ROAD MAINTENANCE CONTESTABILITY REFORM PROGRAM INDUSTRY BRIEFING

ROAD MAINTENANCE CONTESTABILITY REFORM PROGRAM INDUSTRY BRIEFING

WELCOME Jim Peachman Reform Program Manager, RMS

1. BACKGROUND AND CONTEXT PETER DUNCAN CHIEF EXECUTIVE, RMS

OUR VISION FOR RMS To be the leader in the management and delivery of safe, efficient and high quality services and infrastructure to the community and businesses of NSW. CUSTOMER FOCUS EFFICIENCY AND EFFECTIVENESS IMPACT AND REPUTATION

THE VISION FOR OUR ROADS RMS has the following goals for maintenance in 2012 16: Improve the quality of urban and rural State Roads, including seeing 93 percent of State Roads meeting national road smoothness standards by 2016. Deliver maintenance services by the most efficient and effective methods. Develop reports on the condition and performance of roads and waterways to inform the public and decision making.

THE NEED FOR REFORM To deliver on our vision for RMS road network: The Treasurer has made a commitment to improve contestability in road maintenance. The NSW Government has supported recommendations by the NSW Commission of Audit to subject road maintenance in Sydney to contestability. RMS internal research has confirmed that road agencies in Australia and internationally have achieved better outcomes through better asset management and innovation. The Reform Program has a high level of support within Transport for NSW and Infrastructure NSW.

THE ROAD MAINTENANCE CONTESTABILITY PROGRAM The objectives of the Program are to: Increase contestability of road maintenance services in the Sydney Region. Improve customer, network and asset outcomes. Improve total asset management capability and decision making. Reduce the total cost of managing and maintaining assets.

THE PROGRAM MANAGEMENT OFFICE An integrated PMO has been established to develop a business case which will identify potential options for the delivery of road maintenance within the Sydney Region. No new arrangements will be in place before July 2013.

OUR INDUSTRY ENGAGEMENT PROCESS The PMO is committed to an ongoing engagement process with industry to inform the development of future road maintenance delivery options. The PMO will research and seek to understand industry best practice, principles and methods in road maintenance, domestically and internationally, as well as establishing any lessons learnt from these arrangements. We have already engaged with our counterparts in Western Australia, Queensland, Victoria and in New Zealand, as well as with key players in the UK.

2. OVERVIEW OF THE NSW ROAD NETWORK MICHAEL VEYSEY DIRECTOR NETWORK MANAGEMENT, RMS

NSW ROAD MANAGEMENT TASKS

RMS REGIONS

THE SYDNEY REGION ROAD NETWORK Sydney Region assets include: 2,800 km carriageway. 7,000 lane km. More than 800 bridges. Traffic and ITS assets. Sydney Region works include: Maintenance of assets. Operation of assets. Minor improvement works.

INDICATIVE SUMMARY OF SYDNEY MAINTENANCE AND OPERATIONS SPEND (Four Year Average Per Annum) Asset / program Summary asset description Summary Activities Sydney North ($M) Sydney South ($M) Sydney West ($M) Corridor ~2,800 carriageway km Corridor routine vegetation control, mowing, roadside assets 9 10 21 Corridor projects / rehab slope, drainage, noise walls and ferries Bridge 821 no. Bridge routine and minor rehabilitation Bridge structural capacity strengthening or replacement Pavement ~7,000 lane km Routine pavement and heavy patching reactive minor repair Pavement resurfacing, rehab, reconstruction, widening 15 51 10 28 30 36 (Page 1 of 3)

INDICATIVE SUMMARY OF SYDNEY MAINTENANCE AND OPERATIONS SPEND (Four Year Average Per Annum) Asset / program Summary asset description Summary Activities Sydney North ($M) Sydney South ($M) Sydney West ($M) Traffic (Signs & Delineation) Static Signs (>115,000 no) & delineations (7,917 Lkm Long lines (291.23 sq km Trans lines & other markings (499,022 RRPM)) Signs routine Inspection, cleaning Signs projects Replacement due to wear & tear, emergency repairs Delineation routine Inspection & condition rating Delineation projects Annual works program based on needs 4 3 3 Traffic (Intelligent Transport System ITS) 3019 TCS, 27,270 Sensing loops, 259 VMS, 90 VSLS, 113 TMU, 22 W/S, 11 TFS, 3749 Street lights, 449 EP Routine/preventive maintenance, Systems inspections, functional checks, emergency repairs, Program of works for replacement or upgrade different asset elements 9 13 10 Incident Management and Driver Aid Services contracted to TMC/ Incident Management Traffic Emergency Patrol Service / Driver Aid 15 (network wide) (Page 2 of 3)

