North West Treatment Hub, Sydney, Australia

Sydney Water is using an NEC4 Alliance Contract (ALC) to deliver over AU$1.5 billion (£750 million) of wastewater treatment improvements in the northwest of the city. It is believed to be the first use of the NEC4 ALC in Australia.

The ALC-based North West Hub Alliance between Sydney Water, John Holland, Stantec Australia and Kellogg Brown & Root was formed in December 2023 to deliver the North West Treatment Hub Growth Program. With the northwest region’s population expected to double by 2036, the alliance is upgrading existing water resource recovery facilities (WRRFs) at Rouse Hill, Riverstone and Castle Hill over 10 years to create a new regional wastewater treatment hub. In addition to providing extra wastewater treatment capacity of 45 Ml/day, the works will ensure discharges entering the Hawkesbury-Nepean River system comply with new environmental regulations.

The first stage, worth AU$595 million (£300 million), was awarded in December 2023 to establish the alliance, expand the treatment capacity at Rouse Hill WRRF and improve biosolids processing at both Rouse Hill and Riverstone WRRFs. The second AU$295 million (£150 million) stage, awarded in December 2025, is to upgrade the liquids capacity at Riverstone WRRF. Three more stages will be awarded over the next eight years. 

The alliance is also introducing innovative sludge carbonisation technology at Riverstone WRRF, a first for Sydney Water. In what is set to be the world’s largest and most advanced sewage sludge carbonisation plant, wastewater sludge will be processed into high-quality biochar, which contains valuable phosphorus nutrients for plant growth. The process also breaks down PFAS ‘forever chemicals’, reducing public health risks.

Unique commercial model

Sydney Water is now an experienced user of NEC4 contracts, have first adopted them in 2019 for its 2020–2030 construction works and service frameworks, which are worth up to AU$4 billion (£2 billion). In 2021 it began using NEC4 for major projects too, starting with the AU$280 million (£140 million) ProMac water supply upgrade, which was completed in 2025. The company has developed a tailored template for each contract option, including ALC.

Program Director Darren Wharton says delivering significant upgrades across multiple complex brownfield sites meant a single package approach was preferred. ‘An NEC4 ALC was therefore chosen as it best aligned with the collaborative integrated delivery approach, we felt was needed to deliver the programme’s objectives.’ 

He says the tailored NEC4 ALC adopts a unique affordability-led commercial model. ‘Using reference-class-forecast benchmarking, risk-based cost estimates and project-specific risk allocation, we established an affordability envelope. This is a holistic budget, inclusive of Sydney Water’s costs, and sets the framework in which the alliance designs and delivers appropriate solutions.’

Wharton says the pain/gain share mechanism for all alliance members, including Sydney Water, is achieved through the NEC4 ALC performance table and is directly linked to the affordability envelope. ‘Outperformance against this envelope serves as the primary source of profit for the alliance partners and delivers savings for us and our customers. The target outturn cost confirms that the proposed solution is deliverable within the affordability envelope and identifies an outperformance reward pool.’

He says the contract has adopted option X26 on programme of works and option X22 on early alliance involvement. ‘This enables us to engage the alliance to develop a proposal for each subsequent stage of the programme based on the performance in prior stages. We have also included a set of client reserve powers outside the scope of alliance board governance, such as removing partners or individuals.’

Promoting collaboration

Wharton says representatives on the alliance governance bodies – such as the Alliance Board and Alliance Integrated Management Team – were selected on a ‘best for task’ basis. ‘This means that roles and responsibilities were assigned according to the skills, experience and capability best suited to deliver the required outcomes. This approach ensures flexibility, optimises resource utilisation and promotes collaboration across the alliance.’

He says the alliance’s unified governance structure is a crucial mechanism for resolving disputes between partners. ‘Each alliance member is committed to act in the NEC’s required “spirit of mutual trust and co-operation”. This means promoting and maintaining a no-blame culture in relation to disputes, errors, mistakes, defects and poor performance, and ensures the prompt and mutual resolution of all issues.’

Wharton says all alliance members are co-located in a single programme office to enable seamless integration and foster collaboration. ‘This setup was particularly effective when the alliance had to develop its proposal for stage 2, facilitating close coordination between the delivery teams and proposal development team, streamlining resource planning and managing interfacing activities between stage 1 and 2 works at Riverstone WRRF.’

He adds that the risk-sharing approach of the NEC4 ALC also helped the alliance to develop and implement the sludge carbonation system at Riverstone WRRF. ‘It enabled us to manage the risks of adopting an emerging process as well as to develop viable markets for the biochar by-product, supporting circular-economy principles’.

Benefits of using NEC

• NEC4 ALC provided a single-package approach to delivering significant upgrades across three complex brownfield sites.
• NEC4 ALC aligned with the collaborative integrated delivery model considered necessary to deliver the 10-year programme’s objectives. 
• NEC4 ALC facilitated flexibility and enabled the development of innovative and sustainable solutions that would not have been possible under a typical design-and-build contract.
• NEC4 ALC committed alliance members to act in a ‘spirit of mutual trust and co-operation’, ensuring a no-blame culture and the prompt and mutual resolution of all issues.
• NEC ALC performance table linked to an affordability envelope provided the pain/gain share mechanism for all alliance members.
• NEC4 ALC options X22 and X26 facilitated the process for developing proposals for each subsequent stage of the programme based on the performance in prior stages.