Page 2804 - Week 09 - Thursday, 8 August 2013

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Any cost savings relating to the depth of the excavation of the abutments and foundations of the dam being shallower than initially expected were lost due to the geotechnical conditions encountered on the right hand abutment where the depth and volume of excavation significantly exceeded expectations by up to 15 metres adjacent to the right hand floor’s valley interface. Additional concrete (approximately 10,000 m3) was required to fill this additional excavation, and furthermore there were significant project costs added due to the delays caused by the additional excavation and refilling of this zone with concrete - prior to commencement of roller compacted concrete (RCC) placement for the main dam.

All abutment and foundation excavation has now been completed and costs have exceeded the TOC budget amount by $3.7 million or approximately 25 per cent over budget.

Project delays caused by this additional work on the right abutment foundations were in the order of 6 weeks and the total project cost impact is estimated to have been in the order of $4 million or approximately 1 per cent of total project budget of $405 million. It should be noted that comments made by Mr Mark Sullivan on 3 September 2009 were made prior to the commencement of strip down of the foundations for the abutments and dam and identification of final ground conditions.

(6) Cost escalation data provided in a letter dated 17 September 2009 to Minister Simon Corbell MLA, tabled in the Legislative Assembly on 17 September 2009 was considered accurate at the time of its preparation and provided the context for price movements on the 2005 data, upon which the original cost estimate for the dam was based. The information provided did not indicate the proportional impact of any one price movement on the price of the dam, but was provided to indicate there had been significant movements over the 2005-2008 period on key inputs to the dam costs.

Within the 2009 agreed TOC, an allowance of $15.4 million (5.6 per cent) of direct costs was made for cost movements on key commodities over the life of the project; namely - cement, fly ash, fuel and reinforcement steel. No separate accounting has been made on this escalation allowance by the BWA. However, based on unit price movements over the life of the project on these key commodities, the full extent of expected escalation has not come to fruition.

Due to significant cost movements in other areas of the project, any savings resulting from lower than expected cost escalation have been consumed as project contingency and there is no identifiable saving in the AOC or final cost to ACTEW as a result.

(7) Up until the TOC was agreed by the BWA “Alliance Project Management Team” on 26 August 2009 and subsequently amended and approved by the Alliance Leadership Group on 27 August 2009, all summary costs were ‘estimates in progress’ and could not be described as the completed TOC estimate.

The referenced text from the TOC Report identifies the fact that the Alliance estimators will cease making direct input of estimate data to the estimating software on 20 July 2013. Therefore, ‘locked off the estimate’ data and all subsequent adjustments to the estimate were recorded on the referenced table which was included in the TOC Report in order to allow tracing of any changes to the estimate.

(8) As at 30 June 2013, ACTEW Corporation’s net share of savings on the major Water Security Projects, other than the ECD, amounts to $22.8 million. This figure is

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