Page 4038 - Week 11 - Wednesday, 16 Sept 2009
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I think that is an incredibly telling quote. Basically what we are saying here is that we go out, we sell the community on a project, we convince them it is a good idea. We say it is going to cost $120 million but we know right at that point, right at the beginning, that that is not going to be the ultimate price. Frankly, I find that a dishonest way to have a community debate about what is the right infrastructure for the ACT.
Where does this leave us all? What I am wondering here is why we base decisions about public spending on such flimsy information as that it can be subject to price increase 2½ times the original price. Was somebody just guessing? We are doing back-of-the-envelope estimates at the start and we seem to be saying, “Actually this is what the community might cop; so let us put that down as the price.”
It worries me that we hear from Actew, for example, that, while they knew there was going to be a dam wall, they actually did not know how much it was going to cost, nor did they expect to. Again, I quote from Mr Sullivan, Actew’s managing director, in the estimates process:
For instance, with the dam, when you look at two abutments and say that we are going to put a concrete wall between those two abutments, at that stage you do not understand the geology of those abutments as well as you will before you build them. You will see escalation, for instance, in dam prices as a result of the geology of the abutments.
In effect, we knew there was going to be a dam wall there but we actually did not know how much it was going to cost because we did not understand the geology of the abutments on which it was going to be built. Why did we pretend that we did know the cost?
The lesson here for all of us is that estimate costs are invalid as any kind of reflection on the final cost the community will pay. But while time and lack of information may explain the difference between $120 million and $245 million, I am still determined to find out what explains the difference between $245 million and $363 million.
It seems clear that the actual geology of the area where the dam wall was to be built was not fully understood when early costs were provided to the government and to the community. I am no engineer; so I have to confess that I am just running off the public statements that have been made about the construction and the geotechnical investigations by the managing director of Actew, as well as the EIS and the development application. So I make that, I guess, rider on these comments.
But Mr Sullivan was clear on radio a couple of weeks back that the reason for the cost blow-out was that the dam wall needed to be nine metres deeper, resulting in an extra 120,000 cubic metres to be both excavated and then filled with concrete. But I suspect that Mr Sullivan knew that these cost increases were coming well before the start of September. I am not clear on the chronology yet of what was known and what was said but it is something that I hope we can clear up in the weeks ahead.
Certainly in May this year, with 38 boreholes drilled, Mr Sullivan indicated that Actew knew “a whole lot more” about the nature of the area. Maybe inaccuracy of the
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