26 August 2013

Paying the contractors to be over time and budget on the Cotter Dam?

| johnboy
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The Liberals Alistair Coe is asking questions about the exploding costs on the expanded Cotter Dam:

Alistair Coe MLA



Following the Auditor General’s announcement for a performance audit of the Cotter Dam project, Shadow Minister for Planning and Infrastructure Alistair Coe said the ACT Government should demonstrate what time penalties are included in the contract to construct the Cotter Dam.

“The cost of the Cotter Dam has blown out from the 2008 figure of $145 million to $409 million,” Mr Coe said today.

“A later $363 million figure included a $35.6 million ‘gain share’ (like profit) for the companies working on the project. That amount has now fallen by $29.2 million to $6.4 million.

“However, despite forgoing $29.2 million, it appears that contractors have picked up an addition $70 million for direct costs of construction.

“The contracts in place should mean that all involved have an incentive to deliver the Dam ahead of time and under budget. It looks as if the opposite is in place.

“Andrew Barr and Katy Gallagher need to explain why it seems ACTEW have given the contractors a financial incentive for the dam going over-time and over-budget.

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Hmm, turnover vs. profit could there be a difference?

I’d be interested to know how Mr Coe thinks thing could have been arranged. Even if we could have found a contractor to take on the job as a lump sum contract what would have happened when they discovered they couldn’t finish the job and declared bankruptcy?

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