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Centre for Management Practice

Building the Singapore Sports Hub through a public-private partnership

BY CENTRE FOR MANAGEMENT PRACTICE

In 2001, the Singapore government wanted to upgrade the old national stadium. The government was committed to creating an environment conducive to sporting success, and the infrastructure of the stadium, along with its surrounding facilities, was expected to support the development of promising local talent.

The national stadium had been a symbol of the community’s togetherness. At independence, participation in sports was encouraged in order to foster bonding among the diverse populace. Singaporeans used to gather at the stadium during various sporting events to cheer for the home team. Going forward, the Committee on Sporting Singapore believed that a multiuse Sports Hub would raise local standards,

[A state-of-the-art Sports Hub] will provide a competitive edge when Singapore goes out to bid for premium sports and entertainment events… This unique cluster development will play a critical role in accelerating the fusion of sports industry, excellence and participation, and take sports to the next level in Singapore.

A public-private partnership (PPP) model was chosen over a purely public project model to finance and manage the construction and operations of the facility. Mark Rathbone, partner at global advisory firm PwC, was appointed to consult and manage the procurement issues for the project, and explained the old-fashioned method of managing public developments,

In traditional procurements, the government would pay for construction of the project. Then the government would effectively pick up the costs of operations. It all runs through the government budget. The government bears all the risk of cost overruns, delays, running costs and life cycle costs. 

In the PPP, the agreement would specify the deliverables of the private consortium in return for availability payments during the 25-year contract period. Getting involved from the start allowed the consortium to gain synergies by combining design, construction and operations. They arranged financing for construction and individual partners utilised their specialised knowledge to manage the project more efficiently.

The government would save on the initial capital outlay and only make monthly payments based on the availability of the physical facility, subject to availability criteria but irrespective of usage. However, no payment would be made should the facility be unavailable for use. During the contractual period, the consortium also had to ensure the facility was in top condition.

Eventually, the Singapore Sports Hub Consortium was chosen as the preferred bidder based on their commercial viability, technical design that included a retractable roof and ability to provide quality sports programming for the public. The $1.3 billion project was finally completed in June 2014. The former Minister for Community Development, Youth and Sports, Dr Vivian Balakrishnan, said the Sports Hub would be critical towards realising the Sporting Singapore vision,

With its world class facilities, the Sports Hub will position Singapore as a preferred venue for premium sports and entertainment events in the region. We also want to ensure that the Sports Hub is a place for all Singaporeans. It will offer a wide range of fun and exciting sports and recreational activities for everyone.

Since the project was initiated, Singapore has successfully hosted the ground-breaking 2010 Youth Olympic Games and the innovative Formula One night race in 2008. Rathbone was proud to have helped raise the standing of Singapore as a sporting venue and hoped that the successful project would be a model for future regional infrastructure projects. 

 

The views expressed in this column are the author's own and do not necessarily reflect this publication's view, and this article is not edited by Singapore Business Review. The author was not remunerated for this article.

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Centre for Management Practice

Centre for Management Practice

The Centre for Management Practice is a leading university think-tank at Singapore Management University. The Centre identifies, captures, and disseminates new knowledge based on emerging trends, best practices, and cutting-edge business models operating in Asia's fast-changing and dynamic markets. This is accomplished through academic consulting; as well as the development and publication of case studies, journal articles, and other periodical content.

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