Capitalising on the North West Rail Link Investment for greater good in Sydney

There’s no doubt the North West Rail Link is a game changer for the prosperity of people in Sydney; specifically North Western Sydney. Its operation will fundamentally change travel patterns and accessibility arrangements.

In addition, Badgerys Creek is going to be an enormous boost for Western Sydney and a catalyst for substantial investment in road and rail transport infrastructure.

So how are these pockets of infrastructure going to come together and unleash benefits to the whole of Sydney? I recently caught up with Tom Gellibrand, Deputy Project Director at North West Rail Link, to gain some insight on the greater impact of transport investment.

Integration

Tom and his team are responsible for the integration of the new rapid transit network into the wider transport network.

“We are identifying the best way of integrating the North West Rail Link into other modes.

“We’re working with agencies in government to make sure that our service is integrated with all transport modes. We’re working with Roads and Maritime Servicesand road improvements are going to be integrated with our service – they will complement each other.

“In the physical dimension, our designs accommodate for bikes, pedestrians, taxis, buses, commuter car parking – all connecting together at a precinct level.

“We’ve got a modal hierarchy for our precincts which puts the pedestrians first, then cyclists, buses, taxis, tap and ride, and commuter car parking.”

Overcoming obstacles

To release the highest value benefit from the project, all stations, precinct areas and adjoining urban development will be linked into stations to provide long term benefits – a task which Tom explains has a few key challenges:

“At a physical level, that means how and where you’re actually constructing the roads and creating those links. From the planning side, it’s looking at land use and activating precincts with commercial activities. That will make them destinations onto themselves.

“It’s going really well, but it is invariably a challenge, because we’re a transport provider and will need to work with other organisations responsible for land use planning.”

“We can build the train line and run the train at a a reliably high frequency, but we have to make sure that the urban form and future development capitalises on that investment. It’s one of our critical success factors.”

In addition to urban regeneration, the project will also be accommodate the government’s plans to hit the growth in housing and employment objective:

“The railway line itself traverses a number of really key centres including Rouse Hill, Norwest Business Park, Castle Hill, Epping, Macquarie Uni, Macquarie Park down to Chatswood.

“The level of service is going to increase the attractiveness of these centres for people to work in. In terms of future growth in employment; it’s highly likely that the centres will become increasingly attractive for people to invest in.

“We expect a significant increase in the growth or housing and employment along the North West Rail Link.”

The project is on track to have all major contracts signed by the end of 2014. The next tangible milestone for the community will be the commencement of the tunnel boring machines in late 2014.

Hear more from Tom and the the Key players involved in Sydney’s infrastructure future during NSW infrastructure in September.

Accelerated design for new hospital – check out how it’s done.

In the run-up to Health Facilities Design and Development conference, I wanted to explore some of the new case studies on the agenda.

One topic that really stood out is Jeffrey Williams’ presentation in his role as Director of Nursing at St John of God Midland Public and Private Hospitals, in particular the short time it took to get the project off the ground.

I caught up with Jeffrey recently when he gave me a sneak preview on some of the features of the new hospitals, key design innovations and a breakdown of the user group consultation process:

Project overview

Construction of the new 367-bed co-located public and private hospitals has reached 70 per cent, and is on target for a November 2015 opening.

With 307 beds, the public hospital will offer a wide range of services to the communities of Perth’s northern and eastern suburbs and the inner Wheatbelt, while the 60-bed integrated private hospital will offer the choice of private health care.

State and Commonwealth Governments have jointly invested $360 million in the public hospital project that will be operated by St John of God Health Care under a public private partnership agreement. The WA-based private health care operator is investing $70 million in the private hospital.

Fast facts

  • First major hospital facilities to be built in the Midland area in more than 50 years.
  • HASSELL architects and Brookfield Multiplex are the design and construction partners.
  • The public hospital will treat approximately 29,000 inpatients, 55,000 emergency patients and 89,000 outpatients in its first full year of operation.
  • The public hospital will provide an expanded range of services from those provided by Swan District Hospital free of charge to public patients.
  • There will be 367 beds in total – 307 public beds and 60 private beds.
  • The public hospital will have 50 per cent more beds than the Swan District Hospital.
  • More than 1,000 staff will be employed at the hospitals.
  • Easy access will be provided for pedestrians, vehicles, and public transport.
  • On-site parking will include 725 staff bays and 221 visitor bays.
  • Easy drop off and access to the emergency department will be provided.
  • Patients, visitors and the community will enjoy landscaped gardens, courtyards, public art and plazas.
  • The hospitals are being built on an eight-hectare site, four times the size of the Midland Oval.

Accelerated design

The State Government released its expression of interest in September 2010 seeking responses within five weeks.

