How our governments get major projects wrong

Taxpayers end up paying too much for major road and rail projects in Australia because governments don't drive a hard bargain on contracts with the big construction firms, according to a new Grattan Institute report.

Megabang for megabucks: driving a harder bargain on megaprojects calls on governments to stop worrying about the profitability of the industry and start delivering quality services at the lowest long-term cost to the community.

Australia's transport infrastructure costs are above the global average, and there is a government culture of caving in to contractor demands after contracts are signed.

About 25 per cent of projects end up costing taxpayers more than the government expected when construction started.

To get quality infrastructure at a sharp price, competition is fundamental. But as the size of projects has grown, so has the size of contracts – and with larger contracts, competition inevitably thins.

Few firms have the technical and financial capability to win contracts worth $1 billion or more. Yet Australian governments often give undue priority to domestic experience, making it hard for international firms to win contracts.

State governments often rush projects to market, so they can announce and start them before the next election. But in the rush, governments don't always identify or mitigate expensive problems such as contaminated soil, and they're not systematic enough about dividing projects into bundles or choosing the contract type with the right incentives for the particular job.

The report calls on governments to only sign contracts that they are prepared to enforce, and to award all infrastructure contracts through an open tender process.

And it recommends Australian governments investigate how similar countries overseas manage to build high-quality transport infrastructure more cheaply.

"Our governments are getting major projects wrong, and taxpayers are left to pick up the tab," says lead author and Grattan Institute transport and cities program director Marion Terrill.

"Our report shows how Australia can build better."

Should the government be getting better value for spending taxpayer money on road and rail projects?


What would you expect when, for years, you show "the door" to the public service expertise on:

1. Infrastructure acquisition, 

2. Tender compilation/construction, assessment, negotiation and evaluation,

3. Contract drafting, negotiation and management for the life of a project, and

4. Management, confirmation, testing, and acceptance of the delivery of infrastructure assets?

Replacing decades of knowledge, skills and experience with political appointees (aka trainee politicians) to manage infrastructure projects.  They're NEVER going to give 'FEARLESS' advice to their minister - - that'd be 'political' career shortening for that cabal of lackeys staffing ministers' offices.  

Just look at what the NSW Auditor General reported to Parliament yesterday regarding the Land Purchase by Transport for NSW for over $60m (purchased for $13m by the seller 12 months earlier) at Camellia for the Parramatta Light Rail - should be renamed Lite on process Rail.  Now TfNSW has to use your taxes to pay over $300m to remediate the land from contaminants. 

Why did the Minister sack his appointed departmental head who was responsible at the time of the procurement and purchase? 

Why did the Minister rehire the sacked appointee 6 weeks later to run the Sydney Metro? 

Were further plundering opportunities uncovered and an experienced operator required to gather them up?

By the way, where do you think the tenderers/service providers/bidders get their knowledge, skills and experience from for these infrastructure project?  You got it!  Senior bureaucrats retrenched by the government/ministers from infrastructure procurement departments across the nation.  This is 'not rocket science'.  

Don't get me started on the Parramatta Light Rail fiasco. I had the unfortunate experience to try and find a street in Parramatta. The traffic was diverted into one -way streets, to which all of the shops have been vacated. One 4 level car park and street will be demolished sometime soon, why? because of the Light Rail. The main street, Church Street has fencing on either side of the road and we all had to walk in single file. I said to one of the sign-holding girls" why are they destroying this lovely suburb"?, she said "I hate it, they call it progress". What a joke.  Even outside Westmead Hospital, the Light Rail again, slowing down traffic and paths all uneven waiting for some unfortunate to break an ankle. 


I am sure that to work as a labourer you are required to have 2 things going for you - 1. Be strong of back and 2, weak in the head.

Politicians on the other hand who want a position in Parliament must have 2 requirements - 1. money the more the better and 2, Demanded to leave their brains at the door and go by guess work. Well there is always the public who are there to cover your butt and take of the financial slack when you get things so wrong.

A politician with a "brain"? 

Well that's a terrific oxymoron.  Thanks Beemee

Having recently been involved in the planning of a major project, one of the problems is the extreme demand of union organizers before they sign off their union members to work on a project. This together with the many people involved in the projects, either academics or other so called "experts" who commanded excessive fees for their services or consultancies, that have no practical knowledge or hands-on skills. Also the additional  costs inflicted on projects, that are needing to cater for the miriad of demands by minority and fringe extremists, rather the the good of the majority.

Yeah, we all know.  It's always the unions.  It's NEVER the government.  

So are we to criticise any government for choosing Australian tenders over foreign tenders? I would rather see contracts let to Australian companies who use Australian workers and pay tax in Australia. I note that the article is very big on complaining about contracts but very small on actual detail to support the complaints.

I wonder how Japan can repair quake ravaged highways in only 6 days and we can take more than 6 months to fill in a few potholes?

Local tenderers (using the term loosely here) were once given a break in tender responses by discounting their charges by as much as 15%. However, those days are essentially gone because of 'free trade' agreements since by Australian governments.  Free trade has NEVER been fair trade. 

For instance, show me ONE major contract let by, say, TfNSW in the last 20 years that wasn't awarded to an overseas resident supplier or its local subsidiary.  All profits from such entities go off shore.  Every single $.


Why is it both current State(NSW) and Federal governments have paid 10 times the price for some land acquisitions, and then have compulsory land acquisitions at the lowest price for general home owners.

Sounds like corruption to me.

You're right.

If it looks like a pig, smells like a pig, walks like a pig, then it's  a Politician Imbibing Graft !


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