Electricity Network Improvement

Endeavour Energy supplies electricity to 2.4 million people in households and businesses across a swathe of New South Wales, including Sydney’s Greater West, the Blue Mountains, Southern Highlands, Illawarra and the South Coast.

In June 2017 the company began operating under a 99-year lease partnership between its new owners, an Australian-led consortium of private investors, and the state government. Their first priority was to launch a significant investment program to improve network infrastructure, performance and service reliability for customers.

Brief

Endeavour Energy’s new Major Projects Unit was established to deliver large capital works under a new collaborative framework agreement (CFA). The aim was to achieve greater value for money compared with traditional contracting through more competitive pricing of a longer-term program of works and better workforce utilisation. In addition, the client would avoid the costs of managing multiple tenders and suppliers. Endeavour Energy also wanted to fast-track this procurement process so the two chosen contractors could be appointed in time to start work in January 2018 and maximise the volume of works delivered in the current regulatory period.

What we did

HKA designed and developed the procurement delivery strategy, and managed the overall transaction for awarding an US$460 million (A$650 million) programme of works.

Drawing on past experience of utility sector procurement and intensive consultations with Endeavour Energy management, our team tailored a bespoke CFA to meet the client’s objectives and the challenges of delivering complex high-voltage infrastructure safely and efficiently in mainly urban areas.

Our specialists also established project controls and guidelines to ensure that Endeavour Energy secured value for money.

Acting as transaction managers and commercial advisers, our team:

• Established the key drivers and objectives for procuring the program through a new contract arrangement.

• Assessed a variety of commercial models to identify the approach best aligned with those objectives.

• Planned and managed industry briefings and a market sounding process.

• Designed and developed key performance indicators to underpin the collaborative framework, along with tools to evaluate and track results, and drive value for money.

• Worked with the legal team drafting the framework agreement and call-off contracts.

• Drafted documentation for the EOI (expression of interest) and RFT (request for tender) stages, and consulted with internal teams to ensure projects and pricing schedules were scoped correctly in line with safety, environmental and quality requirements.

• Evaluated the tenders, carrying out detailed analysis of pricing schedules and key performance indicator commitments.

• Designed and managed the three-week interactive dialogue process between the client and contractors, which included a team simulation exercise to test how shortlisted bidders would perform in practice.

• Led the final negotiations with the two winning contractors, and coached client stakeholders on the CFA’s contractual obligations and commercial regime.

Outcomes

As transaction managers, our team put in place a new delivery regime – effective from January 2018 – enabling Endeavour Energy to increase the volume of work it delivers annually while driving business efficiencies.

The selection process de-risked the project by ensuring contractors gained a clear understanding of the program’s challenges as well as the client’s appetite for innovation and collaborative working.

Cost savings were achieved in contract negotiations, procurement administration and management of projects delivered in shortened timeframes, while reducing exposure to claims and disputes.

Endeavour Energy’s MPU is equipped with a suite of tools to manage the framework, including a guideline setting out the enablers and criteria for maximising value for money.