Post EOI submission, St John of God Health Care continued to work closely with its partners Brookfield Multiplex and HASSELL to develop a design within the allocated budget while awaiting confirmation of our selection to tender for the request for proposal.

Thankfully St John of God Health Care was selected and had a short 20-week window in which to prepare and submit a response.

On 1 December 2011, St John of God Health Care was announced as the preferred tenderer and, following negotiations, signed a contract with the Western Australian Government on 14 June 2012.

During the negotiation phase, St John of God Health Care, Brookfield Multiplex and HASSELL worked closely with the State Government’s consultants to ensure that any major design issues were dealt with at a high level so that construction could start as soon as possible after contractual completion.

This preparation allowed St John of God Health Care to achieve the State Government’s goal of starting work within one month of satisfying the conditions precedent, in August 2012

User group design

While we completed the design very quickly, we could only establish the design user groups after the contract was signed. This led to a concurrent construction and user consultation process that meant we had to focus on those areas where we needed to finalise the design and start building first.

We began a four-step user group process, with each group running between 16 and 20 weeks.

At the first meeting, we presented the users with a schematic design. The architects and builders then took the users’ advice and presented the modified design at the second meeting. The third stage was detailed design when we presented drawings showing room elevations and the position of furniture and equipment. The fourth meeting was a presentation of the final detailed design and allowing the users a last opportunity to highlight any remaining issues.  The detailed design was then signed off ready for construction drawings to begin.

Taking the Emergency Department User Group as an example, the users told us that the waiting room was too small and so we adapted the design accordingly. This process allowed us to drill down into the operational detail by asking them their opinion on matters such as the number of cubicles and the department’s layout.

Accelerated construction

While the user group consultations were taking place, preparatory construction work, such as piling and pouring concrete for the floors got underway. We also made decisions such as the location of wet areas to enable holes to be drilled for the later installation of pipes and drainage.

In those early days, we included around 130 square metres of expansion space on each floor. This built-in flexibility meant that we were well prepared for short-and long term expansion and design changes.

Managing expectations

From the word go, we made it clear to the user groups that the construction budgets were fixed.

The WA Health Clinical Services Planning Framework was a useful tool as some things were a given and did not need to be included in the design discussion.

For example, we had already made sure that we had the right number of beds and could explain to the users that we were working with a 30-bed medical ward, a 24-bed short stay surgical unit, or a 12-bed intensive care unit.  We also knew that St John of God Midland Public Hospital was a Level 4 hospital for cardiology and a Level 1 hospital for intensive care.

We were therefore clear about what we were trying to achieve and this allowed the users to understand the clinical scope so they could focus on how the unit might work and how we could make workflow more efficient.

Innovation in design

We standardised all of the rooms that are common across multiple areas of the hospital. For example, a dirty utility and a clean utility have the same layout in all areas.

We will be using swipe access widely throughout the hospitals for security, including to high traffic areas such as emergency department and restricted areas such as drug rooms.

All patient bedroom ensuite rooms were manufactured offsite as ‘pods’ to a standard, including a standard bedroom pod and a mental health pod, and installed within a short timeframe. While this was cost neutral from a construction perspective, cost and time savings were achieved in the installation.

We decentralised our staff stations, meaning that most ward areas have two or three staff stations instead of one centralised staff station and so clinicians will be closer to their patients.

Finally, we designed to accommodate future expansion. When the State Government issued its proposal for a 307-bed public hospital, they said that the hospital must have the capability to expand to 464-beds by 2021.

The design accommodates expansion in several ways:

1. Intensive Care Unit and Coronary Care Unit

This 12-bed shared unit has six rooms configured for intensive care patients and six rooms configured for coronary care patients. The six coronary care rooms can quickly be converted to intensive care rooms as the required services are already in place and space exists in the adjacent area for 12 coronary care beds to be installed with minimal disruption.

2. Operating theatres suite

The operating theatres suite is designed to cater for the maximum 464-bed capacity with nine theatres and three procedure rooms. These are all of equal size and configuration meaning that the three procedure rooms can easily be converted into theatres, while the procedure rooms can be re-located to a nearby area of the hospital.

3. Private beds

The two 30-bed private wards have been integrated in such a way that when the State Government wants to expand the public hospital from 307 to 367 beds, these can easily be converted into public hospital beds and St John of God Health Care will build a stand-alone private hospital on a nearby site.

4. Additional wing

The expansion to 464-beds can be achieved by adding a new wing extending out from the existing ward block on the northern side of the hospital. Again, this is designed to be achieved with minimal disruption to existing hospital operations.

Lessons learnt

I have two roles and two sets of responsibilities on this project: the first is clinical design and the second is transition and operational readiness. I have learnt lessons across both of these areas.

