Page 4556 - Week 12 - Thursday, 15 October 2009
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the final dose of bad news delivered on 3 September by Mark Sullivan, the Managing Director of Actew, that the final cost of the dam would be $118 million more than the most recent estimate. In one go, Actew added around a third onto the final bill. In doing so, Actew have provided a number of reasons to the public about why this has happened. We have heard that it was the unpredictable site geology which resulted in a bigger dam wall that added the cost on. We have heard that the cost of labour was part of the reason for the cost increase. We have heard that the cost increases of specific materials on the global market have caused the cost increase. We have heard that it was the environmental remediation and associated programs that caused the cost increase.
But when you look more deeply at each of these issues and some of the others, it becomes clear very quickly that we do not yet have the full story. The reason we do not have the full story is that we have not yet had access to the kind of information that would fill in the gaps and answer some of the questions. That information should come in the form of the costings for the project. Actew also claims to have had at least one independent review of the target outturn cost completed. This would provide some clearer information about how the TOC was arrived at.
I would like to take the opportunity to outline some of the issues that have remained unclear to date for the Greens and why in our amendment we seek further documents. Firstly, we are concerned about the chronology of the costings and how this interacts with when specific studies were undertaken by Actew that would have further informed the cost of the project. Specifically, the size of the dam wall has been raised frequently in the public debate.
On ABC radio on 3 September, managing director Mark Sullivan gave the clear impression that it was this that had resulted in the major cost increase of $118 million announced in September 2009. Yet, while the document received from Mr Sullivan last month also makes reference to a growing understanding of the site geology that influenced the size of the dam wall and the volume of foundations required to be excavated and the volume of roller compacted concrete required, the exact impact on the cost, and the component of that $118 million that was due to the increased dam wall, was not made clear.
While the document provides some broad indication of cost increases in material and labour between 2005 and 2008, there is no clarity about the specific impact of these cost escalations on this particular project. Like I say, I am no engineer, but telling me that the cost of reinforced steel has gone up in the last four years means nothing if it is not clear how much reinforced steel is needed for the construction. I must say, from a layperson’s perspective, that I remain surprised that any estimate of cost for a dam wall could be made public without enough geological surveying having already taken place to determine basic issues such as how big the dam wall might be.
I also note in the document the Assembly received one of the identified significant cost increases was the cost of fuel, and there was a dramatic graph showing the cost increases up to 2008. I imagine that if that graph had continued out to 2009 it would have reflected the reduction in fuel prices that has been witnessed. It is in the region of a third since that graph was last measured.
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