The results of the audit report into Victorian schools announced
on 20 February 2013 revealed a AUD420 million maintenance backlog
with over 5,000 school buildings identified as falling below the
standards set by Department of Education and Early Childhood
Since the first school public private partnership (PPP) in 2003
in New South Wales, the building of new schools via design,
construct and maintain PPPs in Queensland, Victoria and South
Australia has been a successful model for delivering much needed
education infrastructure in Australia. However, a PPP which
delivers upgrades and maintenance for existing schools has not been
used in Australia.
In contrast, the US and the UK have both used a PPP model to
deliver much needed school upgrade and maintenance repairs,
particularly where government funding has been unavailable.
In 2009, the Yonkers school district in New York undertook due
diligence of the 40 schools in its district in order to formulate
an Educational Facilitates Plan for capital improvements. The due
diligence revealed maintenance problems at 95% of schools in the
district, where the average age of each school building was 73
years old. Financial, legal and technical advisors were appointed
in 2012 to recommend how best the US$1.7 billion Education
Facilities Plan (which included US$400 million in emergency
repairs) could be delivered via a PPP over an expected 15 year
period. This PPP was the first social infrastructure PPP for a
public school district in the US.
Although the PPP is still in its initial phase, the Yonkers
project has received significant support from the business
community when it was announced among the "world's 100
most innovative urban infrastructure projects" in the KPMG
Infrastructure 100 Report in 2012. Further support has been
received within the education community including from the
Superintendent of Yonkers Public Schools, Mr. Pierorazio who
believes that "the P3 (PPP) allows us to transfer the
responsibility of building management to the private sector, who
can do it more efficiently and, frankly, more effectively. In turn,
we can concentrate on what we do best – preparing students to
The Yonkers PPP will likely incorporate lessons learnt from the
UK's "Building Schools for the Future" program (BSF)
which was announced in 2003 primarily in order to renew 3,500
English secondary schools over a 15 year period. In order to manage
the program, the UK Government created Partnerships for Schools
(PfS). This ambitious plan involved state and private sector
initiative funding which was combined through the formation of a
public/private joint venture, referred to as a Local Education
Partnership which was responsible for delivering the required
maintenance or rebuilding of a school.
The BSF program was criticised for its extensive delays, caused
in part due to the ambitious scale of the project, the pressure put
on local councils and schools (including teaching staff) during the
consultation process and the level of bureaucracy to be negotiated
by the private sector. The program was highly politicised and the
change in government in 2010 resulted in the subsequent
announcement of the closure of the PfS in 2011.
The US and UK experiences provide interesting examples to be
considered by DEECD. While the Victorian Government on Wednesday
announced AUD51.5 million in funding to address initial problems,
the remaining shortfall required to address identified maintenance
problems represents a significant funding challenge for the State.
Further exacerbating this issue is the pressing need for such
repairs, with the audit report noting that the current
"reactive" approach to maintenance is "likely to
compound defects, leading to a need for more costly maintenance
interventions in the future".
The scope of the potential maintenance could create a sizeable
project which if delivered via a PPP would likely generate private
sector interest while delivering to the State benefits such as
value for money, efficient delivery of repairs to schools, transfer
of risk to the private sector, certainty for future maintenance
spending through the provision of maintenance warranties by the
private sector and better life cycle planning.
In our view, these benefits when combined with the State's
current funding challenges merit a discussion as to the suitability
of using a PPP model for the delivery of maintenance services in
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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