It was challenging in terms of the limitations on which people within WA Health that we and the other tenderers were allowed not access during the bid preparations. If we were to go through the same process in the future, we would request earlier and wider access to key players in the public sector.

Secondly, we would focus on operational preparedness earlier. While we had a firm view of how we would run the hospital, we did not start working through this in earnest until after the building program started. If we had begun earlier, we would have benefited from additional preparation time.

However, all aspects of the project, including the partnership with WA Health and the North Metropolitan Health Service, in particular, have worked really well. In terms of construction and commissioning, everything is on budget and on track for opening in November 2015

Working in partnership

The traditional public private partnership means the State saves on design, construction and facility management, but continues to deliver the service. As our model also includes clinical services delivery, the State Government can achieve further efficiencies.

Overall, it has been a very positive process, with the focus now firmly on completing construction, operationalising our commissioning program and finalising the details of the patient transfer from the existing Swan District Hospital that will close when the new hospital opens.

Hear more from Jeffrey during his presentation at Health Facilities Design and Development Victoria.

8 lessons learnt from dredging projects

There’s no shortage of hold-ups when it comes to dredging projects, with such a big industry, Australia is full of them. Ahead of Dredging and Reclamation 2014, I caught up with a few project leaders to see where mistakes have been made. Some key areas stood out that I wanted to share with you:

Mapping is key

Financial considerations are hard to overestimate in any project. Developers can often be unwilling to spend money on mapping and monitoring, instead opting for the simplest possible technique. Unfortunately, as you go down the line with this approach, there’s still some surprise when the approvals get rejected. Without the right equipment, the operation tends to go over thresholds or other similar measurements. In the field, the simplest technique doesn’t give you the answer all the time. You’ll only end up having to spend your money on fines and delays instead. Be one step ahead of the regulators and the public.

Transferring risk can end up costing big bucks

Dredging project owners are always looking to reduce their risk, trying to create contracts that transfer risk to the dredging contractor and it doesn’t work. A contractor can decide at some point that they haven’t made enough money, pick an area of AS 2124 and attack it and make a claim. If multiple contractors operate within a wharf or similar structure at the same time, this can cause access issues and lead to further claims.

There’s an illusion in the current way contracts are done that risk can be transferred from the project owner. Whilst this may save short term costs, it can lead to substantial cost and time delays down the line.

Owners still have a lack of experience in terms of practical dredging knowledge. Most teams have a procurement unit working in isolation and independently of everyone else, which leads to a single vision. Risk becomes points on a paper inside a contract that becomes transferred rather than dealt with from a practical view.

Communication is top priority

It seems obvious, but it’s still an area that leads to many issues throughout the dredging process. This is crucial both for contract relationships and to avoid delays and disputes from stakeholders.

Collaboration, partnership, and being able to see another person’s perspective is key. Building a rapport builds confidence and trust that the contract and project is being handled responsibly – work together early and often, both at the project level and more broadly.

Good planning up front and a robust assessment of baseline environmental conditions needs to be locked in. Have a very well defined project description early on and don’t change it. All of those things will help approvals, stakeholder communication and consultation.

The ‘unforeseen’ can be avoided

If you’re acting for the Principal, start thinking about the likelihood of unexpected conditions at the early feasibility stage of a project right up to when you select a tenderer. After selecting a tenderer and the Contractor is working on site, you lose much of the power to influence. Take steps to identify possible latent conditions at any early stage, before you’re confronted with them during project execution.

Latent conditions need to be managed

If a Principal is faced with a more complex project with varying soil and rock types, then it is well advised to carry out a more thorough investigation to lower the risk of not detecting a latent condition. Obviously there is a cut off; a Principal can’t investigate every cubic meter for the planned Project.

Any site investigation can only be a representation of anticipated subsurface conditions. Principals should always aim to reduce the risk to an acceptable degree. Consider Early Contractor Involvement with the scope of the planned site investigation.

Geotechnical modelling has huge potential

 

Both the Principal and the Contractor should formulate a robust 3D geotechnical model of the likely subsurface conditions. The model can determine what materials you are likely to encounter in different types and categories.

The Principal’s consultant and the Contractor’s production estimator can then calculate the derived productions fairly accurately. If a latent condition is encountered, a geotechnical model can provide the parties with a benchmark to calculate where the differences are. Be wary of interpretation – different biases can lead to issues.

Take proactive measures

A proactive way of dealing with disputes as they arise is needed. A dispute board can be selected for their knowledge and expertise before any dispute has arisen. By undertaking an on-going relationship and regular site visits, the dispute board will acquire a good working knowledge of the project. When a dispute arises, the dispute board will have a much better understanding than a court or arbitral tribunal, which will only be appointed after a dispute has arisen.

