31 July 2017
Australia has signature capital city convention and exhibition centre (CEC) facilities. However, the demand for such facilities exists in our regional centres too. The key to success starts with the planning.
As well as providing a meeting place, CECs generate significant benefits for a local economy, supporting tourism, hospitality, retail and other businesses.
So how can governments ensure their success?
At one level, a CEC is simply a box.
One part has a stage and some seats to listen to people. Another part has a large open area to exhibit goods and services.
But not all boxes are created equal. Not all boxes succeed.
Where the box is placed, how it is connected, what equipment goes inside it and how it is operated are all relevant considerations.
These four elements are each essential to the success of a CEC.
The regional CECs’ location needs to be capable of attracting a critical mass of people. A regional centre needs to service an existing or emerging catchment area, but also needs to attract visitors.
A CEC can both exploit existing pull factors of a particular location, as well as contribute to those factors itself.
A regional CEC planned and developed in consultation with the local community will assist with maximising these different pull factors and sharing the benefits.
The connection between a regional CEC, the capital city CEC and other regional CECs should be considered. Sometimes, these CECs will be in competition for particular events. Alternatively, these CECs might collaborate with complementary offerings (for example, one event might be hosted across CECs). In both cases, a regional CEC should be able to articulate its differentiating value.
In order to attract visitors, the CEC needs to be accessible. This includes easy access by major roads or reasonably direct public transport.
But connection is about more than transport. A successful CEC is integrated into a precinct which includes transport solutions, as well as ready access to accommodation and retail services.
Indeed, to drive the economics of commissioning and then operating a CEC, aligned commercial development opportunities are valuable. These opportunities may include a hotel development, retail outlets and even a residential component.
While it may be possible to pursue such commercial developments through different stakeholders and counterparties, it will require careful planning to manage multiple interface risks during construction and operation. Depending on government’s appetite for managing such interface risks, there may be advantages to seeking integrated proposals for the development and, potentially, the operation of the entire precinct.
Ultimately, any commercial development needs to complement and support the CEC and be appropriately integrated into a precinct master plan. In commissioning a CEC, government needs to ensure the harmonious integration of any commercial development and the appropriate allocation of interface risk to the contractor.
Although the built form of a CEC may be relatively simple, it will require a significant amount of equipment for operation.
A CEC will require a range of technology, some of which may be sophisticated or at high risk of becoming obsolete. Such technology might include flexible staging and seating as well as audio-visual equipment for amplification, projection, recording and broadcasting. A CEC may also require a range of less sophisticated equipment: desks and chairs, crockery and cutlery.
To achieve certainty of pricing and manage project costs, sufficient time needs to be allowed to develop and refine equipment specifications, preferably together with the selected developer and operator. From a contractual perspective, government needs to ensure that the mechanisms for procuring such equipment provide sufficient certainty as to specification, quantity and price.
Sometimes contracts contemplate the purchase of equipment as provisional sum items, which are subject to an allowance but may cost more or less. Ideally, provisional sum items will be limited to those items (such as technology) that cannot be adequately specified at the outset because they might rapidly become obsolete or are genuinely impossible to price (for example, where there is a requirement for a bespoke item).
To manage any unwelcome surprises, government should undertake a rigorous due diligence of the proposed allowances and ensure that the contract provides it with sufficient discretion to vary its requirements for the provisional sum items.
There are a variety of models government may consider for delivering a CEC. These could include commissioning a contractor to design and build it, with a government agency or another contractor then operating it. Alternatively, a consortium could be commissioned to finance, design, construct, operate and maintain the CEC under a public private partnership (PPP).
One benefit of a PPP is that it incentivises the contractor to ensure appropriate design and construction, given they will also be responsible for operation, maintenance and ultimately handing back the facility in a particular condition. A PPP will also provide government with a measure of certainty as to lifecycle costs.
In structuring the transaction, government will need to consider who is intended to operate the CEC, from generating convention and exhibition ideas, to running the events, to maintenance of the facilities. Government also needs to ensure there is a clear contractual allocation of different responsibilities. It also requires clarity as to which government entity is responsible for contract management of each element.
Because it is difficult to predict the future needs of convention and exhibition organisers and attendees, it is important to provide mechanisms for future-proofing. The planning, design and contractual arrangements for a CEC can be structured to provide flexibility to change the built forms, uses and services of the CEC and surrounding precinct.
The implementation of changes will be easier if there is a pre-agreed set of principles and processes for agreeing, pricing and managing such changes.
Corrs acted for the State of Victoria in the development of the new Melbourne Convention Centre and the recent Melbourne Exhibition Centre Expansion projects.
This publication is introductory in nature. Its content is current at the date of publication. It does not constitute legal advice and should not be relied upon as such. You should always obtain legal advice based on your specific circumstances before taking any action relating to matters covered by this publication. Some information may have been obtained from external sources, and we cannot guarantee the accuracy or currency of any such information.