’s Green Star
Shortlisted Respondents. Custom Rating Tool for Below Ground
Stations for each of the five new Stations.
Table 2: Summary of Government policy outcomes
Government Policy Contracted Minimum Difference

outcome requirement
Victorian Industry Participation Policy local content target
Local content (ANZ) – (D&C Activities) 88.23% 84% +4.23%
Local content (ANZ) – Tunnel prefabricated 95% 95% Nil
concrete casings
Local content (ANZ) – railway tracks 95% 90% +5%
(locally milled steel)1
Local content (ANZ) – concrete sleepers 95% 95% Nil
Major Projects Skills Guarantee
Vocational training (D&C Phase)2 10% 10% Nil
Other Government policy objectives
Priority Jobseekers (D&C Phase) 10% 2.5% 3 +7.5%
Notes:
1. Project Co will more broadly seek to maximise the use of locally milled steel fabricated products where possible, targeting
92.6% local content for steel.
2. Project Co has an aspirational target of 16% of its workforce comprising of apprentices, trainees and engineering cadets,
noting that the contracted requirement is 10%.
3. The Project Scope and Technical Requirements (PS&TR) provides for a minimum Aboriginal Employment Target of 2.5%.
The 2.5% minimum requirement does not apply for other Priority Jobseekers.

1. PROJECT OVERVIEW
1.6 1.8
PUBLIC INTEREST STATE ADVISORS
CONSIDERATIONS The following external advisors were engaged to
The State assessed the extent to which the assist the State in undertaking the tender
project was in the public interest prior to process (Table 4).
entering into the PPP contract. The analysis was
undertaken in accordance with the Partnerships
Table 4: State Advisers
Victoria guidance on how to evaluate whether a
project meets the public interest.
Role Advisors
The assessment against criteria such as public
Technical, Planning Aurecon Jacobs Mott
access, security, consumer rights, concluded
and Engagement McDonald JV
that, on balance, the public interest was being
Adviser (including
protected. Appendix E contains the Public
design)
Interest Test.
Legal Advisers Herbert Smith
Freehills (HSF)
1.7
CONTRACT MILESTONES Commercial Adviser KPMG
and Financial Auditor
The Project Agreement contains a number of
contract milestones for Project Co to meet that Independent Aquenta Consulting
also interact with the broader Metro Tunnel Estimator
Project milestones, as summarised in Table 3.
Constructability Advisian
Adviser
Table 3: Contract milestone summary
Probity Adviser O’Connor Marsden
Contract milestone Date Probity Auditor Pitcher Partners Pty
Ltd
Contract Close 16 December 2017
Financial Close 18 December 2017
Date for Provisional 17 September 2023
Acceptance of the
Tunnel and Stations
PPP
Date for Final 17 September 2024
Acceptance of the
Tunnel and Stations
PPP
Maintenance Phase 17 September 2023 to
17 September 2048
Contract expiry date 17 September 2048
As noted above, the Metro Tunnel Project

is on track to be completed by 2025. Tunnel
and Stations PPP Final Acceptance does not
represent completion of the broader Metro
Tunnel Project and the commencement of
passenger services. Completion of the broader
Metro Tunnel Project and commencement of
passenger services requires completion of all
Metro Tunnel Project packages and a range of
operational readiness activities to be finalised.

2
FINANCIAL
OUTCOME
2.1 2.1.2
VALUE FOR MONEY PUBLIC SECTOR COMPARATOR
The PSC is an estimate of the hypothetical,
2.1.1 risk-adjusted, whole-of-life cost of the project if
OVERVIEW delivered by the State. The PSC is developed in
accordance with the project scope and technical
The Partnerships Victoria framework seeks to
requirements and risk allocation proposed for
identify and implement the most efficient form
the private sector party arrangement, and is
of infrastructure and service delivery. The
based on the most likely and efficient form of
concept of value for money goes beyond
conventional (that is, non-public private
selecting the cheapest solution, focusing on the
partnership) delivery by the State.
value of each aspect of a Proposal. This involves
an in-depth analysis of each Proposal received The PSC is expressed in terms of the Net
from the private sector and comparison against Present Cost (NPC) to the State, calculated
a State-managed delivery option. The evaluation using a discounted cash flow method taking full
considered quantifiable elements (for example, account of the costs and risks that would arise
items that can be quantified in monetary terms) through State delivery. The PSC includes
as well as qualitative considerations. amounts for the design and construction of the
Tunnel and Stations PPP as well as maintenance
and lifecycle costs during the Maintenance
Phase of the Tunnel and Stations PPP.

2. FINANCIAL OUTCOME
The PSC is made up of a number of elements as 2.2

contained in Table 5.
ADDITIONAL VALUE FOR MONEY
BENEFITS
Table 5: Components of the public sector comparator In addition to meeting all of the State’s
requirements for the Tunnel and Stations PPP at
Components of the PSC Net a price that is $87.4 million less than the State’s
present cost PSC, Project Co’s Proposal also contained a
($millions) number of additional benefits for the State and
Capital costs 4,482.7 public compared to the State’s reference design,
including the following:
Maintenance and lifecycle costs 366.5
• meeting or exceeding all State policy
Raw PSC 4,849.2 requirements targets including for local jobs,
industry and content, as outlined in section
Transferred risks 478.6
1.5.2;
PSC (excluding retained risk) 5,327.8 • the D&C Subcontractor has committed to
achieve a minimum of 15.5% female
Notes: participation in the performance of its
1. All numbers are expressed in net present values as at 30
September 2017.
obligations in respect of the Project, which
2. In accordance with the National PPP Guidance, a risk free significantly exceeds the 10% national
rate of 3.09 per cent was used in calculating the net construction industry average;
present value of the PSC and its components.
3. The Raw PSC represents the base raw costs to the State • establishment of ‘MetroHub’, a dedicated
to deliver the Tunnel and Stations PPP. The term ‘raw’ learning and job access hub bringing
refers to the estimate of costs to the State of delivering
the project before taking into account adjustments for together key industry and workforce
competitive neutrality and risk. stakeholders to maximise local participation
4. The PSC includes adjustments for ‘competitive neutrality’ in the Tunnel and Stations PPP through
where necessary, i.e. removing the net competitive
advantages or disadvantages that accrue to Government
workforce development, local industry
by virtue of its public ownership. A competitive neutrality development and social outcomes;
adjustment is not deemed applicable in the context of
the Tunnel and Stations PPP. • each of the five new Stations will have its
5. The PSC includes transferred risk estimates but excludes own unique identity. The innovative designs
State retained risk estimates to enable a like-for-like will include wider platforms, more natural
comparison to be made between Proposals.
light, bringing world-class urban design to
the heart of Melbourne and its train network;
2.1.3 • an additional entrance is provided at Royal
NET PRESENT COST OF PROJECT CO’S Melbourne Hospital at Parkville, a wider tram
PROPOSAL interchange platform and additional
The quantitative value for money assessment, as escalators are provided at Domain;
demonstrated by the estimated savings • the connection to Flinders Street station uses
between the PSC and private sector contract the Degraves Street entrance and Campbell
cost is shown in Table 6. Arcade to connect straight onto each
platform at Flinders Street station;
Table 6: Value-for-money comparison – PSC versus private sector delivery
Public sector Private sector Estimated savings Estimated savings

comparator comparator ($millions) (%)
($millions) ($millions)
5,327.8 5,240.4 87.4 1.6%
Notes:
1. All non-percentile numbers are expressed in net present values as at 30 September 2017.
2. In accordance with the National PPP Guidance, a Proposal evaluation discount rate of 5.70 per cent was used in calculating
the net present cost of private sector delivery.
3. In accordance with the National PPP Guidance, a Proposal evaluation discount rate of 5.19 per cent was used in calculating
the net present cost of the State Contributions.

• the Proposal delivered the highest value to 2.4

the State for both OSD sites, capturing value
to reduce the overall cost of the Metro Tunnel COSTS AND SERVICE PAYMENTS
Project; The payment mechanism for the Tunnel and
• high quality in-station retail, providing Stations PPP is consistent with the mechanisms
activation and an enhanced passenger developed in precedent ‘availability based’ PPP
experience; projects and has been developed to drive
performance, innovation and value for money.
• innovative ‘Meanwhile Metro’ strategy for
managing disruption to the community Payments to Project Co will be determined in
during construction, which will also seek to accordance with a defined Quarterly Service
use the construction intervention to Payment (QSP) formula that reflects a
celebrate and trial long term urban outcomes traditional payment mechanism alongside an
for Melbourne; abatement regime.
• sustainability initiatives across all stations to
reduce emissions, save water and increase 2.4.1
green space; QUARTERLY SERVICE PAYMENTS
• tree removals along the alignment were The key components of the Tunnel and Stations
minimised; PPP QSPs comprise:
• providing changing places facilities for
• one-off D&C Phase adjustments following
people with disabilities at each new Station;
Final Acceptance, including for Local
and
Content Requirements, Major Project Skills
• greater public realm allocated to pedestrians. Guarantee and Priority Jobseekers'
Requirements. The QSPs made to Project Co
2.3 may be adjusted (reduced) if Project Co fails
to meet its contractually specified targets, as
OTHER COSTS outlined in section 1.5.2;
In addition to the costs shown above for the • payments for works during the Final
PSC and the NPC of Project Co’s Proposal, the Acceptance Works phase (Final Acceptance
State will meet a range of other costs in relation Works Payments), being the period between
to the Project, including: Provisional Acceptance and Final
Acceptance. The Final Acceptance Works
• State project management costs of
Payments comprise a payment to cover fixed
administering the Project Agreement;
debt and equity repayments during the Final
• Tunnel and Stations PPP delivery risks Acceptance Works phase, a Final
retained by the State; Acceptance Works component to cover the
• the State’s 50 per cent share of Independent costs of Project Co undertaking the Final
Reviewer costs; Acceptance Works and a lifecycle
component to cover lifecycle costs; and
• land acquisition and leasing costs to support
construction; • Maintenance Phase payments, comprising:
• costs associated with delivering the other –– a

payment to cover fixed debt and equity
Metro Tunnel Project Works Packages; repayments during the Maintenance
Phase;
• costs associated with ‘occupying’ parts of
–– a maintenance component to cover all
the existing train and tram network through
maintenance and other services costs;
construction; and
and
• certain Metro Tunnel Project insurances. –– a lifecycle component to cover lifecycle
costs.