INDICATIVE SUMMARY OF SYDNEY MAINTENANCE AND OPERATIONS SPEND (Four Year Average Per Annum) Asset / program Summary asset description Summary Activities Sydney North ($M) Sydney South ($M) Sydney West ($M) Minor improvement works Network efficiency and congestion treatments, safety management, cyclists improvements and public transport 46 26 39 Operations (excl. TMC) Operating asset Upgrades and operation efficiency Infrastructure 3 2 - Services Sydney Harbour Bridge (SHB) Alliance Asset management, project development and management, technical support, data capture and management SHB maintenance and improvement works 20 (network wide) - 19 - (Page 3 of 3)

CUSTOMER, ASSET AND NETWORK OUTCOMES The customer is at the centre of everything we do. We are committed to: Ensuring effective access and reliability in the road network. Maintaining acceptable standards in asset quality and safety. Meeting customer expectations in the way we deliver services. Preserving the value of the road assets.

WHERE WE HAVE BEEN, WHERE WE ARE GOING RTA was the first State Road Authority to implement a long term road network maintenance contract in 1995. Road maintenance practices have been evolving since that time. Industry is maturing in safety and environmental management practices. Potential for increasing collaboration between government agencies, the public and the service deliverers.

CHALLENGES AHEAD Access to the network has become more difficult. Increasing focus on managing congestion and improving interactions with our customers. Freight loads on the network are increasing. Worker safety is paramount and work practices are evolving to suit.

RMS CASE STUDIES Sydney Harbour Bridge Re-surfacing High risk, high exposure work. Client providing forum, industry providing innovation. Risk averse, collaborative planning. Heathcote Road Roadworks An informed community is a satisfied community. Collaboration between community and works providers reduces inconvenience for both. Changing focus first option is close the road.

ROADS AND MARITIME SERVICES REFORM AND TRANSFORMATION DIRECTOR NEIL DICKSON Organisational Reform Executive Reform Committee support ROADS AND MARITIME SERVICES CHIEF EXECUTIVE PETER DUNCAN STRATEGY AND ENGAGEMENT DIRECTOR MARYANNE GRAHAM Communication and Community Engagement Ministerial and Executive Coordination Strategy and Performance Government Information and Privacy CUSTOMER AND COMPLIANCE DIRECTOR PETER WELLS NETWORK MANAGEMENT DIRECTOR MIKE VEYSEY INFRASTRUCTURE DEVELOPMENT DIRECTOR GEOFF FOGARTY MARITIME DIRECTOR TONY MIDDLETON Customer Service Road User Regulation Road Freight Accreditation and Assurance Compliance Operations Sanctions and Prosecutions Infrastructure Asset Management Traffic and Safety Management Engineering Technology Environment Motorway Management Road Information Service Regional Engagement and Coordination Portfolio Management Infrastructure Development Infrastructure Delivery Motorway Projects Pacific Highway Office Princes Highway Office Infrastructure Contracts Boating Safety Commercial Vessels Infrastructure Marine Property Investigations and Operational Capability COMMERCIAL DIRECTOR - RICHARD BOGGON CORPORATE DIRECTOR - PAUL HESFORD Tolling Road and Fleet Services Commercial Development Property Commercial Operations MyPlates Work Health and Safety Strategic Program Implementation Financial Management Information Management and Information Technology Human Resources Governance Reports to the Chief Executive on all matters Legal Branch Reports to the Chief Executive on all matters

CURRENT MANAGEMENT ARRANGEMENTS ROADS AND MARITIME SERVICES CHIEF EXECUTIVE PETER DUNCAN NETWORK MANAGEMENT DIRECTOR MIKE VEYSEY COMMERCIAL SERVICES DIRECTOR RICHARD BOGGON Portfolio Management Road Information Services Infrastructure Asset Management Traffic & Safety Management Tolling Property Commercial Development Motorway Management Engineering Technology Regional Engagement & Coordination Environment Road & Fleet Services Commercial Operations MyPlates MEMBERS OF DELIVERY ALLIANCES