Keep learning and evolving

The fundamental of dredging is that you dig the stuff up out of the ground and put it somewhere – that hasn’t changed. What has changed is the way that you do it, and that’s driven from environmental approvals.

The management of reclamation areas has improved enormously, and understanding how to minimise the amount of turbidity or sediments that get back into the environment. That’s going to become much more important as work is done in the Great Barrier Reef Marine Park. Innovation will be dealing with the conditions and coming up with the best outcome using all of your knowledge and resources available to come up with a solution.

The Dredging and Reclamation conference has been developed as a value creation forum where knowledge, new ideas, best practice and real world learning experiences can be shared amongst other dredging professionals. Providing key case studies from leading practitioners, the conference will share insight into Australia’s most exciting dredging projects in the planning, design or development stages.

Find out more by visiting www.dredgingandreclamation.com.au or call 02 9229 1090.

The interview that gave me more than I bargained for…

Patrizia Iacono, Executive Assistant to the Group CIO Insurance Australia Group is quite honestly one of the most interesting people I’ve spoken to.

As with most interviews, I was speaking  to Patrizia due to her participation in an event of ours. In this case it was the EAPA Summit 2014.

I thought the interview was going to lead down a path specifically for some top tips that EAs and PAs could have to help them progress in their career. This group of professionals is a personal favorite of mine, and I always try to get some top resources to share with them.

However, i had completely underestimated how much i’d personally be able to take away from our conversation – Looking forward to meeting in July, but for now, over to Patrizia for the insights.

Hope you enjoy as much as i did…

I have been an Executive Assistant for over 20 years now, I started at the top, which is a really unusual place to start, I started supporting the chairman of a global advertising agency with my first job and I was very fortunate that I landed that role. It was a role that I really didn’t want because I was going to be an advertising executive, and I was working at the time on the Myer Children’s Wear account as an account executive. Believe it or not, it all fell apart one Friday afternoon when my boss called me in to his office to say that effective on the Monday morning I’d be working for our chairman, and it really was from day one where I fell in love with the role and really enjoyed the role very, very much.

It steamrolled from there with a move to Sydney, working for the CEO at the time, Dr Richard Walsh, and from there I went on to work at Lion Nathan, working for their chairman, back into adverting. From advertising I landed what you would call the job of a lifetime where I was working for an American IT management consultancy and my role was traveling the globe alongside our CEO with just a laptop and a mobile phone. For its time it was really a rare occurrence in this country for any executive assistant to land such a role, whereas in today’s climate it is becoming more common.

Things changed from there and I fell pregnant after 15 years that I’d been married, I took a step sideways and decided to work part time for a few years until my daughter was old enough to join school, and I picked up my career from there and here I am now. Really loving the role and loving being a great executive assistant, for me now it’s about sharing the knowledge I’ve acquired over those years and hopefully inspiring others through my mentoring. I have relationships with over 40 executive assistants as their mentor and it’s something I truly am passionate about.

Alex – We still have a lot of issues around people struggling with personality clashes; obviously you’ve worked for many different types of bosses and colleagues. What’s your advice on how to cope with those demanding personalities?

Patrizia –  I’ve had my fair share of demanding executives, even some that I now refer to as my Miranda, from the movie The Devil Wears Prada. The key to handling these demanding personalities is that I’ve always managed to adapt to the personality of the executive that I support. Some of those skills that I use are understanding their needs, their tasks and executing it as quickly as possible. You will know when an executive wants a task completed yesterday rather than today, it’s all about acting with speed and efficiency, and in turn that is what builds that trust which is crucial in the relationship of the EA and their executive.

The other skill I would add here is foresight, that ability to plan what could go wrong before it does go wrong, you have a demanding executive who has meetings back to back all day, what I would be doing is starting from the night before checking all the meetings for the following days, are the attendees confirmed, are the bookings in there, have technology been confirmed, PC facilities, etc. It’s ensuring the executive has their pre-reading material in hand as well.

If there’s travel involved, it’s having that foresight to say, right, reconfirm the car service ahead of time, ask them to pick up your boss ten minutes before because that person’s a picnicker or stresser, it’s all about you really having that foresight to go in there and nab all the things that could go wrong before they do go wrong.

I always think of it as when an executive becomes irate I never take it personally, I never have taken it personally, but I take it professionally, for me it’s, why is he irate and what can I do to actually calm this situation, to me the biggest tip is always stay cool, calm and collected.

Alex – A lot of people that come to our EA and PA summit are at the start of their career, but not sure about where they can go or where they want to go from here on in. What sort of plan you think people should be putting in place to make sure career development is constantly a vision and a clear goal for them?