Figure 3: Performance regime overview
PPP Co Performance
Asset Performance Quality
System Failure Failure Reliability Quality

Event Event Adjustment Failure
2.4.2 • Reliability Adjustment (RA) – The RA is

ABATEMENT REGIME designed to increase vertical transport
(escalators and lifts) abatements on the basis
Abatements to the QSPs may be made every of whether the vertical transport assets have
quarter during the Maintenance Phase based on achieved their designed reliability target over
Project Co’s performance. The Tunnel and a one year period. The annual reliability
Stations PPP performance regime is structured target is 99.60% per escalator and 99.60%
to incentivise Project Co to design, install, per lift. Failure to meet either one of these
construct and maintain assets that comply with reliability targets may result in abatement of
the State’s functional requirements, stated in the QSPs.
terms of functionality, availability / reliability and
appearance, and to minimise disruption to rail • Quality Failure (QF) – QFs relate to a non-
operations. The performance regime is primarily infrastructure based failures (e.g. monthly
related to the performance of assets rather than report delivered late) and are calibrated to
the operation of a rail system, and is broadly encourage Project Co to invest in an
structured in line with the performance regimes appropriate level of management resources
adopted for previous Partnerships Victoria and systems.
infrastructure projects.
Full details of the abatement regime are
An outline of the performance regime is contained in the Project Agreement, including
provided in Figure 3. the Services Specification.
Each element is described below: 2.4.3

• System Failure Event (SFE) – SFEs relate to FINAL ACCEPTANCE PAYMENT
events where pre-determined service- The Final Acceptance Payment is designed to
affecting failures occur resulting in significant incentivise Project Co to work collaboratively
operational disruption. SFEs may affect a with RSA, RIA and the Train Franchisee to
platform, station, single tunnel, or the total ensure that the Metro Tunnel Project is ready to
system, each of which will result in a different be integrated with the existing rail network and
level of abatement. Abatements for SFEs are signalling system at the earliest opportunity. The
significant. Final Acceptance Payment is structured as
• Failure Event (FE) – FEs relate to events follows:
where a space or individual asset is
• if Final Acceptance occurs on the Date for
unavailable with an abatement applicable if
Final Acceptance: Project Co will receive an
the event is not rectified within a prescribed
incentive payment of $12.5 million (nominal);
timeframe. The size of abatement is
determined primarily according to the • if Final Acceptance occurs early, Project Co’s
importance of that space or individual asset incentive payment will be increased by
and impact of unavailability (e.g. office light $40,000 (nominal) for each day by which
out vs escalator out). The regime the Date of Final Acceptance is earlier than
differentiates between differing peak and the Date for Final Acceptance, capped at a
off-peak operational impacts in setting maximum payment of $20 million (nominal);
rectification times and abatement amounts. or

• if Final Acceptance occurs late, Project Co’s 2.4.4

incentive payment will be reduced by QSPS AND LEASE TREATMENT
$40,000 (nominal) for each day by which
the Date of Final Acceptance is later than the Tables 7,8 and 9 provide further details on the
Date for Final Acceptance, subject to a quantum of the QSPs and the lease treatment
minimum payment of $5 million (nominal). for the Tunnel and Stations PPP.
As much of the systems integration and

commissioning work required for Final
Acceptance will be undertaken by RSA, RIA and
the Train Franchisee, the minimum incentive
payment is designed to ensure that Project Co is
incentivised to work collaboratively to achieve
Final Acceptance even if Final Acceptance does
not occur within 6 months of the target Date for
Final Acceptance.
Table 7: Disclosure of nominal flows
Cost of contracted Discount rate used Total cost of First full year
proposal (net to arrive at net contracted proposal payment (nominal)
present cost) as at present cost (nominal)
30 September 2017
$’million % $’million $’million

5,240.4 5.70% and 5.19% for 9,580.7 187.0
the State Contribution
Notes:
1. The first full financial year payment is measured from 1 July 2024 until 30 June 2025.
Table 8: Disclosure of lease liability
Lease liability Lease liability Expected year of Implied interest rate

expected to be expected to be recognition in lease liability
recognised at recognised at
completion (nominal) completion (NPC)
$’million $’million Financial year %

2,008.8 1,440.2 2023-24 6.43%
Notes:
1. The lease liability has been measured as at the Date for Provisional Acceptance based on the Financial Close Financial Model.
2. The lease liability has been calculated under current accounting practice using the leasing standard AASB117.
The recognition may change under the new standard Service Concession Arrangements:Grantors AASB1059.
3. The lease liability may be further reduced if the State elects to pay the State Maintenance Phase Contribution.
Table 9: Breakdown of quarterly service payments
Sum of quarterly Principal Interest Implied maintenance and

service payments over payments on payments on lifecycle component of
the life of contract lease liability lease liability quarterly service payments
$’million $’million $’million $’million

Nominal 5,512.4 2,015.3 2,046.8 1,450.3
Notes:
1. The lease liability has been measured as at the Date for Provisional Acceptance based on the Financial Close Financial Model.

2.5 In addition to the State Contributions, as a

further option to optimise value for money, the
STATE CONTRIBUTIONS State may elect to pay a State Maintenance
In order to support the financing task, reduce Phase Contribution to Project Co between 3 to 5
the total cost of the Tunnel and Stations PPP years after the Date for Final Acceptance. This
and enhance value for money, the State will payment must be used by Project Co to reduce
make State Construction Contributions to project debt to $500 million (nominal).
Project Co during the D&C Phase and a State
Capital Contribution following Provisional Whilst a component of debt will be repaid upon
Acceptance (collectively, the ‘State payment of each State contribution, the
Contributions’). payments will have no material impact on the
risk allocation for the Tunnel and Stations PPP,
The State Contributions will be available as as Project Co may still incur significant payment
described below: reductions if the Services are not delivered to
the required standard.
• State Construction Contribution –
Progressive capital contributions during D&C Table 10 summarises the capital contributions to
Phase up to a total of $2.5 billion (nominal), Project Co.
or approximately 42% of the $6 billion
financed design and construct cost, will be
provided to Project Co in tranches during the
D&C Phase between January 2020 and
Provisional Acceptance; and
• State Capital Contribution – A capital
contribution at Provisional Acceptance of
$1.5 billion (nominal), or approximately 25%
of the $6 billion financed design and
construct cost, will be provided to Project Co
shortly after the Date of Provisional
Acceptance.
Table 10: Capital contributions
State Capital Contributions made to Project Co Amount ($’million)
Capital contribution during D&C Phase 2,500.0

Capital contribution at Provisional Acceptance 1,500.0
Total capital contributions $4,000.0

Figure 4: Summary of payment arrangements
Financial Provisional Final Time

Close Acceptance Acceptance (not to scale)
State Construction
Contributions State Capital
Capital $2.5bn Contribution
Contributions (Paid progressively $1.5bn
at ‘back end’ of (Paid at PA)
construction)
Final Acceptance
Final Incentive Payment
$12.5m
Acceptance
Payment Max Payment Min Payment
-25 weeks +25 weeks
$20m $5m
Full Capital Component of QSP

(Debt & Equity)
QSP
QSP – Final Acceptance QSP – Maintenance
Work Payments Phase Payments
2.6 Reimbursement of a proportion of unsuccessful

bidders bid costs is consistent with the
SUMMARY OF PAYMENT Partnerships Victoria Requirements where it will
ARRANGEMENTS maximise competition by incentivising stronger
A high-level summary of the payment market responses and attracting better quality
arrangements between the State and Project Co Proposals. Given the value of bid costs for a
is set out in Figure 4. project as large and complex as the Tunnel and
Stations PPP and the number of local and
interstate projects that were competing for
2.7 resources at the time the Tunnel and Stations
BID COST REIMBURSEMENT PPP was tendered, provision of bid cost
reimbursement for the Tunnel and Stations PPP
The State will make a contribution to the was considered necessary in order to optimise
unsuccessful Shortlisted Respondents equal to value for money by incentivising stronger
50 per cent of each unsuccessful Shortlisted market responses and attracting better quality
Respondent’s verifiable and reasonable external bids. The State retains the intellectual property
costs incurred in preparing a Proposal (capped contained in each unsuccessful Shortlist
to a maximum payment to each unsuccessful Respondent’s Proposal.
Shortlisted Respondent of $15 million). Payment
of the contribution to Proposal costs is subject
to the unsuccessful Shortlisted Respondents
satisfying certain terms and conditions.

3
KEY
COMMERCIAL
FEATURES
3.1
PARTIES TO THE CONTRACT
The relevant parties under the contractual
arrangements are summarised in Table 11.
Table 11: Summary of contact parties
Entity Description
State parties
The State The State is a signatory to the Project Agreement and other relevant ancillary
Project Documents. The Minister for Public Transport executed these contracts
on behalf of the State.
Key private sector parties
Project Co Cross Yarra Partnership is the counterparty to the Project Agreement, and is the
primary contracting entity with the State.
Cross Yarra Partnership, in turn, has entered into a range of contracts with its
consortium partners to deliver elements of the Tunnel and Stations PPP.
Notwithstanding this, Cross Yarra Partnership is the organisation ultimately
responsible for the delivery of the Tunnel and Stations PPP.
Cross Yarra Partnership is a partnership between the four Equity Investors (see
below).
D&C Project Co has engaged Lendlease Engineering Pty Ltd, John Holland Pty Ltd
Subcontractor and Bouygues Construction Australia Pty Ltd under an unincorporated joint
venture arrangement to undertake the design and construction of the Tunnel
and Stations PPP works.

