January 16, 2012

PCL

The $1 billion (AUD), 130,000-square-metre Victorian comprehensive cancer centre in the city of Melbourne will be built over 13 levels and include two bridge links to the existing Royal Melbourne Hospital. PCL has eyed entering the Australian market for five years.

PCL expands into Australian market with Grocon, Plenary Health

The PCL family of companies and its Australian joint venture partner Grocon are part of a consortium headed by Plenary Health Australia that will deliver the $1 billion (AUD) Victorian comprehensive cancer centre in the city of Melbourne.

The PCL/Grocon construction joint venture combines PCL’s experience in construction of hospital facilities within the public-private partnership (P3) model with Grocon’s track record in delivering some of Melbourne’s most iconic buildings.

In Canada, PCL and Plenary Health currently have five P3 hospital projects, valued at some $3 billion, under development.

Brad Nelson, PCL’s Toronto-based president and chief operating officer, Canadian Buildings, said his company’s successful working relationship with Plenary Health in Canada was “definitely” a factor in his firm’s retention as a member of the consortium vying for the Melbourne project.

Plenary Health announced in mid-December that it had achieved financial close with the Victorian government on the project. It will include construction of a 130,000-square-metre facility which will be built over 13 levels and include two bridge links to the existing Royal Melbourne Hospital.

“We’ve had a very good relationship with Plenary Health here in Canada over many years,” Nelson said. “I’d say that was the single largest reason that we ended up going to Australia.”

PCL has been eying the Australian construction market for five years. Nelson said an analysis indicated that it was the offshore market that most resembled Canada’s in terms of such items as language, laws and the way in which business is conducted.

“We definitely consider this project a breakthrough,” said Nelson, who was one of the key players involved in putting the bid together.

“It’s the first project we’ve gone after there. To go in and win our first bid showed that we had done our research.”

The Plenary Health consortium consists of sponsor, financial arranger and equity investor Plenary Group as well as Honeywell, which will provide facilities management services over a 25-year period, and the PCL/Grocon venture which is in charge of design and construction.

The architectural design team is made up of three Australian firms, Design Inc. and Silver Thomas Hanley in partnership with McBride Charles Ryan.

Nelson said PCL first met Grocon personnel after a contingent of senior executives from that company came up to Toronto a couple of years ago. Subsequent meetings followed in Australia. Initial introductions were made by Plenary Health officials.

Nelson said the two companies wanted to ensure that their corporate cultures, codes of conduct in doing business and skill sets were compatible prior to forming a joint venture.

“We spent time getting to know each other before we actually solidified that we would go after this as a team.”

Grocon is one of Australia’s leading development and construction groups.

For its part, PCL has already sent more than a dozen senior staff to the site, among them estimators and construction management and project management personnel. Grocon is supplying a similar number of people.

“When we look at staffing these joint ventures, we look at sharing the senior positions,” Nelson said.

One of the key challenges from a construction perspective on a project of this size and complexity “is adhering to the schedule,” Nelson said.

The joint venture doesn’t anticipate any issues in getting necessary subtrades on board.

“They have a very strong subtrade community there that has worked on complex projects.”

Construction is scheduled for completion by the end of 2015.

“We’re already on site,” Nelson said. “But the pace is really going to start to pick up within the next six months.”

PCL hopes to use the project as a springboard for additional work in Australia.

The project is being financed through a fully underwritten debt and equity package. The banking group brought together to finance the project includes Export Development Canada.

Plenary Group principal John O’Rourke said his organization is “particularly excited” about the introduction of PCL to the Victorian construction market.

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