CURRENT ARRANGEMENTS (EXCEPT SYDNEY NORTH) RMS Network Management sets strategy and program. RFS delivers the works. Asset strategy Determining the desired outcome Budgeting and funding Ownership and visibility of asset Asset management Asset maintenance DELIVERY ALLIANCES Monitoring the asset condition Asset modelling Developing works programs Scheduling the works programs Carrying out the works Updating asset data WORK BY RMS (Network Management) WORK BY RFS

CURRENT ARRANGEMENTS (SYDNEY NORTH) PSMC delivers some activities. RFS delivers balance. Asset strategy Determining the desired outcome Budgeting and funding Ownership and visibility of asset Monitoring the asset condition Asset management Asset modelling Developing works programs Asset maintenance PAVEMENTS BALANCE CORRIDOR OF ASSETS/ NO OPERATIONS SERVICES NO MINOR IMPROVEMENT WORKS Scheduling the works programs Carrying out the works Updating asset data WORK BY RMS WORK BY DOWNER WORK BY RFS

THE ROLE OF ROAD AND FLEET SERVICES IN ASSET MAINTENANCE RFS is the service delivery arm within RMS, mandated to deliver maintenance services by the most efficient and effective method possible.

3. SUMMARY OF ROAD AND FLEET SERVICES RICHARD BOGGON DIRECTOR COMMERCIAL, RMS

ROAD AND FLEET SERVICES (RFS) WHO ARE WE? RFS is part of RMS Commercial Services Directorate, delivering works and services valued at over $700m per annum statewide. RFS has over 2,000 professional and skilled staff based in strategically located offices, depots and workshops throughout the state. Ninety percent of RFS works are delivered through alliance relationships with RMS Network Management. RFS also works for external clients in NSW and interstate, principally in the government sector.

THE EVOLUTION OF RFS Our history

OVERVIEW OF RFS RMS is the primary customer along with councils, other government agencies and private sector Over $700m Annual Revenue equivalent Over 2,000 staff + contractors 40% of work is contracted to industry Road Maintenance Roadside, route, routine and corridor maintenance in urban and rural areas Road Construction Develop and upgrade road networks throughout NSW Bridge Maintenance & Construction Maintain and construct steel, timber and concrete bridges throughout NSW Bitumen Sealing Provide bitumen binder spray and covering to road surfaces ensuring long-lasting durability Line-marking Carry out long-line and special purpose line- marking all over NSW Traffic Services and ITS Design, supply, install and maintain traffic management systems Incident Management / Driver Aid Provide support to the TMC for incident management and driver aid RFS Regions Sydney Region Hunter Region Northern Region Quality, Safety & Environment Quality and Risk Work Health & Safety Environment Technical Operations Estimation Procurement Business Development Fleet Services Plant Equipment Vehicle Ferry Services Commercial Finance & Performance Project Finance/ Financial Reporting /Pricing Southern Region Country West Commercial Operations

RFS REGIONS Over 850 employees in Sydney, as well as subcontractors AREA OF FOCUS FOR INCREASING CONTESTABILITY SYDNEY REGION

SYDNEY REGION Total 2011/12 revenue $320m across all services, which may or may not be in scope: Approx 60% road maintenance and operations. Approx 30% improvement projects. Approx 10% external parties. REGION EMPLOYEES Salary 225 Wages 512 Other 120

SYDNEY REGION CAPABILITIES SYDNEY ROAD SERVICES SECTIONS EMPLOYEES WORK BY SUBCONTRACTORS CAPABILITIES Bridge services 138 21% Bridge repair, rehabilitation, strengthening, joint replacement, routine works Painting and barrier repairs Special projects (Spit Bridge, culvert works, major bridge repairs) Support staff (estimating, procurement, admin/accounts support) Sydney Harbour Bridge (SHB) Alliance 94 10% SHB maintenance and improvement works Civil works 304 60% Routine maintenance Construction works Manage asphalt panel contracts Support (procurement, planning and resourcing, quality management, admin/accounts) Traffic services 321 37% Maintenance and construction of traffic signals and ITS Manufacture and maintain signal controllers Upgrade programs (i.e. LED upgrade) Minor & major sign repairs and installations Pavement marking Driver Aid, Traffic Emergency Patrol services, special events

RFS SYDNEY REGION DEPOTS, FLEET AND EQUIPMENT Depots 11 depots/yards Fleet and Equipment Owned Leased Hired (registered subcontractors)

CHALLENGES AND OPPORTUNITIES Our challenges Our opportunities

MORE THAN JUST ROAD MAINTENANCE All Sydney Road Service Sections contribute to operational support and incident response. This is a key capability of RFS.

