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Donal Minnock

National Roads Authority

PPP’s in Ireland

The Fermoy Bypass

PPP Scheme

Outline of Presentation• Delivery of Fermoy Bypass

– Statutory Procedures

– Tender Competition

– Project scope

• Payment Mechanism

• Risk Allocation

• Project Consortium structure

• Contract Management & Monitoring

• NRA PPP Programme Activity overview & recap

Fermoy Bypass

Statutory Procedures

Delivery of Fermoy Bypass:

Statutory Procedures - Planning

• Planning application submitted by Cork County Council 12th July 2001

• Oral Hearing held November 2001

• Supplementary material requested by the board and submitted 27th May 2002

• Oral Hearing re-opened 24th September 2002

• Approval received 30th December 2002

Statutory Procedures - tolling

• Draft Toll Scheme published 14th May 2001

• 8 objections received

• Oral Hearing into toll scheme 3rd April 2002

• Adoption of toll scheme by NRA Board

27th March 2003

• Publication of Draft Bye-Laws 12th May 2006

• Adoption of Bye-Laws 20th July 2006

Tender Competition

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Tender Competiton

• Pre-qualification in OJEU commenced July 2001

• Shortlisting successful tenders in Nov 2001 :� Direct Route

Halliburton Brown & Root Ltd, Strabag AG, John Sisk & Son (Holdings) Ltd, Lagan Holdings Ltd, Roadbridge Ltd (Mulcair).

� Erin RouteCarillion Private Finance Ltd, Balfour Beatty Capital Projects, EgisProjects SA, WS Atkins Investments Ltd.

� Togher TollMota-Engil SGPS SA, Mota & Companhia SA, Engil Sociedadede Construcao Civil SA, Acciona SA, Banco Espirito Santo SA, Coffey Construction Ltd, Priority Construction Ltd.

� Vinci-HegartyVinci, PJ Hegarty & Sons.

PPP Procurement ProcessPrequalification

Invitation to Negotiate

Shortlisting

Preferred

BidderPrequalEvaluation

Tender

Evaluation

ClarificationMeetings Due diligence

& BAFO

Negotiations

Close

Provisional Preferred Tenderer (“PPT”)

Tender Programme

• Issue of tender documentation 19th April 2002

• Tender return date 18th November 2002

• Shortlisting of tenderers to BAFO 25th March

2003 – Togher Toll & DirectRoute

• Best and Final Offers in 16th December 2003

• Announced Preferred tender 17th February 2004

• Contract Close 11th June 2004

Statutory

Procedures

Project Scope

N8 Rathcormac

/Fermoy Bypass

Scheme

Layout Plan

Galway

Belfast

Waterford

Cork

Dublin

Limerick

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N8 Rathcormac/Fermoy Bypass

Technical Scope

• 17.5 km 2 Lane motorway

• 450m Motorway Viaduct

• 2 Major River Bridges

• 3 Interchanges (1 was removed by ABP)

• 9 County Road Crossings

• 1 Motorway Toll Plaza

• 2 Ramp Toll Plazas

N8 Rathcormac/Fermoy Bypass

Typical Standard

Motorway Cross-Section

Toll Plazas

� Mainline Plaza between Watergrasshill and

Rathcormac South Interchanges

� 6 lanes in each direction

� Ramp Plazas to be located at North facing Ramps

at the Corrin Interchange

� 2 lanes per Ramp

� Includes Administration Building, Canopy, Toll

Booths, access, etc.

