Alliance Contracting—Evolving Alternative Project Delivery (2015)

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68 APPENDIX A Australian Commercial Framework and Gainshare/Painshare Examples The following pages have been extracted from: Australian Government, Department of Infrastructure and Transport, National Guide to Alliance Contracting, 2011 [Online]. Available: http://www.infrastructure.gov.au /infrastructure/nacg/files/National_Guide_to_Alliance_Contracting04July.pdf. For more information please access the basic document at the URL shown. This appendix presents examples of calculating the Risk or Reward on project completion. In order to illustrate the underlying principles these examples are presented in simplified conceptual form rather than the complexity that could be expected in an actual alliance. Thus: The non-government participant’s (NOP) fee is presented as an aggregate single figure that is fixed as a lump sum once the TOC is agreed. The non-cost risk or reward is treated as a performance score from a single KRA (recognizing that in practice there may be several KRAs). There are no adjustments to the initial TOC due to Owner changes. The • • • • calculation and distribution of the Risk or Reward amongst individual NOPs is not presented.

69 $ 88 m $ 12 m $100 m Model 1a) Cost and Non-Cost Performance Not Linked Reimbursable Costs NOP (Aggregate) Fee b) Cost Gainshare/Painshare Split 50:50, no caps c) Non-Cost Reward/Penalty TOC A separate pool of funds has been established by the Owner as reward/penalty for non-cost performance that is not linked to cost performance. Alliance Performance on Non-Cost KRA Score Reward/Penalty to NOP Achieve Stretch Target 100 $2 m Business as Usual 0 nil Poor –50 <$2 m> Risk or Reward Calculations: Model 1a) Scenarios 1 Very good cost and non-cost performance 2 Mixed—Very good cost and poor non-cost performance 3 Very poor cost and non-cost performance TOC AOC $100 m $90 m $100 m $90 m $100 m $125 m Under (Overrun) to TOC Non-Cost Performance Score $10 m 100 $10 m –50 <$25 m> –50 Cost Gainshare/<Painshare> Owner 50% NOPs 50% $5 m gain $5 m gain $5 m gain $5 m gain <$12.5 m> pain <$12.5 m> pain Non-Cost Reward/Penalty to NOP $2 m reward <$2 m> penalty <$2 m> penalty Total Gainshare/<Painshare> Owner NOP $5 m $7 m $5 m $3 m <$12.5 m> <$14.5 m> Base data a) TOC Components

70 Model 1b) Cost and Non-Cost Performance Not Linked—Cap on NOPs’ Painshare The Base data for Model 1b) is similar to Model 1a) except that the Commercial Framework now includes a Cap of $12 m on the NOPs’ painshare. Model 1b) Scenarios 1 Very good cost and non-cost performance 2 Mixed—Very good cost and poor non-cost performance 3 Poor cost and non-cost performance TOC AOC $100 m $90 m $100 m $90 m $100 m $125 m Under (Overrun) to TOC Non-Cost Performance Score $10 m 100 $10 m –50 <$25 m> –50 Cost Gainshare/<Painshare> (pre-cap) Owner 50% NOPs 50% $5 m gain $5 m gain $5 m gain $5 m gain <$12.5 m> pain <$12.5 m> pain Non-Cost Reward/Penalty to NOP $2 m reward <$2 m> penalty <$2 m> penalty Total Gainshare/<Painshare> (pre-cap) Owner NOP $5 m $7 m $5 m $3 m <$12.5 m> <$14.5 m> Cap on NOP Painshare $12 m $12 m $12 m Total Gainshare/<Painshare> (after applying cap) Owner NOP $5 m $7 m $5 m $3 m <$13 m> <$12 m>

