Public Infrastructure, Private Motivations

14 Apr 2015

 

Earlier this morning, the Queensland Transport & Main Roads invited industry to attend a briefing on the proposed up grade of Pacific Highway Exit 54 - the Coomera Town Centre Interchange.

By way of a brief intro to the project, this is a long overdue upgrade of a poorly performing interchange, currently operating at 2010-11 capacity standards. The proposed upgrade (already progressed to detailed design within the last five weeks), has been budgeted at $75M and includes a new, widened bridge over the M1, two new signalised intersections, major ramp works and a new roundabout.

The project is due out to tender TODAY, with commencement expected on the 1st of July and completed by the end of September 2016 - a very busy, fifteen month programme.

"Hey, that's great news for contractors and the community!", I hear you say. Well, yes, of course anything is better than nothing at the moment for the Queensland construction industry, but the motivation and delivery of this project are likely to result in some very trying times for the successful bidder.

 

Of the total project budget (and TMR have stressed there are NO additional funds available, so think carefully about trying to take advantage of any opportunities during the tender stage!), a private developer has committed over 20% to the pot. Granted, most major developments require a contribution in the form of headworks charges to their local governing body, but this goes over and above what would usually be considered 'standard practice'. "But isn't it a good thing that private industry are investing in public infrastructure?" Yes, it is, but let's consider the trade off.

 

The private developer of the Coomera Town Centre, as many will know, is Westfield - a company it would be fair to say, that enjoys making a buck or two. For Westfield to commit to an additional $17M of funding to the upgrade of public infrastructure that for one reason or another has been overlooked by TMR, the Queensland Government and Gold Coast City Council for at least five years, one could assume there's enough of a financial incentive in the short to medium term in getting the Coomera Town Centre open and operational by say, Christmas 2016?! 

 

TMR's planning effort has been heavily condensed to within the last two months, and as previously mentioned, has progressed from concept to detailed design in the last five weeks. In their own words, TMR engaged a designer who would 'work on their terms', and produce a design fit for tender to suit their end date of September 2016. TMR advised prospective bidders that no alternative design options would be entertained, as they're "pretty confident they have the right solution", and assessing alternatives will make the programme unachievable. In almost the same breath, TMR responded to questioners that "some analysis and modelling had been undertaken, but not 'detailed' modelling".

 

Some might argue that shortcuts have been taken, but this could be forgiven as by their own acknowledgement, TMR are currently under-resourced (and will be seeking to engage external project support and delivery consultants on this and other projects throughout the region).

While it's encouraging to see some new projects coming to market, the risk to so many desperate contractors is that Clients, under the influence of private investors, political commitments, general market constraints (and even the odd Commonwealth Games deadline!), are willing to enforce unrealistic expectations on an already damaged industry. For a contractor to successfully bid this project (we identified ten major contractors in the auditorium this morning!), will require a huge effort over the next six weeks, hounding subcontractors and suppliers for their best price, preparing traffic management and staging plans, pulling together estimates, submission documents and internal reviews... did I forget anything? 

Oh yeah: if you want to win this one, you better just conveniently forget about your risk and contingency review - maybe just hide that page in the back of the folder...

 

 

Private investment in public infrastructure is a smart, and most would say a "fair" way to improve our transport assets, but should the private partners in a PPP be able to dictate terms, borne of self interest, to the detriment of the industry? 

Good luck out there.

Please reload