3. KEY COMMERCIAL FEATURES
Table 11: Summary of contact parties (continued)
Entity Description
Maintenance Project Co has engaged John Holland Pty Ltd to undertake the maintenance and
Subcontractor repair of various assets and to provide other associated lifecycle and other
services.
Equity The following entities have committed to provide the equity required for Project
Investors Co:
• Lendlease Infrastructure Investments Pty Ltd;
• John Holland Group Pty Ltd;
• Bouygues Construction Australia Pty Ltd; and
• John Laing Investments Limited.
Financiers The following entities have committed to provide the senior debt required for
the Tunnel and Stations PPP (noting this is the initial bank group only and it may
change following completion of the syndication process):
• Australia and New Zealand Banking Group;
• Credit Agricole CIB Australia Limited;
• Mizuho Bank, Ltd;
• Westpac Banking Corporation;
• Bank of China Limited;
• Canadian Imperial Bank of Commerce;
• Crédit Industriel et Commercial;
• DZ BANK AG Deutsche Zentral-Genossenschaftsbank;
• Industrial and Commercial Bank of China Limited;
• KfW IPEX-Bank GmbH; and
• United Overseas Bank Limited.
Other parties
Train The franchisee for the Melbourne metropolitan rail network is Metro Trains
Franchisee Melbourne Pty Ltd. Metro Trains Melbourne Pty Ltd, as the operator of the
Melbourne metropolitan rail network, will coordinate various activities with
Project Co during both the D&C and Maintenance Phases.
Tram The franchisee for the Melbourne tram network is KDR Victoria Pty Ltd. KDR
Franchisee Victoria Pty Ltd, as the operator of the Melbourne tram network, will coordinate
various activities with Project Co during the construction of the Tunnel and
Stations PPP.
Independent The State and Project Co have jointly appointed AECOM Australia Pty Ltd to
Reviewer oversee the design and construction of the Tunnel and Stations PPP in
accordance with the Independent Reviewer Deed of Appointment.
OSD An unincorporated joint venture comprising John Holland Nth OSD Developer
Developers Pty Ltd and Scape Little Latrobe Operator Pty Ltd have entered into contracts
for the development of the OSD at State Library.
Lendlease (OSD South) Pty Ltd as trustee for Lendlease (OSD South) Trust has
entered into contracts for the development of the OSD at Town Hall.

Figure 5: Contractual arrangements and relationships
Independent State
Reviewer
Commercial Public
Project
Development
Agreement Transport
Agreement Victoria
Franchisee
Agreement
Equity
Investors
Interface Equity &
Developer Project Co Finance Franchisee
Agreement
Documents
Financiers
D&C Contract Subcontracts
Franchisee
Cooperation
Agreement
OSD Builder D&C Maintenance

Subcontractor Subcontractor
Over site
Tunnel and Stations PPP
developments
Notes:
1. Direct deeds and other ancillary agreements are not shown in this figure.
2. There are two separate Developers for the OSDs at State Library and Town Hall, which will be delivered under separate
Commercial Development Agreements and Interface Agreements. Only one has been depicted for simplicity.
3. There are two separate Franchisee Cooperation Agreements, one with the Train Franchisee and another with the Tram
Franchisee. Only one has been depicted for simplicity.
3.2 3.3
CONTRACTUAL RELATIONSHIPS RISK ALLOCATION
The relationship between the State, Project Co The risk allocation in the Project Agreement
and other related parties is detailed in the allocates risks to the party best able to manage
Project Agreement and associated documents. them in order to achieve the best value for
Figure 5 sets out a high-level overview of the money for the State. This results in various risks
commercial structure for the Tunnel and being:
Stations PPP and OSDs.
• retained by the State;
Project Co has also entered into a number of • transferred to the private sector; or
other contractual arrangements governing the
management of interfaces. These are described • shared between the parties.
in section 3.4.
The Project Agreement and associated
documents establish the obligations of each
party in managing these risks. Table 12 provides
a high level outline of the risk allocation for the
Tunnel and Stations PPP. Where a risk is
allocated to more than one party, those parties
may not share that allocation equally. Detail on
all risks, as well as further detail on the risks
identified in Table 12, is provided in the Project
Agreement and associated Project Documents.

Table 12: Tunnel and Stations PPP risk summary
Allocation
No. Type of Risk Description State Project Co Shared

Site Risks
1 Land Risk associated with acquiring
acquisition land identified at Contract
Close as required for Project ✔1
Co’s design accepted by the
State.
Risk associated with acquiring
land as a result of design
✔
changes requested by the
State after Contract Close.
Risk associated with acquiring
land as a result of design
✔
changes requested by Project
Co after Contract Close.
2 Planning Risk of obtaining State
Approvals approvals and planning
reservations of the land
required for the Tunnel and ✔2
Stations PPP based on the
design agreed at Contract
Close.
3 Native title Risk of native title claims
claims affecting the Tunnel and ✔
Stations PPP.
4 Aboriginal Risk of discovery of items of
heritage and aboriginal heritage and ✔
artefacts artefacts at the site.
5 Site conditions Risk of unanticipated
geotechnical or other ground
conditions (including services ✔3
and utilities) in respect of the
Tunnel and Stations PPP.
Risk of managing, removing
and remediating
✔3
contamination caused or
disturbed by Project Co.
Design, Construction and Commissioning Risks
6 Force majeure Risk of delay caused by force
majeure events which prevent
✔
construction milestones being
met.
7 Design risk Risk that the design does not
✔
meet the PS&TR.
8 Construction Risk that construction
risk activities cannot be completed ✔
on time and/or to budget.

Table 12: Tunnel and Stations PPP risk summary (continued)
Allocation

9 Franchisee Risk of managing interfaces
interface risk with the Franchisee during the
D&C Phase in relation to:
• track occupations; ✔4
• design development
✔
process;
• safety and accreditation;
✔
and
• testing and commissioning. ✔
10 Interface with Risk in relation to managing
other Metro interfaces and coordinating
Tunnel work design and construction
packages activities with other Metro
✔
Tunnel work packages in
accordance with the
requirements of the Project
Agreement.
Risk in relation to meeting
defined Tunnel and Stations
PPP milestones such as the
✔
provision of design
information or site access from
/ by other Work Packages.
Risk in relation to other Metro
Tunnel work packages failing
✔
to meet specified
requirements.
11 Other existing Risk associated with obtaining
transport occupations of tram
infrastructure infrastructure and for ✔
interface risk complying with associated
operator requirements.
Risk that construction
activities cause damage to
✔5
CityLink and/or impact on its
operations.
12 Other State Impact of other State projects
projects which result in a modification
✔
or delay to the Tunnel and
Stations PPP.
13 Defects risk Risk that defects are identified
following completion of ✔
construction.
14 Equipment Responsibility for the selection
and procurement of ✔6
equipment.
Responsibility for the
✔
installation of equipment.

Allocation

15 Commissioning Risk that the Works are not
constructed so as to be fit for
✔
purpose or do not comply
with contractual obligations.
Risk that the Works cannot be
commissioned in accordance
with the commissioning
✔
regime agreed with the other
Metro Tunnel work packages
and the Train Franchisee.
Operating risks
16 Force majeure Risk that force majeure events
affect the operation or
✔
availability of the Tunnel and
Stations PPP.
17 Franchisee Risk of managing interfaces
interface risk with the Train Franchisee
during the Maintenance Phase
in relation to:
• incident and fault
✔
management;
• safety and accreditation ✔7
• maintenance of the Tunnel
✔
and Stations.
18 Ticketing and Provision and performance of
farebox the electronic ticketing system
✔
revenue at the new Stations, including
collection of fare box revenue.
19 Asset Making the Tunnel and
availability and Stations available for the
maintenance Franchisee in accordance with ✔
availability requirements and
levels.
20 Meeting Tunnel and Stations
performance performance does not meet
✔
requirements the performance
requirements.
21 Lifecycle costs Risks associated with the
replacement and
refurbishment of Tunnel and
✔
Stations assets over the
Maintenance Phase (excluding
Returned Works).

Allocation

22 Changes in rail Changes in rail service levels
services levels impacting the maintenance
and lifecycle of Tunnel and
Stations assets:
• within parameters specified
in the Project Agreement; ✔
and
• modification to service
levels and service plan
✔
outside the agreed
parameters.
23 In station Risk that actual revenues
commercial generated by in station
opportunities commercial opportunities ✔
differs from the base case
financial model.
24 Residual life Satisfying the residual design
and end of life requirements for the
✔
Term handover Tunnel and Stations at the end
of the Maintenance Phase.
Accreditation
25 Rail safety Obtaining and maintaining
accreditation accreditation for the
construction (and associated ✔
activities) of the Tunnel and
Stations PPP.
Providing assistance to
Franchisee to vary its
accreditation as necessary for ✔
operation of the Tunnel and
Stations PPP.
Accreditation for Maintenance
Phase services of the Tunnel ✔7
and Stations PPP.
Industrial Relations
26 Industrial Risks of industrial action and
relations risk industrial relations matters
affecting the Tunnel and
Stations PPP (excluding those
✔
actions which directly result
from an act or omission of the
State and only affect the
Project or the sites).
Change in law
27 Project Risk of additional cost or delay
specific resulting from changes in
change in law State policy or law which ✔8
directly affect the Tunnel and
Stations PPP.