Patrizia – For me, that stage really begins at the research stage before you join an organisation; what I’ve done in every role that I’ve ever been in and the organisations I’ve joined is that I’ve actually researched and evaluated the organisation before even going in for an interview with the executive or with the HR team of that organisation. For me it helps to ascertain if that organisation is investing in their employee’s career development plans, and some of the questions that I always would ask and do ask are, what training programmes are offered for EAs, does the organisation have an EA community, is there a mentor programme in place?

Once you’ve joined that organisation, that is the right fit for you, what I’ve done is sit down with the executive and work out a clear set of objectives and career plan. For example, my personal career plan is mapped out as a strategy document, what I’ve got is a plan of action to achieve a set of goals, I’ve identified what I want to accomplish, in six months, in a year, and three years, that’s how I keep on track with my personal career development and achievable goals, I really think that’s the forward plan that most EAs should be really thinking about when they do join an organisation.

Alex – Personal brand is something that comes up frequently. What tips would you give to develop personal brand and perception?

Patrizia – Personal brand is really, really important to me. Your personal brand is your professional reputation, it’s the impression we all leave or the image we want to portray that we will be remembered for. It’s a choice we make on how we’re going to leverage ourselves in the workplace, it’s also a great opportunity to showcase the knowledge which is important to the success and the career progression of any EA.

Some of the tips that I’d like to share are those that I’ve built up over the last 20 years, really think about how people see you through the way you communicate, are you empathetic and approachable; the way you play ball in the organisation; are you seen as a team player or a silo player; are you a problem solver with a real can-do attitude. Are you sharing the knowledge and inspiring others; and do you treat others the way you want to be treated? As an EA we are the brand of the executive we support and certainly the organisation, both internally and externally.

Alex – With the variety of tasks that need to be juggled, have you got any ideas in terms of organisational excellence, where do you think we can really start to improve that time management?

Patrizia – We face many challenges in the organisation, on a daily basis. To achieve that organisational excellence we need to remember that we’re no longer viewed as the support staff but more as that integral business partner. We’re finally matching the skills of the people that we support. We’re also serving as innovation catalyst, we manage and simplify those processes, time can be a huge benefit to the executive. We need to have the business acumen to understand the strategy and plan to deliver that vision through our own analytic thoroughness, innovation and cultural awareness through time management. By managing the executive’s day to day business, you’re giving them time back so they spend more time focusing on strategy and certainly productivity.

Time management for me never has been an issue, it’s learning to prioritise, pretty much by the time I get to work in the mornings I know exactly what’s going on, it’s how we manage that time effectively to give them time back.

If you run out of time and it’s just not working, always ask for help, always reach out to your peers, to anyone to say, can you give me hand, don’t ever be afraid to ask for help.

Alex – Has the job been how you expected it to be?

Patrizia – The role of the executive assistant means being much, much more than just that standard job description that you’re given at a job interview or that you may read on a recruitment website. For me it’s not just the hard skills, okay, sure, we do need those hard skills, but what’s really important especially now is the ability to actually bring a lot more soft skills to the role.

Business is now becoming a lot more agile than it ever has been, and especially with organisations having to respond rapidly to changes in internal and external environments without losing that vision, we’re actually required to start using a lot more of the soft skills; the multitasking, organisation, adaptability, flexibility and initiative. We really are creating and evolving our own unique job description day by day in the organisation we work in.

Alex – I was interested if you had any stories to tell, have you ever been tasked with something quite strange or something you weren’t expecting to do?

Patrizia – Definitely. I had a Miranda moment, that’s how I love to refer to them. Some years ago I was working for an executive who was invited to attend the Academy Awards in Los Angeles, I got him off to the airport, got him on the plane, when he landed in Los Angeles and got to his hotel room he’d realised he’d left his favourite cufflinks in Sydney, and he wasn’t going to go to the Academy Awards without these particular cufflinks, it’s crazy, I know.

So I got this panicked call at 5 am saying, well, I won’t say asking, he was actually telling me that he needed these cufflinks and that he wanted me to personally fly them over. I was out of bed, within a couple of hours, I’d booked a car to drive me to his apartment, find the cufflinks, drive to the airport, book a flight, fly to Los Angeles, cab it to the Beverly Wilshire, cab straight back to the airport and fly home to Sydney, if that’s not weird, I’m not sure what is. But he was a very, very happy executive and went off to the Academy Awards with his favourite cufflinks, that’s one of my, probably one of the strangest, I’d say, but one of many, many stories that I love to share.

It was, it was all done in a day, literally in a day, I think the flight landed that morning and I was back on a flight that evening, yes, it was crazy.

