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The PPP That Was So Easy… It Failed
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They thought it would be a walk in the park. Ten kilometres of track. Four shiny underground stations (Green Square, Mascot, Domestic Airport, International Airport). A tidy A$900 million price tag. No complex bridges. No financing gaps. No environmental battles. A textbook PPP… On paper. ​ ​ And that was exactly the problem. ​ Because they got lazy. ​ They skipped the fundamentals—risk, incentives, accountability. Passenger-demand forecasts showed 68,000 riders a day; real life barely scraped 12,500. Six months after opening on 21 May 2000, Airport Link Company was in receivership, leaving the New South Wales government holding the bag. How typical. ​ When PPPs look “too easy,” people forget the basics: ​ Align risk with control. Private investors couldn’t change fares or service levels, yet wore the revenue risk. Keep KPIs tight. The contract didn’t penalise demand-forecast fairy tales; it rewarded optimism. Build in consequences. Penalties were wafer-thin, payouts almost automatic once the line opened. ​ Plan for the worst, not the best. Everyone banked on Olympic-year traffic solving everything. Spoiler: it didn’t. ​ They thought they were buying peace of mind. They ended up buying a mess of renegotiations, government compensation packages (A$80 million in 2002, more in 2005), and a line that became a case study in how not to structure revenue risk. ​ Complexity doesn’t kill a PPP. Complacency does. More lessons and stories? Check this out. ​
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Vicente Valencia
I talk about Personal Growth, Management, Infrastructure and More | C-Suite Executive | Mentor, Coach, Strategic Consultant | Real Estate Investor | 👇JOIN +2k readers 👇
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