How optimal was the Sydney Metro contract?: Comparison with international best practice

The New South Wales (NSW) government created the Sydney Metro Authority to design, build and operate a completely separate underground Metro rail system to supplement the existing public transport network in Sydney. By the time the NSW government abruptly cancelled the entire Metro project in early 2010, the Authority had conceived and designed a contract that was proceeding to procurement. This paper compares the elements of the proposed Sydney Metro contract to findings of the literature on optimal contracting and optimal incentives and on PPP best practice. The paper concludes that the Metro seems to have at least implicitly drawn fairly heavily on best practices and principles, but that its ultimate failure to be implemented is an instructive lesson about how operating environment can impede integration of useful knowledge and experience.