Low cost marketing innovation – 4 essentials to success

It’s tough to be a marketer. It’s hard to allocate cash for innovation, but at the same time rapid consumer behaviour changes and increased competition make it a bit tricky to stand out.

All is not lost. We can once again get our creative juices flowing without breaking the bank (sorry…). I recently took a look at the world of Financial Services and it’s safe to say a few obstacles need to be overcome; the allure of the non-banks and a heck of a lot of expectation from the customer.

With that in mind I recently caught up with Simon Clarke, Head of Online Banking Suncorp.

Simon and the team have a clear focus: “We’re delivering our new core banking capability. It is a major strategic initiative for us and will enable a new generation of customer experience through our simpler and more agile platform.”

“At more of a group level, we are constantly looking at ways we can improve the customer experience across our key areas of banking, life and insurance. We want to ensure that customers have a consistent experience no matter what product they have and touch point they engage us from.”

The team have a smaller budget than the major banks, encouraging (sometimes forcing) Suncorp to think outside the box to build and optimise customer experience. This approach can often far outweigh consultation and reading through insight all day.

So how exactly are they doing this? Here’s Simon’s recipe to success:

Sweat the small stuff

“Post GFC, innovation has been always associated with research and development. But in more recent times, people and customers have come to realise that innovation isn’t always about the newest technology or gadget. It’s often just tapping away to remove a step or part of a process.

“We often find in banking that we build, design, rebuild and redesign technologies very quickly due to tech improvements and resilience. But we often neglect to review the process which the technology facilitates. That often leads to a slick looking application underpinned by a very long, frustrating seven-step process to do something that should only take two.

“We have a goal in which we constantly go through customer journey maps and ask: ‘Does that need to be there? Is it just because it’s always been there?’ As we optimise our websites, online banking platforms and mobile channels, we have the opportunity to challenge and improve the process. We also blend with user experience design so every word, click or tap culminates in a simple, easy to use engagement.”

What to do today: Innovate incrementally. Start with a small pain point with your product, system or process. Pull it apart and put it back together 2% at a time. Overtime, these 2% add to 20% very quickly and culminates in achieving high customer satisfaction at low cost and risk.

Mix it up

“We often find it amusing the costs that come out of delivering innovative technology or simply keeping up with customer demand. All of our banking platforms are designed and built in-house.

“This allows for very tight ‘product teams’ to form with a mix of business and IT people to take a challenge, sketch it, design it, user-test it, build it, secure it and get it out the door within a few days. We have feedback forms that are monitored and answered by product owners so every idea, complaint or comment goes straight to the person who can make a decision and execute on that idea or fix that problem.”

What to do today: Speak constantly to your team to understand roadblocks and attack them one by one to form a lean, effective team. Take the time to also listen to your customers. They should influence and be a part of your strategy and execution, not just an end user.

Look past the fancy reports

“From a design and UX perspective, again we use the same tools that a small business might to perform UI online tests, surveys and lab tests using basic video conference equipment.

“Some of these tools can cost $150 to run and the feedback and insight we get is amazing compared to a $10,000 report. We love using these ‘guerrilla tactics’. From an execution side, it allows us to try a lot of new things and if some don’t hit the mark, there isn’t a swollen budget sitting at the other end.”

What to do today: If you need insight, there’s plenty of it out there for free. Form an idea, build it out with creative and knowledgably colleagues and put it to the test. Learn fast and do it cheap. If the idea doesn’t hit the mark, gather your learnings and put it towards your next opportunity.

Persist

“Having a ‘fail fast and learn’ culture can be difficult to achieve and persist. But with the right attitude, enthusiasm and decision-making capability, we can strive to build the easiest-to-use websites and online banking platforms and see the effects through direct feedback.

“I think the biggest challenge is building the right culture and acknowledging that innovation doesn’t need to be cutting edge development. Simple touches each day accumulate to building an innovative model that customers can appreciate each time they engage us.”

What to do today: Build a safe working environment that allows your staff to thrive in generating and testing ideas. Isolate risk adversity so that it is managed but not impacting your ability to innovate and drive user experience.

Join Simon at Digital Financial Services 2014, he’ll be delivering the Case Study ‘Banking Channels at Speed through Lean Innovation’.  Visit www.digitalfinancialservices.com.au or tweet @digifinance

New airport funding revenue set to take off…

There are a lot of issues facing infrastructure funding at a national level. The simple truth is there’s less money in the government pot. As a result, it’s time for economic infrastructure projects to start thinking outside the box about how they’re going to get funding.

Economic infrastructure has a distinguishing characteristic – there is a third party revenue stream generated by people that want to use that piece of infrastructure.

If you want to use a road, or use an airport, then there’s a way in which airport charges are included into the overall financial structure.