Allocation

28 General Risk of a general change in law
✔
change in law during D&C Phase.
Risk of a general change in law
✔
during the Maintenance Phase.
Financing and Insurance Risks
29 Financing Obtaining and maintaining
✔
private sector financing.
30 Base interest Base interest rate risk prior to
✔
rate risk Financial Close.
Base interest rate risk from
Financial Close to the first ✔
re-finance date.
Base interest rate risk from the
✔
first re-finance date.
31 Refinancing Risk of refinancing losses. ✔
Benefit of refinancing gains. ✔
32 Tax Risk that actual tax payable by
Project Co differs from the ✔
base case financial model.
33 Forex risk Risk of forex movements after
✔
Financial Close.
34 Insurance Responsibility for effecting
insurances required for
✔9
construction and operation of
the Tunnel and Stations.
Notes:
1. The State has agreed to provide access to various additional parcels of land. Project Co is required to furnish the State with
information in order to enable the State to procure access to these parcels.
2. Project Co’s Proposal was premised on a change to the reference design rail alignment. The State retains the risk of obtaining
the Planning Scheme Amendment and change to the Project Area to reflect the change of alignment.
3. Reasonable mitigation and remediation measures in respect of groundwater contamination are set out in a mitigation plan. To
the extent additional activities become necessary to remediate groundwater contamination, the State will pay the additional
cost. Project Co will remain liable for the first $20 million of additional remediation costs. Project Co’s obligations in relation to
the remediation of soil contamination at North Melbourne, Anzac and outside of the footprint occupied by the works are
modified such that Project Co is not required to remediate soil contamination that it does not physically encounter, and at
North Melbourne by reference to either the existing contamination level, or a contamination level determined by reference to
its anticipated use on completion of the works.
4. The State will pay for track occupations, as set out in the Potential Base Track Occupations Schedule (unless due to a change
to the agreed methodology), and otherwise in replacement of track occupations cancelled by the Train Franchisee. All other
track occupations are at Project Co’s cost.
5. The State retains the risk that claims by the CityLink Manager for a loss of use of CityLink exceeds insurance proceeds.
6. Project Co will be responsible for the selection, procurement and installation of the majority of equipment required in the
Tunnel and Stations. Exceptions may include ticketing and other equipment to be selected, procured and/or installed by the
RSA or the Train Franchisee.
7. Project Co will perform its services under the accreditation of the Train Franchisee.
8. The State retains the risk that the St Kilda Road precinct is temporarily or permanently included in the Federal ‘National
Heritage List’.
9. Where the Maintenance Phase insurance is procured by the State as part of the wider Government Rail Insurance Program (or
otherwise on a non-project specific basis) the State will indemnify Project Co to the extent that insurance proceeds paid to
Project Co are less than would have been payable under a project-specific policy.

3.4 • direct package interfaces – a process,

reflected in individual Work Package
INTERFACE MANAGEMENT contracts, by which direct Work Package to
Successful delivery of the Metro Tunnel Project Work Package interfaces must be identified,
requires significant coordination and agreed and addressed, including defined
cooperation between MMRA, Project Co, the contractual milestones for a limited number
RIA and the RSA (each a Package Contractor), of critical interfaces between Project Co and
as well as with other Related State Project other Package Contractors – these are
contractors (including the HCMT Project and known as the Critical Interface Milestones
LXRP) and third parties (such as the Train (CIMs) that are used as a key part of the
Franchisee). respective Work Package performance
regimes. Project Co is contractually required
3.4.1 to complete the CIMs for which it is
responsible by the dates specified. Failure to
INTERFACES BETWEEN WORK achieve these milestones may result in
PACKAGES financial consequences for Project Co. If
Each Work Package will be responsible for another Package Contractor fails to achieve
developing, managing and implementing the a CIM for which Project Co was the
works and systems (or sub systems) within their dependant party, this may result in Project
respective scope throughout the project Co being entitled to relief and compensation.
lifecycle as necessary to achieve a fully
integrated and operational system. The level 3.4.2
and timing of coordination and cooperation will INTERFACES WITH TRAIN AND TRAM
be different as between Work Packages, and FRANCHISEES
across the whole of the Metro Tunnel Project
program of works. There will be significant interfaces between
Project Co and the Train Franchisee both during
MMRA has undertaken significant work to the D&C Phase (in relation to design,
understand the potential interfaces associated construction, integration, commissioning and
with the Work Packages and to develop operational readiness activities) and the
strategies to manage them, including Maintenance Phase in terms of the provision of
establishing a commercial framework that Project Co’s asset management services. These
encourages Package Contractors to work interfaces will be governed by the Train
together in a cooperative and collaborative Franchisee Cooperation Agreement.
manner with an appropriate level of risk transfer.
The State’s interface management framework In addition, there will be a level of interface
includes: between Project Co and the Tram Franchisee
during the D&C Phase in relation to Project Co’s
• joint coordination and interface management tram works, including in relation to the design of
– all Package Contractors are required to the works, construction access, overhead power,
enter into a Coordination and Interface Deed commissioning and handback. These interfaces
Poll agreeing to a common set of Framework will be governed by the Tram Franchisee
Coordination and Interface Principles and to Cooperation Agreement. As these works are
establish and actively participate in a Joint returned to the Tram Franchisee on completion
Coordination Committee (JCC); and there will be no ongoing direct contractual
interface between Project Co and the Tram
Franchisee during the Maintenance Phase.
3.4.3
OTHER INTERFACES
The Tunnel and Stations PPP also includes a
number of interfaces, as summarised in Table 13.

Table 13: Summary of other interfaces
Interface Description Interface management
Early Works Managing There are design and The State has delegated to the D&C
Contractor (EWMC) construction interfaces Subcontractor certain responsibilities in
between the early relation to the management of the EWMC
works and the Tunnel agreement and, subject to certain limited
and Stations PPP. exceptions, Project Co and the D&C
Subcontractor have assumed program risk in
relation to the delivery of these early works.
Construction power The State has procured The D&C Subcontractor will assume direct
contractor a contractor to deliver responsibility for these works.
temporary construction
power for tunnel boring
machines. Project Co
will rely on these works
during the D&C Phase.
OSD Developers OSD buildings will be These interfaces are managed under Interface
constructed directly Agreements between the State, Project Co,
above and adjacent to the D&C Subcontractor and each of the OSD
the Stations at State Developers (two separate agreements, one for
Library and Town Hall. each site).
Transurban The Tunnel will travel This interface is managed via an interface
under the CityLink deed between the State and Transurban and a
tunnel. separate interface deed between Project Co
and Transurban.
Other Related State The Tunnel and Stations Project Co has no direct contractual
Projects PPP will interface with relationship with these parties/projects.
the HCMT PPP and may Representatives from the HCMT PPP and/or
interface or need to LXRP may be invited to participate in
coordinate activities meetings of the JCC (or its subcommittees), as
with the LXRP. required.
3.5 • foundation works to enable OSD at State

Library and Town Hall;
GENERAL OBLIGATIONS
• reinstated roads, pavements and
OF PROJECT CO landscaping;
3.5.1 • tram works in the precincts at Town Hall,
D&C PHASE Anzac and Parkville;
Project Co will be responsible for the design and • track works within the Tunnel, including first
construction of the following assets and and second stage concrete, track slab, rail
systems: and fasteners;
• power, including the western intake
• the Tunnel, including all cross passages, substation, traction power including
ventilation shafts, access shafts including at overhead line equipment, Station substations,
the Portals, walkways, tunnel drainage the eastern distribution substation and the
system, cable ducts, embedded pipework eastern 22kV substation;
and civil supports for high capacity signalling
wayside equipment; • mechanical and electrical systems, including
the tunnel ventilation systems, vertical
• the Stations, including at-grade station transport and lighting; and
entrances and ventilation shafts;
• control systems and other Project Co
• public realm works around the Stations, systems such as the station intranet.
where urban design is paramount, and
including hard landscaping and irrigation
systems for trees;

Project Co will also be responsible for: 3.5.2

• the Final Acceptance Works between
MAINTENANCE PHASE
Provisional Acceptance and Final Project Co is required to provide a range of
Acceptance, which includes systems asset management services in respect of various
integration, commissioning and operational assets and infrastructure, including the
readiness activities to ensure the Tunnel and maintenance of the Tunnel and Stations during
Stations PPP works are ready to be the Maintenance Phase of the project. Project
integrated with the existing rail network and Co will not hold any operational responsibility
signalling system. It is noted that these over train services or the Tunnel and Stations.
activities will also involve the RSA, RIA, the This will be the responsibility of the Train
Train Franchisee, MMRA, the HCMT PPP and Franchisee. The Train Franchisee will also be
other stakeholders and that Tunnel and responsible for the provision of security services
Stations PPP Final Acceptance does not in the Tunnel and Stations.
represent completion of the broader Metro
Tunnel Project and the commencement of Project Co’s asset management responsibilities
passenger services; during the Maintenance Phase include:
• providing private sector finance required for • asset management services within the Tunnel
the Tunnel and Stations PPP; and Stations including, subject to certain
• design and construction of certain assets limited exceptions, maintenance of all
which must be completed and handed back structures, buildings, plant, machinery,
to the relevant owner or other third parties equipment, fixtures, furniture, fittings,
(Returned Works). The Returned Works will landscaping, spare parts and other
not form part of Project Co’s asset improvements on or in the Licensed
management obligations during the Maintenance Areas;
Maintenance Phase (refer below). By way of • asset management services within the
example, the Returned Works include certain Portals including maintenance of all
infrastructure and rail systems which are to structures, plant, machinery, equipment,
be returned to (and maintained by) the Train fixtures, fittings, spare parts and other
Franchisee and the Tram Franchisee improvements on or in the Portals;
respectively. Road works, utilities and public
• lifecycle asset replacement for the assets it is
spaces will also be separately returned to
required to maintain;
(and maintained by) the relevant authority or
asset owner (as applicable); • pest control services;
• delivering the Tunnel and Stations PPP works • cleaning services;
in accordance with the environmental • contract management and administration
performance requirements contained in the services; and
Environmental Management Framework
procured by the State for the construction • help desk services.
and operation of the works and approved by Full details of the services and the key
the Victorian Minister for Planning as part of performance indicators are contained in the
the EES; and Project Agreement.
• managing community disruption and
engaging with relevant approval authorities Project Co will also be responsible for:
including the ONRSR, PTV and MFB.
• ensuring the Tunnel and Stations PPP
infrastructure is available to the Train
Franchisee for operation of train services.
Details of the regime regarding the required
availability and performance standards are
set out in the Project Agreement; and
• providing commercial opportunities within
the stations that are synergistic and
complementary to the functions and
operations of the Tunnel and Stations PPP.
These commercial opportunities will include
a variety of retail including food, convenience
and café stores, kiosks, laneway/small format
food, other non-food retail, and vending
machines and ATMs in all stations.