RFS CASE STUDIES Protecting the peak M4 truck accident response A serious multi vehicle accident occurred on the M4 motorway on Thursday 11 October 2012 at 12:18pm. Involved two trucks and one light vehicle. The M4 was closed to all traffic west of the Silverwater Road Overpass. RFS assisted with the east and west bound road closures while the site was cleared. RFS road maintenance staff accessed the site by sweeping the road pavement using a vacuum truck, replaced the centre concrete road barriers with a backhoe and removed debris from the site. The M4 was reopened by 3pm, prior to peak hour traffic.

RFS CASE STUDIES Adapting to meet the service needs F3 contraflow arrangements F3 contraflow arrangements can be serviced by Hunter or Sydney Regions. Requires adaptability to meet ease-of-access requirements. Long-term arrangements require shift changes for crew relief.

LOOKING FORWARD Currently in Sydney, road maintenance on state roads and other services are largely delivered through RFS (except in the current PSMC contract area). Industry feedback will contribute to informing the development of an improved road maintenance service delivery model for the Sydney Region. Councils deliver their own maintenance on local roads through their own arrangements.

4. FORMULATING THE OPTIONS FOR CONTESTABILITY JOHN STATTON GENERAL MANAGER INFRASTRUCTURE ASSET MANAGEMENT, RMS

DEVELOPING THE BUSINESS CASE FOR ROAD MAINTENANCE CONTESTABILITY The PMO will be developing a Business Case over the next three to four months to identify options to improve road maintenance contestability. The Business Case will enable Government to make a decision on future arrangements. Input from industry will be critical to informing the development of options. A number of key variables will be considered when developing the Business Case including: Desired outcomes Scope of services Activities Packaging Staging

SCOPE OF THE BUSINESS CASE STRATEGY VARIABLES OUTCOMES SERVICES ACTIVITIES PACKAGING STAGING How are we developing the Business Case? KEY STRATEGY VARIABLES CONTEXT AND PROGRAM OBJECTIVES What do we want to achieve? Outcomes Services Activities Packaging Staging CONTRACT ARRANGEMENTS To support the strategy CONTESTABILITY PROCESS

KEY OBJECTIVES OF THE PROGRAM STRATEGY VARIABLES OUTCOMES SERVICES ACTIVITIES PACKAGING STAGING Increase contestability of road maintenance services in the Sydney Region. Improve customer, network and asset outcomes. Improve total asset management decision making. Stage 1: One contract in place Roadmap going forward Reduce the total cost of managing and maintaining assets.

WE ARE SEEKING CONTINUOUS IMPROVEMENT IN ASSET MANAGEMENT STRATEGY VARIABLES OUTCOMES SERVICES ACTIVITIES PACKAGING STAGING Traditionally asset management effectiveness has been measured on an input (effort expended) or output (work done) basis Funding is always constrained and there are always competing priorities. RMS is implementing a better approach Linked to outcomes (not outputs). Stage 1: One contract in place Roadmap going forward Seeking consistency in outcomes across road hierarchies. We also recognise there may be future improvements Better asset planning. Better coordination between asset planning and delivery. Innovation.

MANAGEMENT ACTIVITIES STRATEGY VARIABLES OUTCOMES SERVICES ACTIVITIES PACKAGING STAGING There are three hierarchies of service management with opportunities to set different boundaries for the desired level of management. Asset strategy Determining the desired outcome Budgeting and funding Ownership and visibility of asset Asset management Monitoring the asset condition Asset modelling Developing works programs Asset maintenance Scheduling the works programs Carrying out the works Updating asset data