Pre-GFC environment, people were ready and willing to take the risk on the third party revenue streams. But as times get tougher, it’s becoming harder to justify taking the risk on the revenue stream.

To get a bit of insight on exactly how we can start to green-light regional airport development projects, I caught up with Martin Locke, Partner at PwC.

Martin and I took a look at the different models government can use to facilitate new investment in infrastructure that is expressly going to have an impact on productivity, and have an impact on growing the economy, generating revenue streams over time:

  1. Government can still decide to build and finance a new piece of infrastructure in its entirety. As revenue streams begin to firm up, government can then choose to sell off that piece of infrastructure. That’s been done in the context of some of the road transactions recently in Queensland. That model is what can be referred to as ‘build now, future sell’ and could apply in relation a completely new piece of infrastructure, or a piece of infrastructure that is an expansion of an existing arrangement.
  2. Another model is to leverage existing assets. This is when the government identifies a particular brownfield asset that’s already generating a revenue stream, and looks at how to expand it. Stakeholders may be asked to step up and take a risk on a revenue stream before it’s been firmed up. Repayment is sometimes provided out of the existing asset, rather than the expansion.  There’s an example of this currently being developed in the roads area with the extension of the F3 to connect up with the M2 motorway. That’s been done as an extension of the original concession – it’s called Missing Link. In return for taking on the risk of constructing and generating this new revenue stream, shareholders ask for compensation in the form of extending the lease term on the existing concession.
  3. Revenue securitisation is another option. When social infrastructure is financed from substantial government investment, it’s because the private sector won’t take the revenue risk. For economic infrastructure projects, the government’s approach is to pay the private financier an availability payment once the infrastructure has been built, generating a return on the initial private capital. Separately, government will also look to generate a charge and revenue stream from that piece of infrastructure. That type of transaction is what’s currently being contemplated for th East West Link project in Victoria. It’s also an example of what was in relation to the subsequent leasing of the Sydney desalination plant.
  4. Contingent support: The fourth area is for government to provide some form of contingent support for a project.  For example, private financier funding might build an expansion, and the government agrees to provide funding support for that expansion. When the private sector financiers step up with their money, they’re told what the projected revenue stream is going to be, as it’s still a projection, and government provides a return guarantee (normally set at a lower level). There’s a cap and collar type arrangement that is adjusted depending on how much is earned. Once the level of the cap is reached, any excess revenue is paid back to government.
  5.  Finally, government can provide subordinated debt. The private sector will provide funding, but will only agree to fund around 50 per cent of the capital costs of the expansion. This will be because they can only see sufficient revenue to amortise 50 per cent of the capital. Government can then offer the remaining balance, in the form of a subordinated loan. Their subordinated loan is only serviced after the prior ranking loan for the banks has actually been repaid. It provides a mechanism where government is providing funding, designed to earn a return and ultimately be repaid.

The above models certainly offer some innovative funding methods, but without a solid business case to begin with, hopes of funding will be slim. Martin shared his key advice for building a successful business case:

Provide clear support for the future ability to generate third party revenue.  If you’re coming up with financial projections around how you’re going to repay your capital, and how are you going to come up with different forms of revenue stream, do your due diligence around that revenue stream to provide strong evidence.

People make a mistake of confusing economic analysis with financial analysis. People will be trying to justify a project by claiming it’s got a really good economic cost benefit ratio. A lot of indirect economic externalities might help generate a really decent economic cost benefit ratio, but unless they are related to financial benefits, the project will not be financially viable.

The government has become increasingly credit constrained. There’s very little money to deploy. They would far sooner see projects being privately funded rather than publicly funded. Ask yourself: How do I make sure that I’ve actually got a business case and a financial structure that is consistent with private funding being made available?

Hear more from Martin during Regional Airport Development 2014 where he’ll facilitate the workshop ‘Exploring Alternative Funding Models for Infrastructure and Commercial Developments’.

 This workshop will assist you with understanding the alternative infrastructure funding models; and aims to guide you through the processes and criteria for securing such funds. Now is the time to comprehensively explore your funding options to ensure you can turn your master plan into master actions.

The airport v airline debate: why it needs to end

To put it simply, airlines and airports share a common goal; operating as many flights as possible to increase revenue.

However, achieving common ground and good communication has continued to be a challenge since the enforcement of airline deregulation.

To get some insight into exactly where the disparities lie and start to look at how they can be fixed, I spoke to Kevin Gill, Chief Operating Officer at Townsville Airport. He’s in a unique position of having experience from both sides of the coin; he worked as General Manager for privately owned ‘Macair’ for 8 years before joining Queensland Airports Limited (QAL) in 2008.

Where do the potential opportunities lie for airlines and airports to be maximising their revenue streams – have you any examples of this?