3.6 3.7.3
GENERAL OBLIGATIONS OTHER CHANGES IN COSTS
OF THE STATE Subject to certain conditions, Project Co may be
entitled to performance relief under the Project
Under the Project Agreement, the State’s Agreement and to payment by the State of
obligations include the following: certain additional costs and expenses incurred
by it as a result of the following key events:
• the State must procure a number of key
approvals in relation to the Tunnel and • during the Project term:
Stations PPP;
–– breach
by the State of any Project
• the State must provide Project Co with the Documents;
necessary access to allow it to perform its
–– a breach by either the Train and/or Tram
obligations;
Franchisees of their obligations under the
• the State may review and comment on respective Franchisee Cooperation
design documentation and other material Agreements or the fraud or wilful default
that will be submitted by Project Co in of either Franchisee;
accordance with the Project Agreement; and –– suspension of the works / services, as
• the State must pay to Project Co the State required by law, the Commonwealth or
Contributions on the relevant dates, the Final the State because of a native title claim or
Acceptance Works Payments during the the discovery of artefacts;
Final Acceptance Works Phase and the QSPs –– a legal action to, or any review or
during the Maintenance Phase, subject to any revocation of, alteration, amendment,
abatement that may apply if services are not variation or change to, certain planning or
delivered to the required standard. environmental approvals for which the
State is responsible;
3.7 –– industrial action which directly affects the
Tunnel and Stations PPP and which
OTHER CHANGES IN COST Project Co can demonstrate is a direct
TO THE STATE result of an act or omission of the State or
a State-related party within the relevant
3.7.1 licensed areas, other than any act or
MODIFICATIONS omission authorised or permitted under
any State Project Document;
The State may, at its sole discretion, request
Project Co to implement modifications to the –– if the State directs the suspension of the
Tunnel and Stations PPP or the asset works / services, except to the extent
management services, provided that the State such suspension was due to a breach of a
adequately compensates Project Co in State Project Document or a negligent act
accordance with the Project Agreement. or omission of Project Co or its associates,
or a force majeure event;
With regard to modifications, the Project –– a collision, accident or rail safety related
Agreement includes a number of pre-agreed incident involving a train which causes
scope modifications where the scope, damage to the Tunnel and Stations PPP
modification election date and modification cost infrastructure where the cause or
/ saving is ‘pre-agreed’ between the State and occurrence of the damage was beyond
Project Co. the reasonable control of Project Co;
–– a failure by the State to procure certain
3.7.2 planning and/or key approvals it is
CHANGE IN LAW required to secure in relation to the
Tunnel and Stations PPP; or
The State bears the risk of cost increases or
savings arising from certain changes in law and –– the carrying out of works by the State
policy that occur after Contract Close. which are proximate to the project site
(other than the Works Packages, and
provided Project Co complies with its
obligations to cooperate);

• during the D&C Phase: 3.8

–– a failure by the State to make certain land DEFAULT, STEP-IN AND
available by the agreed dates;
TERMINATION REGIME
–– a failure by a non-Project Co Package
Contractor to achieve a CIM for which 3.8.1
Project Co was dependant;
DEFAULT
–– an act or omission of a Metro Tunnel
Package Contractor or their associates A default by Project Co under the contractual
causes loss or damage to the Tunnel and arrangements will entitle the State to various
Stations PPP infrastructure; remedies. Where a default has occurred, the
State will, in most circumstances, be required to
–– the Train Franchisee:
give Project Co an opportunity to cure the
–– cancels an agreed occupation; default. If the default is not cured by Project Co
–– fails to give Project Co an agreed within the required cure period, it will escalate to
occupation by the agreed time or at a major default.
all; or
–– requires Project Co to hand back the The Project Agreement also elevates a number of
Train Franchisee land the subject of an events to be immediately classified in the major
agreed occupation to the Train default category (such as persistent breaches).
Franchisee prior to the agreed hand
In respect of major defaults, Project Co will be
back time, as a result of a direction by
given the opportunity to agree a cure plan with
the State or PTV to the Train Franchise
the State. Where Project Co fails to cure the
to cancel an Agreed Occupation to
major default in accordance with the cure plan,
accommodate a Track Occupation
this will generally, subject to financier step-in
required for another project;
rights, give rise to the State’s right to terminate
–– any act or omission of the State (in its the Project Agreement.
contracting capacity) or the State’s
associates, other than any act or omission Certain events of default are so severe that they
which is authorised or permitted under are not subject to a cure regime. They give rise
the Project Agreement or is an exercise of to a State termination right immediately upon
a Government authority’s statutory their occurrence (for example, insolvency of
authority; Project Co or whole or partial abandonment of
–– failure by the Construction Power the activities by Project Co). These events are
Contractor to complete the construction called default termination events.
power supply assets by the agreed date;
–– the State directs that additional tests be 3.8.2
carried out, except where the results of STEP-IN
that test show that there is a problem
with the works; In addition to triggering termination rights (or
potential termination rights), events of major
–– a step-in by the State as a result of an
default and default termination events may
incident or under a statutory power (but
trigger additional State rights and remedies
not step-in in circumstances related to a
including the right to step-in to remedy the
force majeure event or a Project Co
situation (that is, the right to assume control and
default); or
management of the Tunnel and Stations PPP).
–– remediation of contamination for which
the State is responsible under the Project Step-in rights for the State, as specified in the
Agreement. Project Agreement, can be triggered when:
• a major default has occurred and Project Co

is not complying with its cure plan;
• a default termination event has occurred;
• a cure notice has been issued by a key
subcontractor; or
• a law entitles the State to a statutory right of
step-in.
The default-related step-in right is subject to

any step-in rights the financiers may have.
During any step-in associated with a default, the
QSP will be abated to the extent that the
services are not being provided.

Table 14: Basis for the calculation of the termination payment
Event Trigger Termination payment
Default termination The State may The Tunnel and Stations’ fair market value
event terminate the Project determined by tendering or by an
Agreement if a default independent valuer, including where there is
termination event no liquid market.
occurs.
Termination for force The occurrence of a The outstanding debt as at the termination
majeure force majeure date plus other costs.
termination event.
Voluntary termination The State may, at any The outstanding debt as at termination date
time, for reasons of its and other reasonable costs (including a
own choosing, capped amount of break costs during the D&C
unilaterally elect to Phase (e.g. amounts payable to the D&C
terminate the Project Subcontractor) and a return to equity, subject
Agreement for to the timing of the voluntary termination).
convenience.
3.8.3 3.9
TERMINATION FINANCE AND SECURITY
Where the Project Agreement is terminated ARRANGEMENTS
before the natural expiry of the intended 25 year
Maintenance Phase, Project Co may be entitled Project Co is responsible for the provision of
to a termination payment. The Project debt and equity finance for the Tunnel and
Agreement can be terminated as a result of the Stations PPP. Its funding structure comprises
following: senior debt drawn progressively from Financial
Close and equity committed at Financial Close
• certain events of default (as outlined above); by way of equity letters of credit, with the equity
funding drawn during the D&C Phase.
• a force majeure termination event; or
• voluntarily by the State. If the State elects to the pay the State
Maintenance Phase Contribution, the
The basis for the calculation of the termination outstanding debt will be reduced to $500
payment will be determined by the reason for million (nominal), noting that this payment
the termination, as summarised in Table 14. would occur 3 to 5 years after the Date for Final
In the event that the termination payment Acceptance. Debt will then be refinanced at
is a negative amount, Project Co must pay intervals over the project term. The State will
that amount to the State. not share in any refinancing losses, but will be
entitled to 100 per cent of the benefit of any
refinancing gain where arising from a change in
the payment of a State Contribution, and 50 per
cent of the benefit of any other refinancing
gains (after allowing Project Co to recoup any
prior refinancing losses).
The State takes security over all of Project Co’s

rights and undertakings as security for
performance of Project Co’s obligations under
the State Project Documents. Under the Finance
Direct Deed, the State, Financiers and Project
Co agree the usual priority and enforcement
rights whereby the State obtains first priority for
out of pocket amounts (e.g. on step-in) and
amounts payable to it on termination.

3.10 3.11
STATE RIGHTS AT EXPIRY AUDIT AND INSPECTION RIGHTS
OF CONTRACT OF THE STATE
The Project Agreement requires Project Co to The Project Agreement includes contractual
hand back the Tunnel and Stations PPP assets at rights for the State to be given access to
the expiry of the Maintenance Phase (or on an information and data, including to:
earlier termination) in a condition that meets the
requirements of the Project Agreement. The • inspect or observe any part of the assets or
State will then resume responsibility for those project activities; and/or
sites and assets. To ensure that the assets are in • examine and make copies of the accounts
sound working order at the expiry of the Project and other records, reports and all documents
Agreement, the Project Agreement includes the reasonably requested of Project Co or any of
following handover obligations: its subcontractors in connection with the
• a requirement that Project Co handover the
Maintained Assets in the condition that these The State also has the ability to disclose
assets would be in if Project Co had satisfied information in connection with the Tunnel and
all relevant obligations in accordance with Stations PPP to satisfy the disclosure
the Project Agreement; requirements of the Victorian Auditor-General
• the joint appointment by the State and or to satisfy the requirements of Parliamentary
Project Co of a handover reviewer to accountability.
undertake joint inspections of the Project Co
maintained assets at least 5 years before the 3.12
end of the term and every 6 months
thereafter until the end of the Maintenance PROCESS FOR STATE
Phase (or where there is an early termination, MODIFICATION TO SERVICES/
within such shorter period as is required by FACILITY
the State); and
The State may, at its sole discretion, request
• a requirement that Project Co handover the Project Co implement modifications to the
Maintained Assets in a condition that there Tunnel and Stations PPP assets provided the
are no major lifecycle works required in the State adequately compensates Project Co.
first 5 years following the end of the project
term. This includes an ability to remove works or
services from the Tunnel and Stations PPP
If Project Co fails to maintain the relevant assets scope. Under the modifications regime, Project
to the standards required to satisfy the Co must provide an estimate of the costs or
handover requirements and the estimated cost savings impact of any modification proposed by
of delivering the works to meet the handover the State in a manner which complies with the
condition is more than 120% of the remaining requirements of the Project Agreement. All
QSPs, the State will be entitled to require that costs or savings must be provided on an open
Project Co elect to provide additional bonding, book basis. To provide greater transparency and
or deposit a portion of the remaining QSPs into certainty around modification costs, the Project
an escrow account to cover the expense of any Agreement specifies a range of pre-agreed
shortfall. margins and other on-costs Project Co can
claim in such circumstances. As noted above,
there are a number of pre-agreed costs for
modifications which may be requested by the
State.
The State may pay for the modification either by

way of a lump sum, milestone payments or an
adjustment to the QSP or a combination of such
methods.

