Paxon acted as commercial and procurement adviser to Main Roads WA (MRWA) on the $4 billion Integrated Services Agreement for the comprehensive development of maintenance of various road networks.
Paxon advised MRWA on the optimal form of arrangement, considering bespoke maintenance contracts, alliance structures, and other models to leverage private sector participation to achieve optimal risk transfer and value.
The integrated service agreements (ISAs), which were ultimately adopted, were developed as a variant on an alliance approach to maintenance, allowing for an initial upgrade and subsequent output-based maintenance requirements.
Paxon then developed the commercial model for the ISAs, including risk allocation, payment mechanism and commercial structure which defined the model. This was tested with a market sounding process to ensure the model was of interest to the broad market and to allow for informed responses to be made to the procurement process.
Main Roads WA Client
2011 - 2013 Year
Perth, WA Location
$4 billion Project Value
Commercial and Procurement Adviser Roles
As the new arrangement involved a new commercial structure and risk allocation, there was significant work involved in considering risk allocation and the implications on MRWA.
This included elements such as the need for oil price hedging given its status as a key driver of the materials cost for maintenance.
Paxon modelled a range of oil price movement sensitivities to demonstrate potential outcomes and determine the preferred approach.