Toll Plazas Toll Plazas –– Standard Layout Drawings Standard Layout Drawings

Front Elevation

Side Elevation

N8 Rathcormac/Fermoy BypassSignificant Construction Issues

• Blackwater Crossing Viaduct

– 450m Long Motorway Viaduct in SAC

• Corrin Interchange

– Construction on Soft Ground

• Condonstown Toll Plaza

– Construction of Motorway Tolling Facility

Payment Mechanism

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Payment Mechanism Elements

Primarily:

1. Hard Toll Revenue

2. Construction Payments

3. Operational Payments

Secondarily

� Revenue Share

� Non Availability Payment

� Traffic Guarantee

� Lane Occupation Charges

Payment Mechanism1. Hard toll revenue – from Permit to Use Date

- Tenderer bids on his own traffic forecasts

- Maximum toll charges as per Toll Scheme

- Base toll as per Toll Scheme + Indexation + VAT, rounded to nearest 10c

2. Construction Payments (if required)

- Maximum overall amount set in nominal terms

- Maximum annual amount specified

- Not greater than 50% of certified value of work completed at any point

- Linked to Milestone Events

3. Operational Payments

- Maximum annual amount set

- Maximum average annual amount set

- Cannot commence before Target Completion Date

- Now subject to Non Availability deductions

• Fermoy Bypass - NRA payments to Direct Route:

– Approx €80m (2003 prices) over the period of

construction

– Approx €40m (2003 prices) during the period of

operation. (subject to CPI)

Payment Mechanism (Cont’d)Toll Charge Regime

• NRA set maximum tolls annually

• Same charge regime on M1, N6,

N7, M7/M8, M8, N25 PPP

Schemes

• Motor car = €1.70, Bus = €3.10

• PPP Co’s can propose lower

charges to stimulate demand

• Agreed with PPP Co & published

annually in national papers

• Visit www.nra.ie

Risk Allocation

Risk Allocation

• Statutory Approvals / Planning risks rest entirely with the public sector.

• Construction related risks rest with PPP Co.

• Traffic risk mainly with PPP Co

• NRA establish a Data Room providing significant information to tenderers ie,.

• Site investigation results

• Survey results etc.

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LAW

FINANCING

RESIDUAL LIFE

DEMAND

OPERATING

CONSTRUCTION

DESIGN

PLANNING

PPPTRADITIONALRISK N8 Rathcormac/Fermoy BypassSite Investigation

• Limited existing SI available - geophysical investigation carried out in areas of Karst Limestone

• Advance Ground Investigation Contract tendered by Local Authority - 12 week site works; 4 weeks testing and reporting

• Detailed investigation to comprise boreholes, trial pits and testing

• Overview report along length of project road provided during tender period

N8 Rathcormac/Fermoy BypassArchaeology

• EIS identified 13 sites of archaeological interest

• Archaeological Investigation Contracts were tendered by

Cork County Council to excavate a 2m wide trench, at

12.5m centers, alternated along the centreline out to the

CPO line

• Reports identifying all known sites within the site and

progress of resolution of such sites fed in to the tender

programme

• Approximately 93% of site was tested in this fashion prior

to signing of PPP Contract

Archaeological risk management

• Intensive advance testing

– Pioneered on N4/N6 PPP

contract

M4 - Johnstown

On site excavation• Sites are excavated in

timescales that sit within a

considered timeframe

Advance testing• non-invasive techniques –

geophysics, aerial, topographic,

terrain modelling

• invasive techniques – testing of

sites & trenching of geophysical

areas

Roestown on the M3 Clonee-Kells Motorway

Existing N3

Aerial view of testing on the M3 Clonee-Kells

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Project Consortium

Structures

Typical PPP Contract Structure

ConstructionContractor

OperatingContractor

Contracting

Authority

Funders

Operating Contract

Shareholders

Project Agreement

Shareholders

AgreementPPP Co

Direct

Agreements

Loan Agreement

Direct Agreement

Security

Package

Construction

Contract

Direct Route (Fermoy) Ltd.:

Consortium Members

• Kellog Brown & Root

• Strabag

• John Sisk & Son

• Lagan Holdings

• Roadbridge

• First Irish Infrastructure Fund

– Joint AIB/EIB investment fund

• Subsequent inclusion of Bank of Scotland

Lenders

• KBC/IIB, AIB, ING

– Subsequent inclusion of Bank of Scotland

• European Investment Bank (EIB)

Construction Joint Venture:

Direct Route (Fermoy) Construction Ltd.