APPENDICES
APPENDIX A:
GLOSSARY
Term Definition
ANZ means Australian and New Zealand.

Business Case the publically released business case for the Metro Tunnel
Project available at http://metrotunnel.vic.gov.au/library/
business-case.
CDA means a Commercial Development Agreement as described
in section 3.2.
Coordination and Interface Deed a coordination and interface deed poll signed by each
Poll Package Contractor setting out coordination and interface
requirements with each other Metro Tunnel Project Work
Package.
Contract Close the date on which the State and Project Co entered into the
Project Agreement. This occurred on 16 December 2017.
Critical Interface Milestone (CIM) has the meaning given in section 3.4.1.
D&C Phase means the phase from Contract Close until Final
Acceptance.
Developer means the OSD developer.
Early Works means works that began prior to the commencement of the
Early Works Managing Contractor means the managing contractor appointed for the delivery
(MC) of the Early Works, John Holland Pty Ltd.

APPENDICES
Term Definition
Eastern Portal means the Tunnel entrance at South Yarra.
Environmental Management means the environmental management framework procured
Framework by the State for the construction and operation of the
project works and approved by the Victorian Minister for
Planning.
Evaluation Criteria the criteria used by the State to evaluate Proposals as set
out in Appendix D.
Final Acceptance has the meaning given in the Project Agreement, but in
general terms means the date at which the Tunnel and
Stations are ready for rail operations, including the
completion of all testing and commissioning works.
Final Acceptance Works has the meaning given in the Project Agreement, but in
general terms means the Works to be performed by Project
Co in the period between the Date of Provisional
Acceptance and the Date of Final Acceptance.
Financial Close The date on which Project Co satisfied all of the conditions
to be met in order for its debt providers to make funds
available to it. This occurred on 18 December 2018.
HCMT Project The project to be delivered and maintained by the HCMT
PPP (Evolution Rail) consisting of 65 High Capacity Metro
trains and a train maintenance facility at Pakenham East.
Level Crossing Removal Authority is an 'Administrative Office' established in relation to the
(LXRA) DEDJTR under the Public Administration Act 2004 (Vic) to
deliver the Level Crossing Removal Project.
Maintained Assets has the meaning given in the Project Agreement, but in
general terms means that part of the Tunnel and Stations
PPP to be maintained by Project Co during the Maintenance
Phase.
Maintenance Phase means the period starting from Final Acceptance and
continuing for the remaining term of the Project Agreement.
MFB means Melbourne Fire Brigade.
Melbourne Metro Rail Authority an Administrative Office established in relation to the
(MMRA) Department of Economic Development, Jobs, Transport and
Resources under the Public Administration Act 2004 (Vic).
MMRA is responsible for the delivery of the Metro Tunnel
Project.
Metro Tunnel Project a project that will start to transform Melbourne’s rail
network into an international-style metro system, improving
access to, and connectivity with, the CBD and increasing the
capacity, reliability and efficiency of train lines serving
Melbourne’s growth areas in the north, west and south-east
as described in section 2.
National PPP Guidelines means the suite of guidance material published by the
Commonwealth Department of Infrastructure and Regional
Development and available at www.infrastructure.gov.au/
infrastructure/ngpd/index.aspx.
NPC means net present cost.
ONRSR means the Office of the National Rail Safety Regulator.
Over site Development (OSD) the over site developments to be delivered at State Library
and Town Hall as described and in section1.2.3.

APPENDICES
Term Definition
Package Contractor means any of RSA, RIA and Project Co.
Partnerships Victoria means the State's Partnerships Victoria policy.
Requirements Further information can be obtained on the website
www.partnerships.vic.gov.au.
Portals means the Eastern Portal and the Western Portal.
Procurement Process the process described collectively by the Invitation for EOI
and the RFP.
Project Agreement means the primary document that will regulate the
relationship between the State and Project Co in relation to
the delivery of the Tunnel and Stations PPP.
Project Co means Cross Yarra Partnership engaged by the State to
execute the Project Agreement and deliver the Tunnel and
Stations PPP.
Project Documents means the full suite of documents entered into by the State,
Project Co and others for the delivery of the Tunnel and
Stations PPP.
Proposal a Proposal submitted by a Shortlisted Respondent in
response to the State’s RFP.
Provisional Acceptance has the meaning given in the Project Agreement, but
generally means the date at which the Tunnel and Stations
are complete in accordance with the Project Agreement,
other than the Final Acceptance Works. This is also the point
at which the State commences payment of the QSPs to
Project Co.
Public Sector Comparator (PSC) means the hypothetical, risk-adjusted whole-of-life cost of a
public sector project if delivered by Government as set out
in section 2.1.
Public Interest Test the public interest test contained in Appendix E.
Quarterly Service Payment (QSP) means the service payments to be made by the State to
Project Co from Provisional Acceptance for the 25 year
project term, subject to the requirements of the Project
Agreement (including the abatement regime), as set out in
section 2.4.1.
Rail Infrastructure Alliance (RIA) the Rail Infrastructure Alliance Works Package of the Metro
Tunnel Project.
Rail Systems Alliance (RSA) the Rail Systems Alliance Works Package of the Metro
Tunnel Project.
Related State Projects includes other infrastructure projects funded by the State
other than the Metro Tunnel Project as outlined in section
1.1.2, including the Level Crossing Removal Project,
Cranbourne – Pakenham Rail Upgrade, Flinders Street
Station Redevelopment, Mernda Rail Extension, other
network interface projects and various rolling stock projects
including HCMT and the X’Trapolis trains project.
RFP means the Tunnel and Stations PPP Request for Proposal.
RFP Phase means the phase of the Tender Process involving the
submission of fully costed, fully financed binding Proposals
based on the requirements of the RFP.

APPENDICES
Term Definition
State Advisor those advisers listed in section 1.8.
Services means the Final Acceptance Works and the Services to be
provided under the Services Specification, to be conducted
by Project Co after Provisional Acceptance and during the
Maintenance Phase.
Shortlisted Respondent means one of the three respondents that was selected by
MMRA to submit a Proposal in response to the RFP.
State the State of Victoria.
State Contributions means:
• the State Capital Contribution; and
• the State Construction Contribution.
State Capital Contribution means the capital contribution provided by the State as set
out in section 2.5.
State Construction Contribution means the construction contributions provided by the State
as set out in section 2.5.
Stations Means the five new underground stations to be designed
and constructed, as part of the Metro Tunnel:
• North Melbourne;
• Parkville;
• State Library;
• Town Hall; and
• Anzac,
and including all associated public realm and landscape
works at ground level.
Train Franchisee means the franchisee for the Metropolitan Rail Network,
currently being Metro Trains Melbourne Pty Ltd operating as
“Metro Trains”, responsible for operating the train system.
Tram Franchisee means the franchisee for the Metropolitan Tram Network,
currently being KDR Victoria Pty Ltd operating as Yarra
Trams, responsible for operating the tram system.
Tunnel means the new twin nine kilometre rail tunnels as specified
on the project alignment between Kensington and South
Yarra to be designed, constructed and maintained.
Tunnel and Stations PPP the Public Private Partnership responsible for delivering the
Works set out at in section 1.2.2.
Western Portal means the Tunnel entrance at South Kensington.
Work Packages the four work packages that comprise the Metro Tunnel
Project; Early Works, Tunnel and Stations PPP, Rail
Infrastructure Alliance and Rail Systems Alliance.
Works means the scope of the Tunnel and Stations PPP as provided
at a high level in section 1.2.2 and detailed in the Project
Agreement.

APPENDICES
APPENDIX B:
USEFUL REFERENCES/LINKS
The following references may be of further
assistance:
Metro Tunnel website:

http://metrotunnel.vic.gov.au/
Tunnel and Stations PPP project

documentation, including the Project
Agreement, is available at:
www.tenders.vic.gov.au
Department of Economic Development, Jobs,

Transport and Resources:
www.economicdevelopment.vic.gov.au
Partnerships Victoria policy:

www.dtf.vic.gov.au/Infrastructure-Delivery/
Public-private-partnerships
National PPP Guidelines:

www.dtf.vic.gov.au/Infrastructure-Delivery/
Public-private-partnerships
High Value High Risk framework:

www.dtf.vic.gov.au/Investment-Planning-and-
Evaluation/High-Value-High-Risk

APPENDICES
APPENDIX C:
KEY CONTACT DETAILS
Melbourne Metro Rail Authority
Website:
http://metrotunnel.vic.gov.au/
121 Exhibition Street

Melbourne VIC 3000
Phone:
1800 551 927
Department of Economic Development, Jobs,

Transport and Resources
Website:
www.economicdevelopment.vic.gov.au
1 Spring Street
Melbourne VIC 3000
Phone:
(03) 9651 9999
Partnerships Victoria
Website:
www.dtf.vic.gov.au
Department of Treasury and Finance

1 Treasury Place
East Melbourne VIC 3002
Phone:
(03) 9651 5111

APPENDICES
APPENDIX D:
RFP EVALUATION CRITERIA
The State evaluated each Proposal against
detailed evaluation criteria.
Section
PART A: COMMERCIAL SOLUTION

A1. Commercial solution
A2. Other commercial requirements
A3. Commercial departures
PART B: FINANCIAL SOLUTION
B1. Financing solution – Project Co
B2. Certainty and robustness of finance – Project Co
B3. Financing solution – OSD opportunities
B4. Other financial requirements
PART C: ARCHITECTURE AND PUBLIC REALM REQUIREMENTS
C1. Project vision and identity
C2. Design concept and principles
C3. Customer and user experience
C4. Wayfinding and signage strategy
C5. Cultural and community infrastructure
C6. Public realm design
C7. Architectural design
C8. Station planning
C9. Over site development
PART D: TECHNICAL SOLUTION
D1. System engineering / systems assurance
D2. Civil and structural works
D3. PPP support for RSA
D4. Fire and life safety
D5. Mechanical systems and control
D6. Electrical power systems
D7. Surface Transport
D8. Utility Infrastructure Works
D9. Sustainability and Climate Change
D10. Environment
D11. Departures
PART E: PROJECT MANAGEMENT AND PROCESS REQUIREMENTS
E1. D&C Phase project management approach
E2. D&C Phase project team