The traditional airport has been a landlord. The more contemporary airport immerses itself in understanding the airlines that would fit their destination, because ultimately an airport is a conduit to the destination. If we look at the Gold Coast Airport for example, you’ll tend to focus on typically low cost carriers, which are the correct fit to deliver tourism.

If you’re an airport like Townsville, it’s broader based with strong business content. The first step is to understand the correct airlines that would suit operating to your airport. Be proactive, and look at the emerging trends in your destination that could drive new destination ideas that may be of interest to your targeted airlines.

We have an example of that here; QAL’s research department identified a direct Darwin to Townsville service as an opportunity, because to get to Darwin, often meant a journey through Cairns or Brisbane. It became apparent that there are synergies with Darwin that were growing, between the two cities, those synergies were generally the mining industry and its on-going growth.  Both destinations have strong Defence connections, and there’s also Darwin’s increasing relevance as a gateway into Asia, and Townsville’s lack of connections into Asia.

As a result, the airport started to pitch a direct service to the airlines. AirNorth recognised the opportunity existed and commenced the route which has been very successful and is growing rapidly.

It was a new thinking of airports saying – “we’re not a landlord – we know our destinations, we know the opportunities, and we know our target market, let’s see where we can take this one”.

How does Townsville Airport ensure good operating costs for airline rates – where’s the focus?

Airport charges increased markedly at the start of the century, but if you look at the contemporary airport now, airlines get a lot more than a runway.

Looking beyond that initial price spike, investment in Australian airports has been very strong since they were Federal government owned.  If you look at airport charges as a percentage of airfares, they are still modest.

Airports now work hand in hand with airline partners to ensure that the Airport experience is seamless.  This maximises operational efficiencies and thus an Airline’s OTP.

Can you talk us through some of the common causes for disparate objectives between an airport and airline?

I’ve spent most of my career in airlines, so have seen both sides of the story.

Larger Airports have enjoyed strong financial performance in Australia but people often don’t understand the high levels of capital that are required to maintain and develop these assets. The airline industry has a history of uniformly not making much money.

Airports take a long term view with infrastructure development with planning horizons often beyond 10 years.  For example an airport may wish to increase the footprint of their terminal to meet long term projections and invest accordingly and pass on an increase charge to the airline.

On the other hand, the airline will not reap the benefits of the expanded footprint immediately and accordingly could be reluctant to agree to the increase charges in the short term.

That often causes a disparity in terms of short term versus long term thinking.

Different airlines also have different needs as dictated by their customer base.  FIFO operators only require a minimal facility whereas Virgin for example may require lounge and meeting facilities.

Certain airlines potentially may consider that they end up benefitting more from new infrastructure than other airlines.

What’s the key to successful communication and collaboration? 

The first thing that goes through my mind is empathy.  Until you’ve worked at an airline –  you don’t get to understand the pressures that airlines are under.

A jet airplane costs up to $8,000 an hour to operate, so if you’re an airline operator and the airport encourages you to start a new route, the costs rack up really quickly.

When an airport comes to an airline and advises them of a major redevelopment there is often a cost increase that is added to the list of increasing costs that an airline faces. Ultimately, the passenger ends up paying for it. Therefore it is imperative to ensure that the airlines feel that they are getting are getting value for money.

Airlines are trying to reduce costs and create a margin. This is typically 5% of turnover.  Airports are thinking about the longer term to ensure the correct infrastructure is provided to meet long term demand growth. If the parties can understand each others perspective then they are much more likely to collaborate effectively and reach mutually acceptable outcomes.

There’s no doubt that airlines and airports have to be partners.  We are increasingly immersed together. An airport is reliant on airlines adding capacity to grow their business and enable them to reinvest. There are other ways that airports can assist airlines. QAL for example, provides ground handling support services and also aircraft maintenance services to airlines.  It’s about having a deeper relationship beyond being a landlord.

What do you envisage the airport of the future to look like – what will be the differentiation between those that succeed in becoming cash flow positive and those that don’t?

If the destination is strong, then the airport should prosper, the airport needs to be proactive, and support destination growth.

Work with what you’ve got.  If you know what your destination key trigger points are, then again, be proactive.  Look at new route opportunities and drive the agenda with airlines with constructive ideas. Know you’re the industry you’re operating in.  You’re in aviation; you can’t be a passive landlord.

Airports that are smart really look at all of those negative touch points in facilitation, and try to overcome them, whether it be front of house road transport congestion, or runway congestion.  Technology enabling smart solutions is also going to be very important.

 Join Kevin at Regional Airport Development 2014 where he will be delivering the presentation ‘Attracting Airlines and Strengthening Relationships’.

 Find out more by visiting www.regionalairports.com.au