ACT News


Fears over rising dam costs

Contractors may have gained tens of millions of dollars worth of extra work on the Extended Cotter Dam due to a lack of measures to ensure the project was completed on time and on budget, the ACT Liberals say.

But government-owned water utility ACTEW says it is confident that its management of the dam expansion will be vindicated by an investigation.

Auditor-General Maxine Cooper announced last week that she intends to conduct a performance audit of the $400 million project to give Canberra a new 78-gigalitre dam.

Deputy Liberal leader Alistair Coe said the ACT government needed to explain if contractors had effectively been given a financial incentive for the project to go over time and over budget.

Mr Coe said the cost of the dam had blown out to $409 million from a 2008 figure of $145 million.

''A later $363 million figure included a $35.6 million 'gain share' [like profit] for the companies working on the project,'' Mr Coe said.


''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 additional $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.''

An answer to a question on notice asked by the opposition in the Assembly shows construction costs for the dam project were estimated in 2009 to be $263.4 million.

This included overheads, design and work on the abutment and dam, saddle dams, quarry and other structures.

But the actual cost rose to $335.1 million, not including flood costs.

In a written statement, Michael Easson, acting chairman of ACTEW, said the utility would co-operate with the Auditor-General's inquiry.

Mr Easson said a full review had already been conducted by the Independent Competition and Regulatory Commission in 2011.

''Their report competently examined in detail the budget of $363 million,'' he said.

''It was a report that evaluated the merits of our alliancing procedure with our partners on the dam project and concluded that ACTEW's approach was commercial and reasonable,'' he said.

''With further costs associated with the flood and other issues, the final cost outcomes will not be known for months, but within the period of the Auditor-General's review. But we are also confident that an independent, thorough investigation, as announced by the Auditor-General, will show our actions have been reasonable.''

ACTEW managing director Mark Sullivan last week told an Assembly committee that he believed the Auditor-General would find that the dam would deliver water security to the ACT for a generation.

''I think she'll say the extra $45 million on top of that is money well spent, the contracting arrangements through alliancing was extraordinarily well done.''


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