71 $ 88 m $ 12 m $100 m Model 2a) Cost and Non-Cost Performance Linked Base data a) TOC Components Reimbursable Costs NOP (Aggregate) Fee b) Cost Gainshare/Painshare Split 50:50, no caps c) Non-Cost Reward/Penalty TOC NOP performance on non-cost KRAs is reflected in an increase (or decrease) in their share of cost under/overruns. There is no separate pool of funds and any reward can only be funded by cost underruns. Alliance Performance on Non-Cost KRA Score Reward/Penalty to NOP (Cost Gain/Pain split) Achieve Stretch Target 100 75:25 Business-as-Usual 0 50:50 Poor –50 25:75 Model 2a) Scenarios 1 Very good cost and non-cost performance 2 Mixed—Very good cost and poor non-cost performance 3 Poor cost and non-cost performance TOC AOC $100 m $90 m $100 m $90 m $100 m $125 m Under (Overrun) to TOC Non-Cost Performance Score $10 m 100 $10 m –50 <$25 m> –50 Cost Gainshare/<Painshare> Owner NOPs $5 m gain $5 m gain $5 m gain $5 m gain <$12.5 m> pain <$12.5 m> pain Non-Cost Reward/Penalty to NOP Reflected in gain/pain split Total Gainshare/<Painshare> Owner NOP $2.5 m $7.5 m $7.5 m $2.5 m <$6.25 m> <$18.75 m>

72 Model 2b) Cost and Non-Cost Performance Linked—Cap on NOPs’ Painshare The base data for Model 2b) is similar to Model 2a) except that the Commercial Framework now includes a Cap of $12 m on the NOPs’ painshare. Model 2b) Scenarios 1 Very good cost and non-cost performance 2 Mixed—Very good cost and poor non-cost performance 3 Very Poor cost and non-cost performance TOC AOC $100 m $90 m $100 m $90 m $100 m $125 m Under (Overrun) to TOC Non-Cost Performance Score $10 m 100 $10 m –50 <$25 m> –50 Cost Gainshare/<Painshare> (pre-cap) Owner NOPs 25% gain 75% gain 75% gain 25% gain 25% pain 75% pain Non-Cost Reward/Penalty to NOP Reflected in gain/pain split Total Gainshare/<Painshare> (pre-cap) Owner NOP $2.5 m $7.5 m $7.5 m $2.5 m <$6.25 m> <$18.75 m> Cap on NOP Painshare $12 m $12 m $12 m Total Gainshare/<Painshare> (after applying cap) Owner NOP $2.5 m $7.5 m $7.5 m $2.5 m <$13 m> <$12 m>

Abbreviations used without definitions in TRB publications: A4A Airlines for America AAAE American Association of Airport Executives AASHO American Association of State Highway Officials AASHTO American Association of State Highway and Transportation Officials ACI–NA Airports Council International–North America ACRP Airport Cooperative Research Program ADA Americans with Disabilities Act APTA American Public Transportation Association ASCE American Society of Civil Engineers ASME American Society of Mechanical Engineers ASTM American Society for Testing and Materials ATA American Trucking Associations CTAA Community Transportation Association of America CTBSSP Commercial Truck and Bus Safety Synthesis Program DHS Department of Homeland Security DOE Department of Energy EPA Environmental Protection Agency FAA Federal Aviation Administration FHWA Federal Highway Administration FMCSA Federal Motor Carrier Safety Administration FRA Federal Railroad Administration FTA Federal Transit Administration HMCRP Hazardous Materials Cooperative Research Program IEEE Institute of Electrical and Electronics Engineers ISTEA Intermodal Surface Transportation Efficiency Act of 1991 ITE Institute of Transportation Engineers MAP-21 Moving Ahead for Progress in the 21st Century Act (2012) NASA National Aeronautics and Space Administration NASAO National Association of State Aviation Officials NCFRP National Cooperative Freight Research Program NCHRP National Cooperative Highway Research Program NHTSA National Highway Traffic Safety Administration NTSB National Transportation Safety Board PHMSA Pipeline and Hazardous Materials Safety Administration RITA Research and Innovative Technology Administration SAE Society of Automotive Engineers SAFETEA-LU Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users (2005) TCRP Transit Cooperative Research Program TEA-21 Transportation Equity Act for the 21st Century (1998) TRB Transportation Research Board TSA Transportation Security Administration U.S.DOT United States Department of Transportation