Page 1291 - Week 04 - Tuesday, 27 March 2012
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From that document, members can read what Actew’s estimated revised costs would have been at that stage. The presentation has no official status. It does not form the rationale for any board resolution or decision, nor is it based on current information. It represents an unapproved estimate prior to the recent flood.
Let us turn to that document. Actew’s estimated total project cost to completion would have been $396.8 million, an increase of $33.5 million over the current budget of $363.3 million. This increase in costs is predominantly due to rain. It was simply not possible to reasonably predict or control the extent of the rainfall and flooding that has occurred over the past two years.
In 2009 the amount of rain that fell in the ACT was 75 per cent of the long-term rainfall average. In 2010 and 2011 these figures were 160 per cent and 140 per cent respectively. Clearly, 2010 and 2011 were two of the highest years of rainfall on record.
When Actew started the dam project in August 2009, the target outturn cost assumed there may be 12 shifts lost due to bad weather. However, up to the end of February 2012 there has been a total of 116 shifts lost due to wet weather. It is also the case that despite extensive geotechnical drilling, a geographical fault was not discovered until after excavation works had commenced for the main dam wall foundation. Mr Sullivan discussed the geological feature at his appearance before the public accounts committee; so I do not propose to reiterate his testimony today.
It is a fact that there are operational risks associated with major infrastructure projects such as building a dam. Although it is disappointing that the costs and timing for the dam’s completion have increased, it is clear that they have resulted from factors external to the project.
It is not a secret that Actew was considering the cost and schedule of the dam. Members will recall that on 16 December last year Actew’s managing director, Mr Mark Sullivan, advised the public accounts committee that the budget and schedule for completion of the enlarged Cotter Dam were being reviewed. This review was due to rainfall and the geological feature.
Mr Sullivan indicated that after the information had been presented to the board, he intended to brief all interested parties and make the information public. He gave a similar commitment during an interview on ABC radio on 2 February 2012, in which he indicated that it was intended to provide a detailed report to the Actew board by the end of February 2012. The voting shareholders would also have been informed before there was a public announcement.
As it turns out, the Actew board met on Sunday, 4 March 2012. It was originally intended that the board would consider the revised estimated project schedule and budget at that meeting. It became evident, however, that the flooding that had begun to intensify on 29 February 2012 would significantly change that revised schedule and budget. A full reassessment of the project’s schedule and budget would be needed.
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