• All equity members except FIIF and Bank

of Scotland

Cash Flow Overview

Direct Route (Fermoy) Limited

Project Lenders

KBC/IIB, ING Bank NV,AIB & EIB + BoS

Project Investors

HalliburtonStrabag

SiskLagan

RoadbridgeFIIF

+BoS

Loans

Principle &

Interest

Loan Stock

National Roads

Authority

Revenue Share

Public

Sector

Finance

Providers

Road Users

Tolls

Other Public Sector

TaxVAT

Rates

Third PartiesConstruction Joint

Venture Co.

Construction Costs Operating Costs

Construction & operation payments

DirectRoute

(Fermoy) Holdings Limited

Equity

Dividends

Equity Dividends

Principle& Interest

Designers

• Kellog Brown & Root

• Toll Link

Lender’s Technical Adviser

• RPS MCoS

Functions of the Lender’s Technical adviser• Technical Due Diligence (pre-Financial Close review and report on organisation structure, technical proposals -

feasibility, risks and costs, contract documents etc.)

• Syndication Support (report update and presentation to Syndication Banks, post Finacial Close - if appropriate)

• Progress Monitoring (both for D&C progress and preparation work for O&M phase)

• Payment Certification (in accordance with the terms of the Credit Facility and LTA Agreements)

• Approvals (in accordance with the terms of the Credit Facility and LTA Agreements)

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NRA Contract

Management

NRA PPP Contract• Based on Highways Agency DBFO contract

• Amended to suit Irish PPP programme

• No compensation on PPP Co Default

• High level of risk transfer

• Strong incentive on PPP Co to identify, avoid, mitigate and manage risks effectively

• Toll Road (with free alternative route)

– Traffic and revenue risks

• Programme flexibility

• Long stop date

– 12 months past the Target Completion Date

• NRA provide access to site

– Co-operation Agreement with Local Authorities

• Little opportunity for claims or cost overruns

• Essential to avoid / minimise Authority changes

PPP Contract: Key Sections

• Part 1: Definitions

• Part 4: Property

• Part 5: Design and Construction

• Part 6: O&M

• Part 7: Representatives

• Part 8: Change

• Part 9: Payment and Monitoring.

• Expiry Date

• Completion Date

• Substantial Completion

• Permit to Use / Taking Over Certificates

Key Dates

Key Contract Schedules for D&C

Management

• Schedule 2: Land Issues, Roads and Orders

• Schedule 3: Third Parties

• Schedule 4: Design and Construction

• Schedule 5: Certification Procedure

• Schedule 9: Liaison Procedures

• Schedule 10: Quality and Environmental Management

• Schedule 15: Payments

• Schedule 16: Performance Points

• Schedule 28: Tender Proposals

Clause 20.1 The Authority’s Representative

• The Authority has appointed or will appoint the Authority’s

Representative to act as its agent in relation to the Project and as

otherwise set out in this Agreement. The Authority’s Representative

shall exercise the functions set out in Schedule 8 (Representatives),

such other functions as are set out in this Agreement, and those other

functions in respect of this Agreement which the Authority may notify

to the PPP Co from time to time.

Main Duties of Authority’s Representative• Monitor (and review) the Design

• Monitor Construction

• Assess the need for Variations to the Contract

• Contract Administration and Financial Control

• Perform delegated functions

Fermoy Bypass NRA Site TeamAuthority’s Representative

G. Murphy /D Minnock

Authority’s RepresentativeG. Murphy /D Minnock

Project Director(Consultant)

Project Director(Consultant)

Commission Manager(Consultant)

Commission Manager(Consultant)

Consultant’s Technical

Review Team

Consultant’s Technical

Review Team

ProjectArchaeologist

Ken Hanley

Cork Co. Co.Liaison Officer (1)

Authority’s SiteRepresentative

(Consultant)

Authority’s SiteRepresentative

(Consultant)

