Star Mountain Plaza is a project fuelled by a nations passion and diversity

The Project

Star Mountain Plaza is an ongoing USD500million, mixed-use development in Papua New Guinea. Made up of multiple stages, the project will ultimately deliver 2 luxury hotels, convention centre, retail, residential and commercial complex.  With multiple disciplines involved in the project and a Stratum team based in New Zealand, Australia, China and Papua New Guinea, a well-coordinated BIM process has been critical in managing the flow of design information. Stratum was engaged on end to end scope, ranging from development management, design, procurement, and facilitating commercial feasibilities. We develop the brand proposition, secure hotel operators, demonstrate economic principles to attract investment and sponsorship.

Decision Support Material

Stratum’s role included the creation of financial models (via PwC New Zealand modelling of the project KPIs), assist with capital raising strategies and developing a basis for securing incentives and fiscal concessions from the Government of Papua New Guinea. A critical starting point to this process is the formation of ‘Decision Support Material’ (DSM). In this case it included economic impact studies and hotel market assessment reports (written by independent specialists) which served as the pillars for the financial model and the basis for establishing post completion revenue models to raise project capital.The DSM developed for this project help to qualify the in-direct and direct economic benefit to PNG’s economy and demonstrate the project as essential to the success of PNG State’s commitment to host APEC in 2018.

Operating Strategies

Once stakeholders, finance and support were secured Stratum went on to develop operating strategies. This included the process of selecting a hotel operator to manage the Hotel and Convention Centre facilities. Stratum instigated a comprehensive tendering and vetting process that resulting in a 20 year management agreement with Hilton Worldwide.

Build Strategy 

Construction costs are notoriously expensive in PNG due to heightened build risk, currency constraints and lack of domestic industry expertise. To combat this Stratum developed a strategy away from conventional ‘fix price or guaranteed maximum price’ construction contracts. Although a main contractor was appointed the project was broken down into multiple packages each awarded after a comprehensive tender process. As the project developed Stratum’s role grow to include Construction Management which saw the removal of the reliance on a main contractor and more hand on approach managing the project under a the client’s own contractor structure. Stage One complete in September 2018, went on to successfully Host APEC 2018 and become an essential facility to support Port Moresby growing commercial community.

Procurement

PNG was a challenging market in which to build a 5 star facility to international quality and build standards, this extends to all components of the project:- Legality and international law pertaining to contracts in Country - Risk management and insurances - Development programme - Quality assurance and warrantees - Transport Logistics, storage & tracking - Security - Procurement Processes and due diligence - Financial processes, approval mechanism and structure

Summary

Identifying and deciding which products and services are directly procured, as well as how they are designated into the above categories was crucial. An assessment of risk was rigorously applied to establish a detailed procurement programme before being integrated into the main development programme for the respective buildings.As a result, we assembled an internationally experienced team that has the necessary skills to implement such strategy. This works best under a construction management strategy. Our intent is to use an innovative and cost effective procurement process to not only deliver an efficient and effective supply to the project build team but also achieve a higher level of specification and financial benefit to the client.