APPENDICES
Section
E3. Community and Stakeholder management
E4. Design process
E5. Construction approach
E6. Rail Safety Accreditation (D&C Phase)
E7. Safety
E8. Property and land requirements
PART F: INTERFACE AND INTEGRATION
F1. Interface management
F2. Completion, integration and operational readiness approach
PART G: PROGRAM
G1. Program
PART H: STATE REQUIREMENTS
H1. Local Jobs First - Victorian Industry Participation Policy
H2. Major Project Skills Guarantee
H3. Aboriginal Employment Target
H4. Local workforce development
H5. Social procurement
PART I: SERVICE DELIVERY
I1. Mobilisation
I2. Management of the service delivery
I3. Service specific solutions
I4. Rail Safety Accreditation (Maintenance Phase)
I5. Departures
In addition to the above qualitative criteria there

were three sub-criterion which related to the
total cost of Proposals.
PART J: RISK AND VALUE PROPOSITION

J1. Risk-adjusted cost
J2. Value capture – OSD opportunities
J3. Value for money enhancements and innovation

APPENDICES
APPENDIX E:
PUBLIC INTEREST TEST

PUBLIC INTEREST TEST
Element Relevant Policy / Standard Assessment
Effectiveness The Tunnel and Stations PPP aligns with all relevant The Tunnel and Stations PPP is closely aligned with a number of State policy objectives; in
Is the Project effective in meeting government policies and, in particular, the following key particular, those which relate to providing public transport, and those which promote
government objectives? policies: sustainable population growth (along with access to jobs and services). In this context, the
Victorian Government 5 Year Infrastructure Plan Business Case and the tender documents for the Tunnel and Stations PPP specified an
output/service delivery solution which is consistent with government policy as outlined
The Victorian Infrastructure Plan responds to below.
Infrastructure Victoria’s 30-year Infrastructure Strategy,
and outlines the Victorian Government’s priorities over the The Tunnel and Stations PPP sits alongside the other Metro Tunnel Work Packages, Level
next five years and beyond. The Plan identifies the Metro Crossing Removal Project, High Capacity Metro Trains Project, the Cranbourne Pakenham
Tunnel Project as a catalyst project that will transform Line Upgrade Project as well as a range of other initiatives seeking to transform the public
Melbourne’s public transport system. transport system, reduce road congestion and improve safety for the travelling public. The
Tunnel and Stations PPP will create thousands of jobs and help to ease congestion, reduce
Plan Melbourne travel times and better connect people to jobs and services.
Provide an integrated transport system connecting people More specifically, the Tunnel and Stations PPP (together with the other Metro Tunnel Work
to jobs and services, and goods to market. Packages) will deliver on a number of the Transport Integration Act 2010 transport
Provide a major uplift in the capacity of our rail system via objectives, including:
a pipeline of city-shaping transport projects, generating
 social and economic inclusion, as more people are able to use the public transport
benefits to travellers across the whole network.
system to access jobs and services;
Transport Integration Act (2010)
 greater accessibility to jobs, improved freight efficiency and employment growth in the
Provide an integrated transport system connecting people CBD, leading to economic prosperity;
to jobs and services, and goods to market. The Transport
Integration Act 2010 requires that all decisions affecting  promoting environmental sustainability by empowering public transport use and
the transport system be made within the same integrated alleviating vehicle traffic;
decision-making framework to support the same  integrated transport and land use improvement in the CBD area; and
objectives. The Act’s six transport system objectives are:  improved transport efficiency and reliability.
 Social and economic inclusion; The Tunnel and Stations PPP is of strategic significance to the Victorian economy, and has
 Economic prosperity; therefore been declared a strategic project in accordance with the VIPP framework. The
Tunnel and Stations PPP will be a significant contributor to the State’s local job aspirations.
 Environmental sustainability;
Project Co’s solution met or exceeded all State policy requirement targets including for local
 Integration of transport and land use; jobs, industry and content, including:
 Efficiency, coordination and reliability; and  overall local content of 88.2% for the D&C Activities;
 Safety and health and wellbeing.  local content for maintenance activities of 85.3% of total cost of goods or services;
Victorian Industry Participation Policy (VIPP)  local content for provision of steel of 92.6%;
The VIPP requires Victorian Government departments and  around 5,000 jobs, including throughout the supply chain;
agencies to consider opportunities for competitive local
suppliers, including SMEs, when awarding contracts.  investment in training, skills development and apprenticeship opportunities; and
Major Projects Skills Guarantee (MPSG)  providing training and employment opportunities for indigenous Victorians (2.5 per cent
The MPSG requires Victorian Government departments target of total labour hours) and other priority jobseekers (10 per cent of construction
and agencies to use local apprentices, trainees or workforce).
engineering cadets on all of Victoria's major publicly
funded works for at least 10 per cent of the project's total
labour hours.
Accountability and The Tunnel and Stations PPP fully complies with all The community will be well informed about the obligations of both the Government and
transparency Victorian Government accountability and transparency private sector partners through several mechanisms, including:
Do the partnership arrangements policies and obligations including under the:  details of the relevant contracts, subject to commercial-in-confidence considerations, are
ensure that:  Freedom of Information Act 1982; published in accordance with Victorian Government policy;
 the community can be well  Victorian Government Purchasing Board Policies;  information on the Tunnel and Stations PPP’s performance being available in the
informed about the  Supplier Code of Conduct; and department’s annual report;
obligations of government  the Freedom of Information Act applying to the Tunnel and Stations PPP. The Auditor-
and the private sector  Audit Act 1994 (Vic).
General will have access to project information in accordance with the Audit Act;
partner; and
 Victorian Government Purchasing Board Policies were applied to the tender process;
 these obligations can be
overseen by the Auditor-  an independent probity adviser overseeing the procurement process to ensure the
General. process is fair and transparent and conducted in accordance with the Tunnel and
Stations PPP’s Probity Plan. The probity adviser has provided sign-off to government
following the conclusion of the negotiation process with the preferred proponent;
 an independent probity auditor validating the evaluation process to check and sign off
compliance with Government procurement guidelines, State probity and procurement
procedures and the RFP and any associated documentation. At the completion of the
tender process, the probity auditor concluded that the tender process had been
conducted in a manner consistent with the probity principles; and
 the Auditor-General retaining the right to view all material.
Affected individuals and The Tunnel and Stations PPP must conduct, or be Key government stakeholders have been consulted during the procurement, negotiation and
communities compliant with: completion phases for the Tunnel and Stations PPP. The following individuals/groups were
Have those affected been able to  an appropriate public consultation process with those identified as being affected by the Tunnel and Stations PPP:
contribute effectively at the individuals / groups identified as being affected by the  Metro Trains Melbourne (Train Franchisee);
planning stages, and are their Tunnel and Stations PPP;  Yarra Trams (Tram Franchisee);
rights protected through fair  environmental, OH&S and other assessments of the
appeals processes and other  V/Line;
project area and relevant conditions and requirements
conflict resolution mechanisms? set for the Tunnel and Stations PPP and/or for the  VicTrack;
Metro Tunnel Project overall; and  VicRoads;
 local government planning requirements.  Transurban / CityLink;
 Accredited Rail Transport Operators;
 Government stakeholders including Transport for Victoria, Public Transport Victoria,
Department of Environment, Land, Water and Planning, Aboriginal Affairs Victoria, Office
of the Victorian Government Architect, Heritage Victoria, Environmental Protection
Authority Victoria and the Commonwealth Department of Environment; and
 local councils including Cities of Melbourne, Stonnington, Port Phillip, Maribyrnong and
other relevant councils.
In addition, a range of non-Government organisations and transport advocacy stakeholders
have been, and will continue to be, consulted with including local residents, businesses,
hospitals, universities, Indigenous advocacy groups and other institutions along the Metro
Tunnel Project route.
The Metro Tunnel Project was assessed through an Environment Effects Statement (EES)
process, a requirement of the Minister for Planning's original 'public works' declaration
(published in an Order on 3 September 2015 and accompanied by a 'Statement of
Reasons').
The EES included an integrated assessment of the potential environmental, social, economic
and planning impacts of the project, and the approach to managing these impacts. The EES
was supported by a range of technical studies that identify and assess the potential effects of
the project and provide guidance on mitigation measures.
A comprehensive engagement program has been undertaken by MMRA since early 2015,
including as part of developing the EES, to provide directly affected stakeholders and the
broader public with an opportunity to input into the planning process and have their say on
the concept design and proposed construction approach for the Metro Tunnel Project.
Project Co is required to deliver the Tunnel and Stations PPP works in accordance with the
environmental performance requirements contained in the Environmental Management
Framework procured by the State for the construction and operation of the works and
approved by the Minister for Planning as part of the EES.
Through these activities, MMRA has established relationships with many stakeholders and
community members and expects that Project Co will continue to maintain effective working
relationships with these stakeholders as well as establish relationships with new
stakeholders identified through the detailed design, construction planning, delivery, operation
and maintenance of the Tunnel and Stations PPP.
In addition, Project Co is required to prepare a precinct development plan for each Station
precinct as well as for each of the Portals that will provide an opportunity for community
stakeholders to comment on the proposed designs. These precinct development plans will
be submitted to the Minister for Planning for consideration and approval.
Equity The key disadvantaged groups expected to use the Contractual provisions include the required safeguards to ensure that Project Co complies
Are there adequate infrastructure and access the services are those with with all applicable laws, which include common law and the principles of equity.
arrangements to ensure that physical impairment, the aged and frail and people of The Stations will:
disadvantaged groups can culturally and linguistically diverse (CALD) backgrounds.  provide DDA compliant design and operations that:
effectively use the infrastructure The Tunnel and Stations PPP must comply with all  cater for people with mobility, physical, sensory and cognitive restrictions;
or access the related service? relevant government laws and policies including:
 provide continuous spatial navigation with visual and auditory augmentation and
 Disability Act 2006 and the Commonwealth Disability tactile aids;
Discrimination Act 1992 (DDA);
 provide step-free access to all public areas and train boarding;
 Disability Standards for Accessible Public Transport
2002 (DSAPT);  provide ticketing assets at accessible locations; and
 Racial Discrimination Act 1975;  provide customers with accessibility and mobility needs to be able to board and
 Sex Discrimination Act 1974; and alight the trains without operational staff support;
 Equal Opportunities Act 1995.  provide ambulant toilet facilities (both left and right handed, within the paid zone, in
proximity to ambulant toilet facilities) and lifts and stairwells for customers with
accessibility and mobility needs;
 provide toilets (both left and right handed) within the paid zone, in proximity to
ambulant toilet facilities, with child/baby facilities that are accessible by all paid side
customers;
 provide information on services and facilities for users from CALD backgrounds;
 include equitable routes for non-ambulant and other users requiring lifts from the
platform to the street with redundancy provision that provides equitable access;
 provide tactile ground surface indicators to all door thresholds for the platform screen
doors (PSD) at the Station platforms;
 be compliant with the DSAPT;
 be served with a hearing augmentation system; and
 encourage customers with reduced mobility to board the train at the doors nearest to the
driver’s cabin. A visual indication at ground surface and on the PSD will advise
customers of this boarding location.
In addition:
 Project Co will minimise walking distance between interchange points with existing bus
and tram services and new stations, and ensure the route and interchange can be used
by people who are mobility impaired;
 public phones in the unpaid area of the station will be at an accessible height for
wheelchair customers and with a sign displaying the PTV TTY number for hearing
impaired customers; and
 customers will be able to hear announcements at any place throughout the station, with
alternatives provided for those with a hearing impairment.
Public access Project Co must make the Tunnel and Stations available The Tunnel and Stations infrastructure will be made available to the Train Franchisee to
Are there safeguards that ensure to the Train Franchisee for ongoing public access (as operate under the Train Franchise Agreement for use and access by the public, except
ongoing public access to appropriate) to the infrastructure. during overnight closure periods and times when essential maintenance may be required.
essential infrastructure? All required and statutory public access will be provided, Both the technical and contractual arrangements require Project Co to provide the required
where it is safe to do so. All relevant public transport public access including adequate safeguards to ensure the continued supply of service to the
access requirements will be implemented. public. The contract will include step-in rights for the State to take over the assets in the
Appropriate contractual arrangements will be in place. event of a contract breach or major incident.
Delivery of the Tunnel and Stations PPP as an availability based PPP means that payments
to the private party will be abated for underperformance against contracted service levels
and/or if the Tunnel and Stations infrastructure becomes ‘unavailable’.
Consumer rights Service recipients to whom government owes a high level The Tunnel and Stations PPP will meet all of the special needs and rights through adequate
Does the project provide of duty of care are children, seniors, low income earners, design, construction and maintenance, noting that the Train Franchisee will play a key role in
sufficient safeguards for service physically/mentally disabled, non-English speaking, protecting consumer rights from an operational perspective.
recipients, particularly those for overseas tourists, those not familiar with the transport As set out under the heading of “equity” the technical specifications require that Project Co
whom government has a high system, etc. design and construct the Tunnel and Stations to maximise accessibility to commuters with
level of duty of care, and/or the special needs. As part of the design process, Project Co will be required to build a mock-up
most vulnerable? station to establish the standard to be achieved in the relevant works, with accessibility to be
reviewed and confirmed during the construction process.
As required under the Environmental Performance Requirements, the Business Support
Guidelines for Construction (BSG) provide a framework for Metro Tunnel contractors to
address residual impacts on businesses so far as is reasonably practicable and appropriate.
The BSG outlines the proactive measures and support services that MMRA and the
appointed construction contractors may deliver to support businesses that experience
disruption during and only as a result of construction of the Metro Tunnel. The BSG can be
found at http://metrotunnel.vic.gov.au/__data/assets/pdf_file/0020/104528/MM-Report-
201703-EMF-Business-Support-Guidelines.pdf.
The Residential Impact Mitigation Guidelines (RIMG) provide direction to the Metro Tunnel
contractors on how to address residual impacts on residential amenity so far as is
reasonably practicable and appropriate.
Due to the scale, duration and variable nature of the construction works required for the
Metro Tunnel, there may be some residual impacts on residential amenity despite on-site
mitigation measures being implemented in accordance with the Environmental Performance
Requirements (EPRs).
The EPRs require the preparation of a relocation management framework prior to
commencement of relevant works to provide for the temporary relocation of households on a
voluntary basis. Any relocation management framework is required to be consistent with the
RIMG.
As above, delivery of the project as an availability PPP means that payments to the private
party will be abated for underperformance against contracted service levels.
Security The Tunnel and Stations PPP needs to ensure: The Project Agreement requires compliance (by all contractors involved) with the
Does the project provide  all relevant occupational health and safety standards Occupational Health and Safety Act 2004 (the Act) and all relevant codes of practice that
assurance that community health are met in design, construction and operation / establish health and safety guidelines supporting the Act.
and safety will be secured? maintenance stages; Contract specifications require the Tunnel and Stations to be designed, built and maintained
 government can meet its duty of care obligations to in order to meet relevant occupational health, safety, physical security, emergency risk
the public; and management, data protection and ICT security requirements in full.
Project Co must hold, or must ensure that a key subcontractor holds, relevant accreditation
 all accreditation requirements are met.
to the extent required by law in respect of the project activities which comprise train
operations during the D&C Phase. Project Co must more broadly ensure it complies with all
duties, obligations and requirements under the Rail Safety National Law.
The Train Franchisee will be the accredited Rail Transport Operator in relation to the
operation of the Tunnel and Stations PPP infrastructure and will also be responsible for the
provision of security services. Project Co will perform its maintenance services under the
Train Franchisee’s accreditation and must not do anything to affect the Train Franchisee’s
accreditation.
Privacy Applicable privacy standards with which the Tunnel and The Tunnel and Stations PPP will ensure the protection of rights to privacy through
Does the project provide Stations PPP is required to comply are set out in: adherence to a set of ‘Privacy Principles’ which includes the ‘Health Privacy Principles’ as
adequate protection of users’  Freedom of Information Act 1982; contained in the Health Records Act 2001 (Vic) and the ‘Information Privacy Principles’ as
rights to privacy? contained in the Information Privacy Act 2000 (Vic).
 Health Records Act 2001 (Vic);
Broader compliance with the Freedom of Information Act 1982 and Surveillance Devices Act
 Information Privacy Act 2000 (Vic); 1999 provides an additional layer of privacy protection.
 Privacy and Data Protection Act 2014 (Vic); and
 Surveillance Devices Act 1999.