Consultant’s Landscape

Subconsultant

Consultant’s Landscape

Subconsultant

Consultant’s Tolling

Specialist

Consultant’s Tolling

Specialist

Assistant ContractManager(Roads)

Assistant ContractManager(Roads)

Section Manager(Roads)

Section Manager(Roads)

Assistant ResidentEngineer or Clerk of

Works

Assistant ResidentEngineer or Clerk of

Works

Assistant ContractManager

(Bridges/Structures)

Assistant ContractManager

(Bridges/Structures)

Section Manager(Bridges/Structures)

Section Manager(Bridges/Structures)

Assistant ResidentEngineer

Assistant ResidentEngineer

Assistant ContractManager(Quality)

Assistant ContractManager(Quality)

ClericalOfficer

ClericalOfficer

SecretarySecretary

Cork Co. Co.Project ManagerKieran McKeone

NRA SPM/ InspectorTim Ahern/Paschal

Griffin

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PPP Co’s Certificates

• The PPP Co’s Certification Procedure shall apply to those

Certificates that are to be supplied to the Authority’s

Representative by the PPP Co

• “Acknowledged”, following which the PPP Co may proceed on the basis of there being no objection; or

• “Acknowledged with Comments”, and full details of the Authority’s Representative’s comments shall be supplied to the PPP Co. The PPP Co shall amend its proposals and resubmit amended Certificates. The resubmitted Certificates shall be deemed to be Acknowledged if not objected to within two Working Days after resubmission; or

• “Rejected”, and full details of the reasons for the rejection shall be supplied to the PPP Co. Grounds for such rejection are as set out in Schedule 5 Part 3.

PPP Co’s Certificates: Responses

PPP Co’s Certificates :

Constraints on Starting Work

1. The PPP Co shall not be permitted to proceed with the Works which are the subject matter of a Certificate until such time as the Certificate has been Acknowledged

2. Quality and Environmental Documentation shall includea list of the written procedures, inspection and test plans and method statements which shall be followed to ensure the effective management of the activities to be undertaken by the Contractor. This shall indicate a programme for submission of any written procedure or method statement which allows for its submission to the Authority’s Representative in accordance with the Certification Procedure prior to the commencement of the relevant activity .

• The PPP Co. shall procure that all aspects of the Project are the

subject of Quality and Environmental Management Systems

which comply with Clause 23 and Schedule 10 of the

Agreement.

Clause 23. Quality and Environmental Management

Non Conformance Reports (NCR’s)

• Aid for control of site procedures & construction quality

• ‘No blame’ culture

• Majority should be coming from PPP Co’s quality check &

from Contractor & Designer.

• Follow up - closure

Authority’s Key Objectives for Construction

Monitoring

• Receipt of design and its certification

• Monitor construction and progress

• Monitor management of environmental issues

• Monitor supervision by PPP Co

• Appropriate traffic management

• Report and advise on variations

• Monitoring of third party issues

Donal Minnock

National Roads Authority

NRA PPP

Programme Activity

Review of NRA Progress

• Approx €2.088 billion of private finance

committed to road schemes

• Almost 70 km of national roads

completed and 113 km operated and

maintained under PPP Contracts

• Almost 180 km of national roads under

construction

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Recently opened toll roads• 3 PPP roads open, 10 months, 8 months, and 5 months

early and with no cost over-runs

• M1 Drogheda Bypass – June 2003

• M4/M6 Kilcock-Kinngead – Dec. 2005

• M8 Rathcormac/Fermoy – Oct. 2006

• Dublin Port Tunnel – Dec. 2006

• Next openings– N25 Waterford City Bypass - 2010

– N7 Limerick Tunnel - 2010

– N6 Galway Ballinasloe - 2010

– M7/M8 Portlaoise - 2010

– M3 Clonee Kells - 2010

– M50 Upgrade incorporating free flow tolling - 2010

Or earlier – watch this space!Donal Minnock - National Roads Authority

PPP’s in Ireland – Fermoy Bypass PPP Scheme

Thank you for listening