DELIVERING MAINTENANCE ACTIVITIES STRATEGY VARIABLES OUTCOMES SERVICES ACTIVITIES PACKAGING STAGING ASSET TYPES Road and corridor Static traffic (excl. ITS) Operational support Stage 1: One contract in place KEY OPPORTUNITIES AND CHALLENGES Maintaining close ties and communications with network operations. Managing a high level of interface and interaction with customers. Managing customer expectations in delivery of services. Precision in works planning and making contingency plans for delays. Instilling a proactive operational culture doing what it takes. Responsiveness to Traffic Management Centre (TMC) traffic commander. Roadmap going forward Leveraging knowledge of the network and constraints. Bridges and structures Intelligent transport systems (ITS) Managing older assets with unique circumstances and issues. Obtaining specialist technical, asset management and maintenance skills. Lack of stable forward program major upgrades tend to be lumpy. Strong focus on safe access and environmental protection. Opportunity to employ emerging intelligent technologies to improve network. Specialist skills and knowledge required for asset management and maintenance. Understanding and managing total network rather than isolated assets or regions. Reliability-centric management and responsiveness to failures.

CONTESTING ACTIVITIES KEY CONSIDERATIONS STRATEGY VARIABLES OUTCOMES SERVICES ACTIVITIES PACKAGING STAGING How can we bundle the activities together to achieve the Program outcomes? Where can outcomes be improved? Innovation Collaboration Competition Stage 1: One contract in place Is there capability to manage? Roadmap going forward Nature of activities and specialist skills required (including management). Scale of activities in the network. Managing risk on behalf of RMS Network Stewardship. Can the risk be defined? Able to be understood and managed by a Network Steward.

PACKAGING FOR SERVICE PROVISION STRATEGY VARIABLES OUTCOMES SERVICES ACTIVITIES PACKAGING STAGING Opportunity to review existing boundaries. Key considerations: Size of sub-region networks to promote efficiency whilst being manageable for a service provider. Ensuring arrangements are in place to manage activities that cross boundaries e.g. traffic systems and incident management. Stage 1: One contract in place Ensuring sustainable competition and industry capability in the future. Ensuring that there are no neglected assets.

STAGING OPTIONS FOR CONSIDERATION STRATEGY VARIABLES OUTCOMES SERVICES ACTIVITIES PACKAGING STAGING If the Government decision is made to increase road maintenance contestability, no new arrangements will be put in place before July 2013. Any new arrangements will have plans in place to minimise risk to ensure a seamless transition.

KEY FEATURES FOR POTENTIAL ARRANGEMENTS WITH A SERVICE PROVIDER FEATURE DETAIL 1. Customer focused Ownership of customer outcome Managing and responding to customer expectations Responsive to customers 2. Commercially aligned Shared outcome for service partner and RMS Competitive pricing Clarity in business processes and risk allocation 3. Collaborative Collaborative relationship Complete transparency in assets and activities Cost transparency Stage 1: One contract in place Roadmap going forward 4. Leveraging capability & knowledge Capability and knowledge retention and development RMS remains an informed client 5. Outcome focused Stewardship role acting in best interests of customer, asset and network Clearly defined outcomes Demonstrating value for money 6. Flexible & adaptable Able to evolve to reflect changing priorities, scope and standards Staging transition arrangements to mitigate risk of change 7. Continuous Improvement Encouraging innovation and ongoing efficiencies

THE IMPORTANCE OF INDUSTRY ENGAGEMENT Industry engagement will be used to inform the development of future options to deliver greater road maintenance contestability within the Sydney Region. This is an opportunity for industry to contribute to the future strategy of road maintenance within NSW.

5. INDUSTRY ENGAGEMENT IN THE PROGRAM EVA HANLY PROGRAM DIRECTOR, PROGRAM MANAGEMENT OFFICE ROAD MAINTENANCE CONTESTABILITY REFORM PROGRAM, RMS

INDUSTRY ENGAGEMENT PROCESS NEXT STEPS Step 1: Written submissions from industry Interested proponents should provide written feedback to the PMO on potential future arrangements including consideration of the key variables mentioned earlier in this presentation. Submissions should address industry views, opinions or other insights regarding potential future arrangements put forward. Written submissions should be sent by Wednesday, 21 November, 2012 to: maintenance.industrybriefing@rms.nsw.gov.au Step 2: Industry dialogue Respondents to the written submissions should indicate whether they would like to be contacted by the PMO for further discussion. The PMO will contact each organisation that has indicated that they would like to be involved in further discussion. The industry feedback will contribute to informing the development of an improved road maintenance service delivery model for the Sydney Region.

6. Questions