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High Speed Rail Norway Commercial, Contractual and Organizational issues Public Conference 16th December 2010 www.pwc.com.

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Presentation on theme: "High Speed Rail Norway Commercial, Contractual and Organizational issues Public Conference 16th December 2010 www.pwc.com."— Presentation transcript:

1 High Speed Rail Norway Commercial, Contractual and Organizational issues Public Conference 16th December 2010

2 PwC Work stream: Commercial and Contractual Strategies and Organizational aspects Outline of tasks Approach Interconnectivity between the work streams Preliminary considerations –Commercial –Contractual –Organizational High Speed Rail Norway Commercial, Contractual and organizational issues Slide 2 16 December 2010

3 PwC Outline of tasks Commercial Strategy -How the procuring Authority might limit and manage the cost of building and operating HSR in Norway ? -How to get best value for money from the procurement? Contractual Strategy -The key issues to be addressed in delivering successfully HSR in Norway including the allocation of responsibilities and risk Organizational issues -How to structure the organization in order to implement the commercial and contractual strategies and achieve a successful delivery of HSR High Speed Rail Norway Commercial, Contractual and organizational issues Slide 3 16 December 2010

4 PwC Approach Key drivers of approach -Consider all realistic alternatives at a generic level -Describe the pros and cons of options, no recommendations in this phase of work Key activities -Review of previously prepared material -Leverage experience -Develop lessons from case studies -Preliminary market sounding -Understanding key risks -Recognise dependencies on other workstreams High Speed Rail Norway Commercial, Contractual and organizational issues Slide 4 16 December 2010

5 PwC Interconnectivity between the workstreams High Speed Rail Norway Commercial, Contractual and organizational issues Slide 5 16 December 2010 Market Technical Environmental Rail planning Economic Commercial, contractual and organizational The Commercial, contractual and organizational solutions chosen should deliver the key requirements defined by the other workstreams. The tailored solutions will impact the business case for each project

6 PwC Commercial Strategy – preliminary considerations Life Cycle Cost considerations -How to avoid a cheap build that requires extensive maintenance? -How to encourage contractors to look at cost implications for the whole system of their solution? (TransPennine Express) Risk identification and allocation -What are the key risks? (Planning, land purchase, tunnelling conditions) -How much risk could be allocated to contractor? (Size of project, risk premia, risk of no bid) -How to deal with interface issues? (Rail-wheel, tunnelling with civils) Achieving cost certainty (West Coast Mainline, Gardermobanen) Potential for funding through operating profit (Taiwan experience of increasing State support) High Speed Rail Norway Commercial, Contractual and organizational issues Slide 6 16 December 2010

7 PwC Contractual Strategy – preliminary considerations Packaging - criteria and considerations -Reducing interface risk whilst being able to procure the “best” for each activity (Signalling systems may constrain choice of rolling stock) Interfaces -With the existing network (Specification, access to build and maintain, timetables) -Outside the HSR programme organization (Roads Authority, City Authorities, Power) Nature of contracts -Traditional approach has been one of input specification (Minimises interface risk) -More recent trend is towards output (what the asset/service should deliver) or outcomes (the impact of those outputs) Charging -What revenues will the infrastructure generate? How determined/ controlled? (Setting of fares and access charges) High Speed Rail Norway Commercial, Contractual and organizational issues Slide 7 16 December 2010

8 PwC Organisational – preliminary considerations (1) Roles to be fulfilled for project delivery: Who should be the Procuring Authority ? (Independent Authority has overseen successful introduction of HSR in Spain) How much of the work should the Procuring Authority do? (CrossRail engaging delivery organisations) How much interface risk should the Procuring Authority allow and manage? (Japanese approach – all work together to resolve) High Speed Rail Norway Commercial, Contractual and organizational issues Slide 8 16 December 2010 Government Set policy Procuring Authority Define specification Government Delivery Co Manage delivery Contractor/ Consortium Build/operate infrastructure Train Operator Operate services Rolling stock contractor Build/Maintain stock

9 PwC Organisation – preliminary considerations (2) High Speed Rail Norway Commercial, Contractual and organizational issues Slide 9 16 December 2010 Example organization structure on Government Procuring Authority DeliveryCo (Govt owned) PassengersRegulator HSR OperatorInfraBuildCo Construction subcontract VehicleCo Rolling stock (manufacturer and maintenance Signalling and Operation subcontract Maintenance subcontract InfraCo Build contract (including milestone payments) Transfer of assets and liabilities at construction completion Debt Finance Equity Debt Finance Equity Contractual and payment arrangement Financing cashflow Shareholding Maintenance and operations contract Operating contract Customer revenue Track access charges Possibly PPP-type contract (including milestone payments

10 Thank you This publication has been prepared for general guidance on matters of interest only, and does not constitute professional advice. You should not act upon the information contained in this publication without obtaining specific professional advice. No republication or warranty (express or implied) is given as to the accuracy or completeness of the information contained in this publication, and, to the extent permitted by law, PricewaterhouseCoopers LLP, its members, employees and agents do not accept or assume any liability, responsibility or duty of care for any consequences of you or anyone else acting, or refraining to act, in reliance on the information contained in this publication or for any decision based on it. © 2010 PricewaterhouseCoopers LLP. All rights reserved. 'PricewaterhouseCoopers' refers to PricewaterhouseCoopers LLP (a limited liability partnership in the United Kingdom) or, as the context requires, the PricewaterhouseCoopers global network or other member firms of the network, each of which is a separate and independent legal entity.


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