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TUNNEL AND STATIONS

PUBLIC PRIVATE PARTNERSHIP

On 16 December 2017, the Victorian Government entered

3 KEY COMMERCIAL FEATURES 20

4 TUNNEL AND STATIONS PUBLIC PRIVATE PARTNERSHIP PROJECT SUMMARY

Figure 1: The Metro Tunnel route alignment

5 TUNNEL AND STATIONS PUBLIC PRIVATE PARTNERSHIP PROJECT SUMMARY

This Project Summary provides information on 1.1.4

The EES included an integrated assessment of

6 TUNNEL AND STATIONS PUBLIC PRIVATE PARTNERSHIP PROJECT SUMMARY

A comprehensive engagement program was –– power

7 TUNNEL AND STATIONS PUBLIC PRIVATE PARTNERSHIP PROJECT SUMMARY

8 TUNNEL AND STATIONS PUBLIC PRIVATE PARTNERSHIP PROJECT SUMMARY

Table 1: Tender process – key dates

Tender Process Phase Date

1.4.3 Specialist advisers and other Government

9 TUNNEL AND STATIONS PUBLIC PRIVATE PARTNERSHIP PROJECT SUMMARY

Figure 2: Evaluation governance structure

Priority Sub-Committee of Cabinet Approval of

Major Transport Infrastructure Board

Executive Review Team

10 TUNNEL AND STATIONS PUBLIC PRIVATE PARTNERSHIP PROJECT SUMMARY

The RFP was issued to the three Shortlisted 1.5.2

Table 2: Summary of Government policy outcomes

Government Policy Contracted Minimum Difference

11 TUNNEL AND STATIONS PUBLIC PRIVATE PARTNERSHIP PROJECT SUMMARY

As noted above, the Metro Tunnel Project

12 TUNNEL AND STATIONS PUBLIC PRIVATE PARTNERSHIP PROJECT SUMMARY

13 TUNNEL AND STATIONS PUBLIC PRIVATE PARTNERSHIP PROJECT SUMMARY

The PSC is made up of a number of elements as 2.2

Table 6: Value-for-money comparison – PSC versus private sector delivery

Public sector Private sector Estimated savings Estimated savings

5,327.8 5,240.4 87.4 1.6%

14 TUNNEL AND STATIONS PUBLIC PRIVATE PARTNERSHIP PROJECT SUMMARY

• the Proposal delivered the highest value to 2.4

• costs associated with delivering the other –– a

15 TUNNEL AND STATIONS PUBLIC PRIVATE PARTNERSHIP PROJECT SUMMARY

Figure 3: Performance regime overview

Asset Performance Quality

System Failure Failure Reliability Quality

2.4.2 • Reliability Adjustment (RA) – The RA is

Each element is described below: 2.4.3

16 TUNNEL AND STATIONS PUBLIC PRIVATE PARTNERSHIP PROJECT SUMMARY

• if Final Acceptance occurs late, Project Co’s 2.4.4

As much of the systems integration and

Table 7: Disclosure of nominal flows

$’million % $’million $’million

Table 8: Disclosure of lease liability

Lease liability Lease liability Expected year of Implied interest rate

$’million $’million Financial year %

Table 9: Breakdown of quarterly service payments

Sum of quarterly Principal Interest Implied maintenance and

$’million $’million $’million $’million

17 TUNNEL AND STATIONS PUBLIC PRIVATE PARTNERSHIP PROJECT SUMMARY

2.5 In addition to the State Contributions, as a

Table 10: Capital contributions

State Capital Contributions made to Project Co Amount ($’million)

Capital contribution during D&C Phase 2,500.0

18 TUNNEL AND STATIONS PUBLIC PRIVATE PARTNERSHIP PROJECT SUMMARY

Figure 4: Summary of payment arrangements

3 KEY COMMERCIAL FEATURES 20